Understanding organizational culture - Part I of III

BY EDGAR H. SCHEIN - 2016-08-05

According Edgar H. Sachin (MIT), organizational culture is the pattern of basic assumption that a given group has invented, discovered or developed, in learning to cope with its problems of external adaption and internal integration, and that have worked well enough to be considered valid, and, therefore, to be taught to new members as the correct way to perceive, think, and feel, in relation to these problems.

Culture is influenced by unconscious assumptions which determine how a group perceives, thinks, and feels. The assumptions are actually learned responses. Members of the group learned to react according to the need of the situation. These learned responses were in turn espoused values at some point of time in the past. Values are reflected in behavior. When the behavior addresses the problem at hand, the values are slowly taken for granted, and they become, over a period of time, underlying assumptions. As people assign importance to the values giving rise to their behavior by following them and continuing to behave in certain way, the values underlying the behavior become unconscious assumptions.

Such unconscious assumptions are very powerful. They become sacred to the people who hold them. These people often refuse to even discuss them. For example, “education benefits people” is one such unconscious assumption although it is widely held, it is nevertheless an assumption. Similarly, “freedom is good for society” is an unconscious assumption. Today, most people consider these assumptions as self-evident truths. When events that are not congruent with the organization’s culture occur in an organization, employee get dissatisfied, and sometimes even leave the organization. This is what happened at Netscape when it was taken over by AOL.

Netscape was known for its casual, flexible and independent culture. Employees were not bound by rigid schedules and policies, and were free to come and go as they pleased. They were even allowed to work from home. The company promoted an environment of equality – everyone was encouraged to contribute his opinions. This was also evident in the company’s cubicle policy. Everyone, including CEO Barksdale, worked in cubicle. The company promoted experimentation and did not require employees to seek anyone’s approval for trying out new ideas. For example, Patrick O, Hare, who managed Netscape’s internal human resources website, was allowed to make changes to any page on site, without anyone’s approval. This was the culture at Netscape prior to the merger with AOL.

After the merger, in spite of the contrary by the CEO of AOL, people at Netscape were required to change the way they worked. As a result, by late 1999, most of the key employees who had been associated with Netscape for many years had left. Ramanathan Guha, one of Netscape’s most senior engineers, threw up a $4 million salary at AOL to join Epinions.com. he was soon  joined by Lou Montulli and Aleksander Totic, two of Netscape’s six founding engineers. Other Netscape employees helped start Responsys. Some employees joined Accept. Com and others auction watch. Spark PR was staffed almost entirely by former Netscape PR employees.

David B. Yoffie, professor at Harvard Business School, explains “… The heart and soul of the Netscape engineers’ culture was to try to change the world through technology, not to change the world through media.” AOL was attempting to change the world through the media. This difference of emphasis made many employees feel that they were working in the wrong place. So most of the engineers left and Netscape was transformed from a technology company to a media company. Zawinski said, “AOL is about centralization and control of content. Everything that is good about the Internet, everything that differentiates it from television, is about empowerment of the individual. I don’t want to be a part of an effort that could result in the elimination of all that”

Formation of Organizational Culture

Culture is formed and survives in an organization, as embedded in groups. The strength of the culture depends on the homogeneity and stability of group membership. If the members of the group leave the group after a brief stay then they will not imbibe much of the culture. In this case, the culture of the group will not be strong. The strength of the culture also depends upon the length and intensity of shared experiences. If the members of a group go through difficult experiences or survive difficult organizational problems, then they tend to imbibe and pass on a strong organizational culture to new members in the group. If not, though the individual members hold strong assumptions the group may not reflect a strong culture. Such groups constitute the organization. The culture of the organization is sum and substance of cultures of all these groups.

Roles of Founders in the Formation of Organizational Culture

The founding group forms theories and paradigms based on how the group reaches consensus on various matters. Naturally, the evolution of culture is a multi-stage process. The organization and the development of its culture evolve through several stages of group formation. The final organizational culture then depends on the complex interaction between the assumptions and theories founders set in the beginning, and how the organization learns from subsequent experiences.

How are solutions (which subsequently form the core of the culture) developed in an organization? The founders and early leaders in the organization bring cultural solutions into the new group of people comprising the organization. They arrive at these solutions by trying out different options, and adopting or rejecting them based on their usefulness. Initially, the founders have a high level of influence on the organization. But as the organization ages and acquires its own experiences, it starts adopting its own solutions.

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