The cultural school

Strategy formulation as a collective process

Culture knits a collection of individuals into an integrated entity called

organization. In effect, one focuses primarily on self-interest, the other
on common interest. So too, the literature of what we are calling the
cultural schoolstrategy formation as a process rooted in the social
force of culturemirrors the power school. While one deals with the
influence of internal politics in promoting strategic change, the other
concerns itself largely with the influence of culture in maintaining
strategic stability, indeed sometimes in actively resisting strategic
change.
Culture is hardly a new idea. Every field of study has its central
conceptmarket in economics, politics in political science, strategy in
strategic management, and so onand culture has long been the central
concept in anthropology. From the vantage point of anthropology,
culture is all around usin the food we drink, the music we listen to, the
way we communicate. At the same time, culture is what is unique about
the way we do all these things. It is about what differentiates one
organization from another, one industry from another, one nation from
another. As we shall see, this duality of cultureits pervasiveness yet its
uniquenesshas been reflected in its application to strategic
management as well.
Culture can be studied as an outsider looking on or from the perspective
of the native inside. (These correspond to the two wings of our cognitive
school.) The first takes an objective stand on why people behave as they
do, which is explained by the uniqueness of social and economic
relationships. The second considers culture as a subjective process of
interpretation, not based on any abstract, universal logic.
The Nature of Culture:

Anthropologists debate the definition of culture endlessly. Here we need

only focus on the main outlines of the concept. Culture is essentially
composed of interpretations of a world and the activities and artifacts
that reflect these. Beyond cognition these interpretations are shared
collectively, in a social process. There are no private cultures. Some
activities may be individual, but their significance is collective.

We thus associate organizational culture with collective

cognition. It becomes the "organization's mind," if you like, the shared
beliefs that are reflected in traditions and habits as well as more tangible
manifestationsstories, symbols, even buildings and products.
Organizational culture can be seen as an "expressive social
tissue," and much like tissue in the human body, it binds the bones of
organizational structure to the muscles of organizational processes. In a
sense, culture represents the life force of the organization, the soul of its
physical body.
Indeed, the strength of a culture may be proportional to the
degree to which it eludes conscious awareness.
We shall use the word ideology to describe a rich culture in an
organizationa strong set of beliefs, shared passionately by its members
that distinguishes this organization from all others. Thus, while the
culture of, say, Burger King may be associated with broiling hamburgers
and the like, the ideology of McDonald's was long associated with an
almost fetishist belief in efficiency, service, and cleanliness.
Premises of the Cultural School

Below we summarize the main premises of the cultural schoolits own

set of beliefs, if you like.*
1. Strategy formation is a process of social interaction, based on the
beliefs and understandings shared by the members of an organization.

2. An individual acquires these beliefs through a process of

acculturation, or socialization, which is largely tacit and nonverbal,
although some times reinforced by more formal indoctrination.
3. The members of an organization can, therefore, only partially describe
the beliefs that underpin their culture, while the origins and explanations
may remain obscure.
4. As a result, strategy takes the form of perspective above all, more than
positions, rooted in collective intentions (not necessarily explicated) and
reflected in the patterns by which the deeply embedded resources, or
capabilities, of the organization are protected and used for competitive
advantage. Strategy is therefore best described as deliberate (even if not
fully conscious).

5. Culture and especially ideology do not encourage strategic change so

much as the perpetuation of existing strategy; at best, they tend to promote shifts in position within the organization's overall strategic
perspective.
Culture and Strategy

There has long been a literature on how culture can cause resistance to
strategic change. And, much like the stakeholder approach to designing
power relationships, there is a literature on handy techniques to design
culture, which in our opinion belongs in the planning school, as the
following quotation should make clear: "To match your corporate
culture and business strategy, something like the procedures outlined
above [four steps] should become a part of the corporation's strategic
planning process".
The linkages between the concepts of culture and strategy are therefore
many and varied. We summarize below some of these as they have been
developed in the literature:
DECISION-MAKING STYLE.

Culture influences the style of thinking g favored in an organization as

well as its use of analysis, and thereby influences the strategy-formation
process
RESISTANCE TO STRATEGIC CHANGE.

A shared commitment to beliefs encourages consistency in an

organization's behavior, and thereby discourages changes in strategy.
Before strategic learning can occur, the old [dominant] logic must in a
sense be unlearned by the organization.
OVERCOMING THE RESISTANCE TO STRATEGIC CHANGE.
Attention has also been directed at how to overcome the strategic inertia
of organizational culture. Lorsch has suggested that top managers must
accept as a major part of any company's culture the importance of
flexibility and innovation. He proposed a number of ways to do this,
including naming a "Top Manager Without Portfolio," whose role is to
raise questions, challenge beliefs, and suggest new ideas; using outside
directors to "raise important questions about the appropriateness of

these beliefs in changing times"; holding an "in-company education

program for middle managers, with outside experts"; and encouraging
"systematic rotation of managers among functions and businesses" .
Lorsch also argued that major beliefs should be put in writing: "If
managers are aware of the beliefs they share, they are less likely to be
blinded by the m and are apt to understand more rapidly when changing
events obsolete aspects of culture". He felt managers

Should undertake cultural audits, to develop consensus about shared

beliefs in their organization. The question, as we discussed earlier, is
whether the deep beliefs can really be captured in these ways.
Bjorkman
has pointed to research indicating that radical changes in
strategy have to be based on fundamental change in culture. He described
this as happening in four phases:
1. Strategic drift. In most cases radical changes are preceded by a
widening of the gap between the organizational belief systems and the
characteristics of the environment; a "strategic drift has developed.
2. Unfreezing of current belief systems. Typically, strategic drift
eventually leads to financial decline and the perception of an
organizational cri sis. In this situation previously unquestioned
organizational beliefs are exposed and challenged. The result is growing
tension and disunity in the organization, including a breakdown in
homogenous belief systems.
3. Experimentation and re-formulation. After former organizational belief
systems have been unlearned, the organization often passes through a
period of confusion. This period may lead to the development of a new
strategic vision, usually mingling new and old ideas, and culminating in
experimental, strategic decisions in accordance with the vision.
Demonstrations of positive results may then lead to greater commitment
to the new way of doing things.
4. Stabilization.
Positive
feedback may
gradually
increase
organization members' commitment to new belief systems which seem
to work.

Resources as the Basis of Competitive Advantage

Here we take a rather sharp turn, from the soft social side of culture to
harder economic issues. But we remain within the realm of culture,
which does have that harder side. As we shall see, a view of competitive
advantage currently popular among academics finds its roots in notions
that we see as fundamentally cultural. But first we must set the scene.
MATERIAL CULTURE.

Culture is the shared meaning that a group of people create over time.
This is done by purely social activities, such as speaking, celebrating, and
grieving, but also when people work together on common tasks,
including the interaction that takes place among the m and the resources
they employ.

Tangible resources, such as machines and buildings, as well as less

intangible resources, such as scientific know-how and budgetary
systems, interact with members of an organization to produce what
anthropologists call material culture." This emerges when "human made objects reflect, consciously or unconsciously, directly or
indirectly, the beliefs of the individuals who commissioned,
fabricated, purchased, or used the m and, by extension, the beliefs of the
larger society to which these individuals belonged" .
Of course, the relationship is reciprocal: beliefs and values create objects,
and objects create and shape beliefs and values. Take for example the
automobile. It was invented in Europe, developing as a luxury machine
built by skilled artisans for the affluent. The American s reinvented the
automobile as a standardized, low-cost machine built by unskilled labor
for the multitudes. This reflects deep differences in culture: the
Europeans had a long tradition of craftsmanship, while the Americans
compensated for their shortage of skilled workers by learning to
standardize products and master the art of mass manufacturing. The
competition that eventually arose between America n and European car
manufacturers turned out to be a competition between two different
cultures.

Contribution of cultural school

Certain kinds of organizationsclearly those more "missionary" in
nature, with rich cultures; also to large, established organizations
whose stagnant cultures rein force their long-standing strategies.
The cultural school also seems most applicable to particular periods
in the lives of organizations. This includes a period of reinforcement, in
which a rich strategic perspective is pursued vigorously, perhaps
eventually into stagnation. This generally leads to a period of resistance
to change, in which necessary strategic adaptation is blocked by the
inertia of established culture, including its given strategic perspective.
And perhaps this school can also help us to understand a period of
reframing, during which a new perspective develops collectively, and
even a period of Cultural Revolution that tends to accompany strategic
turnaround.