Can a Cultural Model be The Business Model?

I had a short conversation on Twitter about ideas and thoughts concerning organizational culture. I thought it would be nice to share it and hopefully get another conversation going.

> Can we first design a cultural model and then the business model? Can a culture be the business model?

@apolaine
Yes, I think so. Pret a Manger, Virgin, IKEA, Pixar, all have cultures that define the business decisions.

@gregkrauska
Culture model and business model are distinct. Culture model is powerful way to ensure business model success @futurescape

@paujoral
The Culture is the Context. The Business Model the instrument to operate in it.

@SAlhir
Yes indeed.

@Jabaldaia
Intersection is the way! As is usual say adaptability. We can not propose a static model because cultyre is dynamic! Intersection means plastic. I think any model will have effect in a small part of culture

@exmosis
I've been thinking similar things, but on an individual level. What's my "living model"?

@futurescape
Interesting. Would like to know more on the culture thought..

> Can we keep a culture alive when business, processes, every day reality takes over?

@apolaine
I think it's a mistake to separate the two. I just wrote my last column for Desktop about studio cultures.

@renatalemos
It’s the old dichotomy hierarchy vs non-hierarchy, dominant implies hierarchy. integrative doesn’t. design thinking in progress.

@futurescape
As business scales, does this impact culture negatively? and perhaps its long term success too?

@exmosis
Is culture something we can plan? Or that which emerges from what we do?

@adamstjohn
If it is true culture, it is expressed in everyday reality. Otherwise it is just someone's vision. Culture = shared worldview.

@Jabaldaia
No way! That kind of dominance is not good. We are free than we can choose, and I choose tradition wen it is good!

@gregkrauska
Oh, like when people start doing things and be selves? Sure! So what kind of success do we want more of - celebrate that. Process change should support culture. Not always simple, easy, though.

@docbaty
What is your culture if it isn't your everyday reality? Sounds more like organisational or leadership delusion.

> Still many companies struggle with building a strong dominant & sustainable (!) culture

@docbaty
Agreed. To your previous point: a strong culture should drive business, processes and permeate 'everyday reality'.

@gregkrauska
Culture change needs clarity, simplicity, energy, daily care and feeding - and patience and commitment.

@NicoledeB
Culture change defi needs patience: time, trust, modeling of success, small "wins" that reinforce the change.

@Jabaldaia
I say that we teach what we learn, than we need to teach in a different way and build in all ability to choose!

> Only a dominant cultural model makes real adaptability possible

@renatalemos
Maybe if u use "integrative" instead of "dominant" it would sound better...

@Syamant
Cultural degradation though seriously impacts business. in a sense they are integrated. Perhaps culture defines longevity.

@futurescape
Biz plans evolve but the founder’s practices ensure cultural continuity. as new people come in or leave culture evolves too. e.g. A start-up, based on an idea that is subsequently built. the practices of the founders define the cultural side.

@Jabaldaia
Dominance must be clarified :-) If we see dominance as a leader for sustainability

@docbaty
And you sustain it in two ways: you design it into everything; and then recruit people who will live it.

> And, this might sound trivial, it makes people like their job more

@docbaty
Not trivial at all. Loving your job will motivate most people a lot more than money ever will.

> Should employees fit with the culture? Or can culture be designed to fit with the people?

@apolaine
Here's a video interview I did with Simon Waterfall where he talks about that very question: http://is.gd/90ilj

@Jabaldaia
If we look to satisfaction and motivation of the employees, and we must, culture can be designed !

@aremadeofthis
Culture is a function of the people /cc

@futurescape
People define the culture. each person brings a unique aspect. for continuity sake, they would have a core similarity.

@Jabaldaia
If we look to satisfaction and motivation of the employees, and we must, culture can be designed !

@juliaschaeper
Zappos - check out their culture book defining their business

@Zappos_Service
DM us your address and we would be happy to mail you a culture book.

@leighhleighh
Keeping A Culture Alive Or Building A Living Culture http://bit.ly/9z6w0X

Tags: business, corporate, cultural, culture, design, models, service

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Comment by Michael J on March 4, 2010 at 15:35: Andy,
I think the place it might overlap is in organizations divided into silos. Most creative studios don't have that problem.

Comment by Andy Polaine on March 4, 2010 at 15:08: Hi Ned - I've just realised why we've been talking at cross-purposes. You've been talking about merger and acquisition scenarios, when I've been talking about a single company. Having been through or observed a few during the dotcom days, I can't say I've ever really seen an M&A truly join cultures. In the end, one culture dominates the other and takes over. The best case is that they are similar enough for there to be a little fall out, but it's rarely (if ever) the case that there is some kind of meld. When one entity buys another, the power relationship is clear.

On a side note, long ago in the Antirom days, we were approached by a large dotcom who were interested in buying us. But Antirom's USP was really the collection of personalities that made up studio (12 of us by that point). Buying us and absorbing us into a larger company would have killed of the very thing they wanted to buy. We turned it down and ended up splitting up not long later, poorer but wiser. Or maybe not wiser.

Comment by Michael J on March 4, 2010 at 14:02: Ned,
Thanks for "culture due diligence." Any suggestions of things to read that describes in more detail how that process works?

Comment by Ned Kumar on March 4, 2010 at 7:15: Long day - finally getting a chance to reply to the questions.

Andy,
You are right that culture is a dominant force for success - but that need not imply integration. The issues with mergers/acquisitions or even globalization is that people fail to understand the role culture would play in their success. In most cases, the majority of the focus is on financial analysis, market sizing, asset consolidation, etc. leaving the outcome of the culture fight to chance. - and by culture here I am not just saying organizational culture but national culture as well (the predominant national culture impacts the org culture).

Just based on my experience, here is my POV. We have repeatedly heard in this post that culture drives business. True - but if you take a step or two back, this culture of the company is shaped by the founders and leaders of the company, their management style, AND what they are seeking to do -- whether it is Tony Hsieh of Zappos, Jeff Bezos of Amazon, Jack Welch of GE, or Larry Wilson of Oracle, you will see fundamental similarities between the org culture and what they believe the company should be and do. So now when you go about acquiring another company, chances are very high that the cultures of the two companies are different as they are shaped by different folks. So when I used the word "decoupling", my intention was to underline the importance of culture in realizing the full potential from the union and so having a dedicated team look only at this aspect and do the necessary culture due diligence. Now this need not mean finding ways to integrate the two cultures. It is more about studying the underlying tenets, assumptions, values, and other underpinings of both cultures and deciding: (a) whether to integrate fully if the cultural gap is not much, (b) let the target company keep its own culture if that is critical to survival, (c) let the culture of the target firm be a sub-culture of the parent etc. The KEY here is that while one group is studying the financial viabillity of the merger, a parallel group should be looking at BRIDGING THE CULTURAL GAP (I like the word bridge over integrate). And this cultural due diligence can be independent of the business goals . Again, this is what I meant by decoupling. It is possible that we are humming the same tune and that I am not explaining myself clearly.

(Btw, a congruence on the business models is also needed for success)

Syamant,
Here are a couple of examples of both (looking at it from an M&A perspective).

Bad:
1) Quaker Oats acquiring Snapple beverage. Lasted 3 years and Quaker was forced to unload Snapple for a huge loss.
Why: Mainly culture clash. Quaker's culture was driven by a more focused, mass-market style. Snapple's culture on the other hand was more entrepreneurial and distributed-oriented.

2) Chrysler & Diamler-Benz
Merger of these two was considered a win-win, with the combined entity having an excess of $150 billion in revenue and selling a few million cars and trucks. However, it was downhill with Diamler selling Chrysler to a private equite firm in 2007.
Why: Fundamental differences between the two orgs. Diamler's culture was more centralized and methodical with a high regard for hierarchy and a philosophy of quality at any cost. Chrysler on the other hand had a assertive, risk-taking culture that lend itself to be more flexible and valuing efficiency and producing cost-efficient vehicles.These differences along with bad leadership fast-tracked the destruction of this relationship and the value it might have created.

Good
1) The example that Michael mentioned - Amazon buying Zappos is a good one. They are both customer focused, they both are run by CEOs who are open minded and know what is required. If you get a chance, view this 8 min video by Jeff Bezos of Amazon (http://bit.ly/1anYaS) when the acquisition was announced. I personally thought this was a wonderful way to start the new partnership -- btw, Tony Hsieh published a letter to all Zappos employees talking about similar things.
Lesson learned: Transparency & Communication is of utmost importance. When an M&A happens, there is fear and uncertainty among the folks of the target company. You need to take care that so that they can focus on their jobs.

2) Another great example is Cisco. These past two decades they have made scores of acquisitions. They consciously manage the cultural bridging. In fact, I think they actually have a 'cultural due diligence' team when they make an acquisition along with the Financial teams (I am not sure of the terminology so please don't quote me on it).

Regards,
Ned

Comment by Theo Craveiro on March 3, 2010 at 22:44: For me a Cultural model it is a Business Model.
- Business Model your it's capacity to creates / delivers and captures value. You need to creates more than you can capture.

My business Model:
http://www.flickr.com/photos/fotosdotheo/sets/72157623258837739/show/

Ps: "market's are conversations" bluetrain manifesto

Comment by Syamant on March 3, 2010 at 19:17: Here is a thought to consider... The First-line Manager20/1LM20

http://www.tompeters.com/dispatches/011473.php?rss=1

Comment by Michael J on March 3, 2010 at 13:04: Just thought of Amazon buying Zappo's as an example where the business model and the culture seemed to be perfectly aligned.

I think that in a service business it's all about touchpoints to customers. In which case the culture is the lowest cost method to produce the product at scale. it's the difference between reading a script and being able to "naturally" interact with a customer. But the biz model is how to earn money from the product that culture produces. Great products can crash and burn if focus is diverted from what earns money.

Comment by Andy Polaine on March 3, 2010 at 12:52: So, Ned, doesn't the business argument turn to the need for culture to be integrated to the business thinking rather than decoupling it? In all the examples below, it seems to me that culture is the dominant force for success or failure and that the business model is secondary.

Comment by Michael J on March 3, 2010 at 12:43: No details to offer, but I bet Google has a very good track record on integrating cultures.

Comment by Syamant on March 3, 2010 at 9:16: Great point on acquisitions and culture. Each acquisition seems to bring turmoil in product/service strategies and indeed on culture. Are there any examples of acquisitions where the integration has been good plus has not had a signficant impact on culture?