Building a High Performance Business Culture: The Executive’s Role
By Daniel Denison

All organizations create unique cultures as they grow and develop over time. From a small family-owned business operating in their local market to the largest global corporations spanning dozens of national cultures and time zones, each one has a distinct identity. A mind-boggling array of unique factors combines to shape a complex human organization over the years.

The culture of an organization always reflects the accumulated wisdom that comes from the lessons people learn as they adapt and survive together over time. It’s complex! The thousands of little routines that knit together the fabric of the firm translate timeless knowledge in timely action on a daily basis. The traditional habits and customs that have kept the firm alive and well over time speak loud and clear. When uncertainty rears its ugly head, the culture rules! All members of the corporate tribe tend to fall back on their tried and true methods to weather the storm.
So try as we might, the knowledge embedded in our corporate cultures is always yesterday’s knowledge, developed to meet the challenges of the past. What part of the past should be preserved for the future? How should the principles of the past be adapted to address the problems of the future? How should we go about the delicate task of placing the obsolete practices of the past in the corporate museum so that they are not in the path of our best customers?

What is the role of a top executive in addressing these challenges? Should they ignore it all and try to concentrate on their expense ratios, analyst reports, and latest acquisitions? Probably not! Many recent studies show that top executives now see shaping and managing the corporate culture as one of the major challenges. Why? Former IBM Chairman Lou Gerstner gave us the answer in his best seller, “Who says elephants can’t dance?”

I came to see in my time at IBM, that culture isn’t just one aspect of the game – it IS the game. In the end, an organization is no more than the collective capacity of its people to create value. Vision, strategy, marketing, financial management – any management system, in fact – can set you on the right path and can carry you for a while. But no enterprise – whether in business, government, education, health care, or any area of human endeavor – will succeed over the long haul if those elements aren’t part of its DNA.

But where do you start? If, for a moment, we can sweep most of the complexity under the rug, it is important to note that research over the past two or three decades has shown that there are four main ways that an organization’s culture has an impact on business performance: Through an organization’s sense of mission; its level of adaptability; the degree of involvement of the people; and the consistency provided by the foundation. These are the areas that most clearly impact business performance, so this is where we believe the journey should begin.



Over the past twenty years, we’ve studied the link between organizational culture and business performance, trying to understand the cultural traits that are shared by high performance organizations. Out of this research we’ve developed a survey, which is widely used to diagnosing organizations and drive the change process. Here’s what we’ve found about “What Counts.”

Mission. Successful organizations have a clear sense of purpose and direction that allows them to define organizational goals and strategies and to create a compelling vision of the organization’s future. Leaders play a critical role in defining mission, but a mission can only succeed if it is well understood top to bottom. A clear mission provides purpose and meaning by defining a compelling social role and a set of goals for the organization. Our survey process measures three aspects of mission, strategic direction and intent, goals and objectives, and vision.

Adaptability. A strong sense of purpose and direction must be complemented by a high degree of flexibility and responsiveness to the business environment. Organizations with a strong sense of purpose and direction can often be the ones that are the least adaptive and the most difficult to change. Adaptable organizations quickly translate the demands of the organizational environment into action. This trait is measured with three indexes, creating change, customer focus, and organizational learning.

Involvement. Effective organizations empower and engage their people, build their organization around teams, and develop human capability at all levels. Organizational members are highly committed to their work, and feel a strong sense of engagement and ownership. People at all levels feel that they have input into the decisions that affect their work and feel that their work is directly connected to the goals of the organization. We measure this cultural trait with three indexes, empowerment, team orientation, and capability development.

Consistency. Organizations are most effective when they are consistent and well integrated. Behavior must be rooted in a set of core values, and people must be skilled at putting these values into action by reaching agreement while incorporating diverse points of view. These organizations have highly committed employees, a distinct method of doing business, a tendency to promote from within, and a clear set of “do's” and “don'ts.” This type of consistency is a powerful source of stability and internal integration. We measure this trait with three indexes, core values, agreement, and coordination and integration.

This model focuses our attention on a set of tensions or contradictions. The trade-off between stability and flexibility and the trade-off between internal and external focus are basic to the model. The “diagonal” tensions are also important to understand. Achieving both internal consistency and external adaptability is easier said than done, while reconciling mission and involvement requires that firms achieve both top-down direction and bottom-up influence.

Linking Organizational Culture and Business Performance
Our published studies over the past two decades have explored many aspects of the link between organizational culture and business performance. These studies have examined the link between the four basic traits in the model and performance measures such as profitability, sales growth, quality, innovation, and market value. The model has also been used to create a survey-based diagnostic benchmarking process designed to help organizations focus on the issues that need attention. For busy executives, this means that their approach to a “soft & fuzzy” issue like corporate culture can also be a process to drive performance improvement. The results of this process are highly actionable and help an organization move beyond a discussion of employee satisfaction and employee engagement to better understand the actions that they can take to build their organization for the future.
For more information, please join us for one of our presentations at the Linkage’s Best of Organizational Development Summit or join us for the two-day workshop that follows the summit. Or visit www.denisonculture.com.