The Culture Equation™

Ground-breaking studies like Jim Collins’ books, Built to Last and Good to Great and John Kotter’s book, Corporate Culture and Performance have shown that while an organization’s culture powerfully molds its operating style and can positively (or negatively) effect the performance of work-groups and entire organizations, “culture” has remained an overly-complex and somewhat mysterious topic for most organizations – until now. The Breckenridge Institute® has identified the constituents of organizational culture and formulated them into a Culture Equation™ that describes what organizational culture is in simple, concrete terms (see below).

POI <--> COI <--> ROI = Current Results™

Managers can use this simple equation to improve performance at the organizational, work-group, and individual employee levels simultaneously. The terms of the Culture Equation™ are defined as follows:

• POI = Pattern of Interaction (Do, Informal Rules, Actions, Interactions, Group Learning)
• COI = Context of Interaction (Say, Formal Rules, Structures, Systems, Location)
• ROI = Repository of Interaction (Tacit Assumptions, Belief Structure, Meaning, History)
• Current Results: The Actual Results an Organization Gets, Not Its Goals

The key insight is that organizational culture is composed of all four terms in the equation, with each term being a distinct (but interdependent) category of business elements that interact with the others to produce an organization’s financial and non-financial results. It is the interaction of the four terms that creates organizational culture and many managers experience this interaction as the Invisible Bureaucracy™ we discussed in the October issues of the Pinnacle.

An organization’s culture is created, solidified, and reinforced by the powerful embedding mechanisms described below. The strength of these embedding mechanisms indicates: a) how strong the culture is, b) how explicit (or implicit) the teaching and/or message of the culture is, and c) how intentional (or unintentional) the actions and interactions of the culture are.

• Primary Embedding Mechanisms: Formal and informal rewards are the primary embedding mechanisms for reinforcing an organization’s culture because they define what actions and interactions actually get done, e.g. what people should focus their time, energy, and resources on. What an organization “says” it rewards is COI (formal), but what it actually rewards is POI (informal), and the “informal” rewards have the most powerful affect on creating, reinforcing, and maintaining organizational culture. In fact, the wider the gap between POI and COI, the more powerful the embedding effect will be.

• Secondary Embedding Mechanisms: These include organizational design (structures and systems), geographic location, physical space, décor, facilities, equipment, policies, procedures, formal statements about core ideology (purpose, core values) and philosophy. These are primarily COI, but what these elements “mean” (ROI) within a specific culture, and the actual day-to-day activities (POI) within this context reinforce, solidify, and embed the COI term in the above Culture Equation™.

• Tertiary Embedding Mechanisms: The purpose of culture is to “teach” people how to “see” the world, and the third embedding mechanism is how this is accomplished, e.g. through teaching, training, indoctrination, and interpretation about what POI, COI, and Current Results mean within the context of the organization’s culture – “that’s not how we do it, or see it, around here.” Organizational rituals, ceremonies, traditions, heroes, stories, and key historical events are also tertiary embedding mechanisms. These are primarily ROI, but can also apply to the other terms in the Culture Equation™. ROI is the most difficult mechanism to change directly through teaching, training, indoctrination, and interpretation of events in organizational life because the tacit beliefs and assumptions of which ROI is composed emerge naturally (unconsciously) as the consequence of observing the interaction of POI within the context of COI.

• Repetition: Over time, the day-to-day repetitive experience of POI, COI, ROI and the Current Results helps to migrate these cultural elements to autopilot operations and eventually they become the organization’s reality, e.g. “how it is around here.”

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Underwater Photo: © Annie Crawley, www.anniecrawley.com

“Organizational defense routines make it highly likely that individuals, groups, and organizations will not detect and correct errors that are embarrassing and threatening because the fundamental rules are to (1) bypass the errors and act as if that were not being done, (2) make the bypass undiscussible, and (3) make its undiscussability undiscussible.”

Chris Argyris

Breckenridge Work-Group Indicator™ (BWI™)

Effectively leading a work-group takes an enormous amount of time and energy because managers have to maintain a balance between conflicting or competing interests in a complex system of coalitions of small groups who “see” business issues very differently. For example, in a work-group of 20 people, the manager has to keep track of nineteen relationships between themselves and others, plus 171 third-party relationships. The dynamics of third-party relationships change and become even more complex when combined into coalitions of 3s and 4s. Unlike traditional approaches that use individual personality profiles, the revolutionary BWI™ presents a comprehensive 3D evaluation of group-dynamics and barriers to effective communication in work-groups. It gives managers a shorthand way to understand and effectively manage the differences between people at the work-group, small-group, and individual levels.

Because it evaluates work-groups (departments, teams, etc) within the larger context of an organization’s structures, systems, and culture, the BWI™ is typically used by middle managers, front-line supervisors, and team leaders. People who obtain the most value from the BWI™ use it to help them more effectively:

Join us for a two-day BWI™ workshop entitled, Making the Invisible Bureaucracy™ Visible to be held in Boulder, CO on March 27-28 and May 22-23, 2008. Contact Elin Larson at elin@breckenridgeinstitute.com for details.

Chris Argyris, Overcoming Organizational Defenses

Chris Argyris’ book, Overcoming Organizational Defenses, is must-read for people who want to see the day-to-day operation of the Invisible Bureaucracy™ in action. This book is dense and is not an easy read, but the pay-off for staying with the material is much deeper insight into the organizational and individual behaviors that create, reinforce, and maintain organizational culture. For Argyris, organizational defenses are actions and interactions that emerge in response to the embarrassment or threat associated with human error within the context of an organization’s culture. For example, an company’s formally stated policy is that the way for employees to get ahead is to work hard and gain operational experience, but it becomes apparent that the real criteria for getting promoted is who you know, not what you know or do. If this duplicity becomes a matter of public scrutiny, organizational defenses will most likely arise and follow four steps. Those responsible will: a) try to by-pass the issue, b) give inconsistent messages about what the issue “means”, c) cover-up the incident and make it undiscussible, and finally, d) cover-up the cover-up and make the undiscussibility undiscussible.
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