Jason Jennings in his wonderful book, Less is More: How Great Companies Use Productivity as a Competitive Tool in Business, Penguin Putnam, 2002, writes that “In productive companies, the culture is the strategy.... Unlike other companies, productive companies know the difference between tactics and strategy. The difference is the foundation that allows them to stay focused and build remarkable companies. They have institutionalized their strategy.”
From my work with leaders and managers from across the country, I have learned that the best companies institutionalize their strategy, in part, by institutionalizing their culture. This begins when they institutionalize organizational clarity.
To do this, great leaders and managers understand that organizational culture is an integrated pattern of shared knowledge, beliefs and behaviors translated into a collective commitment toward shared values, goals, and practices/systems. The key is building a “shared” understanding of how we do business.
Edgar Schein, a former professor at the MIT Sloan School of Management, who has made a notable mark on the field of organizational development in many areas, including career development, group process consultation, and organizational culture, wrote that culture is “a pattern of shared basic assumptions invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration." Furthermore, he explains that this culture “has 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 those problems."
Charles W. L. Hill, and Gareth R. Jones in their book, Strategic Management, Houghton Mifflin 2001, point out that culture is "the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization."
As all of us know, every organization has a set of systems and sub-systems, i.e. structures, cultures, and defaults. Ronald Heifetz, Alexander Grashow, and Marty Linsky in their book, The Practice of Adaptive Leadership: Tools and Tactics for Changing Your Organization and the World, Harvard Business Press, 2009, explain that every organizational culture is the sum of it’s folklore, namely the stories people frequently tell that indicate what is most important, rituals, group norms, and meeting protocols.
The simple and defining difference between good and great leaders from my perspective is that the best consciously define, build and reinforce a shared culture on a daily basis. This is what separates them from the mediocre leaders and companies.