Culture And The Strategy Of A Firm example essay topic

Does vision and mission emerge from the particular culture of a firm or is it dictated by strategy? The culture of a firm and the formation of strategy are two very important aspects of an organisation. The world contains many different people all with different values, ideas and beliefs. These differences create a diverse range of cultures within organisations, some having bigger influences than others.

Strategies within organisations are highly dynamic and complex, and can have positive and negative effects on an organisation. Vision and mission are concepts that many believe are vital for an organisation to operate effectively and to the best of its abilities. Andrew Campbell (1991), a prominent writer on vision and mission, believes that both the culture and the strategy of a firm come together side by side to build an overall definition of mission for a firm. The paper will be based around Campbell's perception and whether either culture or strategy has a greater part to play in an organisation's mission. Culture and strategy will be examined in a context relevant to the title question.

Hofstede (1993) defines culture as 'the collective programming of the mind which distinguishes one group or category of people from another'. Hofstede research of different organisations and countries allowed him to make predictions on the way different societies operate, including their management processes and the theories that would be used in management. Morgan (1996) refers to culture as 'the pattern of development reflected in a society's system of knowledge, ideology, values, laws, and day-to-day ritual'. In subsequent writings he expands on organisational culture as 'self-organising and is always evolving' and also ' we are observing an evolved form of social practice that has been influenced by many complex interactions between people, events, situations, actions, and general circumstances'.

These broad definitions of organisational culture are important bases and will be used throughout. Defining strategy is a difficult process because it is a complex concept that has many forms and is constantly changing. Andrews (1987) attempt is a comprehensive definition that incorporates many different aspects of strategy. His definition of strategy includes 'the pattern of decisions... that determines and reveals its objectives, purposes, or goals, and defines the range of business the company is to pursue, the kind of economic and human organisation it tends to be, and the nature of the economic and non-economic contribution it intends to make to its shareholders, employees, customers, and communities. ' It must be recognised that strategy can be identified at three different ascending levels: business, corporate, and network level (De Wit & Meyer 1998).

Culture can have varied affect and influence on the three levels of strategy content. This section will define vision and mission, describe how they are created and focus on their relevance to the firm. Campbell (1991) believes 'a vision and mission can be one and the same', but they are not identical concepts. Vision refers to the future of a firm that is beyond its current capabilities. If a vision is realised then a new vision should be created in order to keep the firm striving for advancement. The distinct difference with a mission is that it can remain unchanged for the life of the company.

Mission refers to the present and is a focus of behaviour and therefore it is very important to the organisation. Vision is valuable due to the importance of goals, but less so because sometimes visions can become useless if they are achieved in a short space of time or if they are overly ambitious. It has been shown that vision and mission are different concepts but because they are predominantly overlapping, for the remainder of this paper the overall concept will be referred to as 'mission'. Many management journals define a strong mission as one that incorporates four general elements - purpose, strategy, behaviour standards, and values. These concepts will be explained and reviewed to gain some understanding of whether either strategy and culture are foremost in the mission of a firm. The four elements defining a mission are not just isolated ideas but can be seen to exist together, reinforcing each other.

The Ashridge mission model (appendix 1) is important to show how the elements link together to form a strong mission for a company. A mission that has a clear 'purpose' is one that explains why the company exists. Campbell (1991) believes that companies fall into three categories when an overall purpose is considered. The first is a company that exists for the benefit solely of the shareholders. The second is one that seeks to satisfy all the stakeholders including shareholders but also customers, employees, suppliers and the community. The final type of purpose identified is one that strives towards a 'higher deal'.

Producing benefits for the stakeholders alone dissatisfies the managers of this type of company. They endeavour to identify a purpose that is greater than that of the combined needs of the stakeholders and so produce something of which they can be proud. A strong mission would also contain guidelines on behaviour standards regarding the day-to-day operations of the firm. It may be set out as a collection of policies but it may also be a pattern of operations that has emerged from within the culture of the company. The behaviour standard is a method of making sure that cooperation is at a maximum between its employees and greater than its competitors. This is based on logic that is termed a left-brain decision.

The diagram is based around the fact that humans think in different ways. It is not an accident that purpose and behaviour standards are linked together with strategy and values in such a way. It has been identified that the brain thinks with the left side concerning logic and the right side, with motives. The left-brain thinking concerns the chosen strategy that will give the firm the most ideal position in its industry.

This logical thinking will involve positioning the firm in its industry where it effectively competes on cost or differentiation. The strategy of a firm will try to cope with Porter's five forces of industry better than any of its competitors, by leading the way in its choice of generic strategies (M.E. Porter 1991). He observes that it would be very difficult for a company to follow two generic strategies at the same time. If the decision were made without the taking values (or culture) into account then the decision would be one based solely on economic importance. The following section addresses the culture influence in the mission definition. The final part of the Ashridge mission model involves right-brain thinking that is concerned with emotional, moral, and ethical rationale.

Campbell describes this way of thinking as 'the right way to treat people, the right way to behave in our society'. This thinking is represented on the Ashridge model by 'values' and are the moral principles that lie behind the company's culture. The model illustrates a trade-off between the rationale of commercial logic and moral rationale. It is this aspect of the two conflicting rationales that link the 'purpose' with 'behaviour standards', that is relevant to the culture-strategy debate. The left-brain reasoning is about the best strategy and the best way of behaving within the company in order to perform in a superior way. The right-brain reasoning of values concerns what behaviour is ethical.

To conclude this section, the 'purpose' of the firm is the outcome of the different levels of influence concerning strategy and culture (values), and their effect on the behaviour guidelines. Research carried out by Baez and Bart (1996) showed that a typical mission would include financial objectives, non-financial objectives, a definition of success, a statement covering value / belief /philosophy, a definition of success and a definition of the organisation's strategy. This reinforces the Ashridge model because it is seen that a successful mission will have not just contain left-brain reasoning of strategy and pure financial rewards but will include right-brain reasoning involving values and morals that are likely to come from within culture and people. This research and Campbell's view are clear that a strong mission involves both the culture and strategy of employees.

Although they are undoubtedly correct in this view, it seems that literature has not addressed the point that culture and strategy may have different levels of influence on the mission of the firm. The aims of the following sections are to examine the possibility that there are different levels of influence between the culture and the strategy of the firm. The 'purpose' of a mission is predominantly made up from strategy of the company. The three types of company that were recognised claimed to have purposes to benefit the shareholder, a wider benefit of all the stakeholders and thirdly, a purpose to aim towards a 'higher deal'. The three standpoints are a consequence of strategy decisions made by the company.

The important aspect of the third type of purpose is that although it is a conscious strategy to satisfy more than just stakeholder needs, it is less economically based. It involves values, beliefs and ethics of the directors or controllers of the organisation and therefore is, in away, a highly culture based decision. If a culture, be it a nation or organisation, had beliefs that were weak in the pursuit of good ethics then it is possible that the purpose of a firm would be orientated more towards shareholders and other stakeholders. Companies that are based around these two types of 'purposes' have preferences that are more economically or financially based. The 'behaviourstandards' of a firm are more complex.

There is a trade-off of a kind between a commercial rationale and philosophical or moral rational (Campbell 1991). The behaviour guidelines have to incorporate good economic sense that will help produce a strategy to compete effectively with competitors, but also have a side that guide the culture of the employees to help them work and make decisions on a day-to-day basis. This aspect of the mission will be highly influenced by the type of culture and the strategy incorporated by the firm. It is difficult to distinguish which has a more determining role. The strong mission must also contain the fore-mentioned 'strategy'.

Strategy helps to define the business, the position that the firm hopes to hold in the industry and the means by which they are to compete. The strategy defines and explains ways of dealing with Porters' five forces (1985). The suppliers, buyers, substitutes, potential entrants and the industry competitors are all aspects of business that a company needs to address and through their strategy, turn to the company's favour. There are many strategies, some highly complex, that are formulated and implemented across industries with aims of controlling the five competitive forces. The strategy process can have many forms. It seems though that when different strategies are recognised within companies, the particular culture, whatever the description, has had a large influence on the strategy.

The idea that culture has a part to play in a company's strategy would bring forward suggestions that culture has an overall bigger influence on a company's mission. Confirming the analysis of the Ashridge mission model, it has been shown that the 'purpose' is more likely to contain elements of the company's culture than that of the strategy. Although levels of strategy and culture link together to produce the purpose, the point being made here is that the culture has a large effect on the actual strategies a firm adopts and therefore culture has a greater overall influence. The 'behaviour standards' on the other hand, depend highly upon the particular culture and strategy. If the Ashridge model is used as a definition of a mission then it can be justified that culture has a greater influence than strategy on a firm's mission. The important outcome that can be seen when analyzing the Ashridge model is that the four elements - purpose, strategy, behaviour standards and values link together to give a comprehensive definition of mission.

This is consistent with the belief of Campbell, but from the analysis other points can be drawn. It has been suggested above, that culture, through having a large effect on strategy, purpose and the behaviour standards, influences the mission more. Campbell's definition proposes that the four elements operate on the same level, reinforcing each other. Although this type of mission definition is reliable, it maybe that culture operates on a higher level to the other three elements. This would suggest a model that would not take the form of a diamond but one of an upside down triangle (appendix 2 - an alternative mission model), with culture existing more independently and having a greater control over the other elements. It is at this point, that the term 'sense of mission' will be introduced, because it may help to explain this line of thinking.

Campbell (1991) explains that there is a great difference between 'mission' and the term 'sense of mission'. Mission in Campbell's eyes is 'an intellectual concept' that can be discussed unemotionally. He believes 'mission is a larger concept than strategy' because it covers both the strategy and the culture of a firm. This is consistent with the previous analysis, but it is Campbell's description of 'sense of mission' that backs up the idea that culture may affect the mission on a higher level than strategy. 'Sense of mission' is not an intellectual concept but one that involves 'emotional and deeply personal feeling'.

In order to have a sense of mission an individual must have an emotional attachment and commitment in what the company stands for and what it is trying to achieve. A company that has a clear mission may not necessarily have employees with strong senses of mission. Collins and Porras (1995) justify Campbell's view when analyzing visionary companies, 'they did not rise to greatness because they wrote one of the vision, values, purpose, mission, or aspiration statements that have become popular in management today. ' It seems clear that mission statements and definitions within firms do not always give the firm a 'sense of mission'. The 'sense of mission' must come from somewhere else in the firm, and it is very possible that the ingrained culture is the source. There have been many writings and much research investigating the culture of organisations in depth.

Hofstede (1993) based research on IBM involving approximately 150,000 employees across fifty countries. He identified five dimensions; power distance, individualism, femininity, uncertainty avoidance and the final long-term versus short-term orientation. Different countries would have different orientations on these dimensions. Predictions were made about how each society operates and what management processes would be applicable. Hofstede's research shows how there were great culture differences between countries by investigating different limbs of the same organisation. National cultures develop over hundreds of years and differ on fundamental, invisible values held by the majority of the population.

The research can indicate how the strength of a particular nation's culture can influence a company. Although Hofstede recognises a company's culture is weaker than the national culture, the research still shows that how a company has a culture from the beginning. Implementing certain values and behaviour standards can change the culture, but there will always be the underlying national culture. Therefore the culture of a firm will always have a 'longevity' to it, that strategy perhaps would never have.

Strategy is formed in different ways. A comprehensive overview of strategy formation within a company may show interpretive, incremental and intended strategy, all contributing to an overall realised strategy. Morgan (1996) has written much on the organisation and he was used earlier to help define culture. The way Morgan discusses culture; it is difficult to see culture and strategy as equal contributors to a firm's mission. Discussing organisation reality and culture he says; '... we have a powerful way of thinking about culture... we must attempt to understand culture as an on going process, proactive process of reality construction.

' He believes that the whole culture phenomenon is alive and it should be understood differently. 'Culture can no longer just be viewed as a simple variable that societies or organisations possess or something that a leader brings to his her organisation'. Morgan recognises that there are many different cultures in organisations that have evolved and have been affected in different ways. A company culture can be changed by different occurrences, be it a powerful leader such as ITT's famous power-hungry, 'jungle fighter', Harold Geen an, or a firm's deliberate strategy to have a friendly company ethos (Morgan 1996). Strategy it seems can change a company's culture, either consciously or by coincidence, but it is the slowly changing, traditional, national culture that has stamped its values on the organisation. The Campbell and Yeung definition and explanation of mission and vision was a useful starting point from where the question could be answered.

It has been shown that mission is a very large, complex concept and although it can be identified and its origins determined with relative ease, it is difficult to conclude how it exists. Through analysis, the question has brought forward very interesting issues associated with mission. Attempting to give a concise answer to the original question, it seems vision and mission are developed from a combination of both strategy and culture. It has been suggested though that the culture actually determines many aspects of the firm and in turn the strategy and direction of the firm would be highly influenced by the power of the particular culture. The vision and mission emerge from the culture and it can be changed and directed by strategy. Fawn and Cox (1985) state; 'It may well be possible by good planning, great leadership, and persistence to radically change the culture of a company.

There are insufficient well-documented cases of successful implementations of such a strategy to know whether this is really possible'.

Bibliography

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C. & Porras, J.I. (1996) Built to Last - The Successful Habits of Visionary Companies Kent, Century Ltd.
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Cox, B. (1985) Corporate Planning in Practice London, Kogan Page Ltd.
Morgan, G. (1996) Images of Organizations London, Sage Publications Porter, M.
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C. & Bart, C.K. (1996) Developing Mission Statements Which Work Long Range Planning 29 (4), pp.
526-533 Campbell, A. & Yeung, S (1991) Creating a Sense of Mission Long Range Planning August pp.
10-20 Campbell, A. (1997) Mission Statements Long Range Planning 30 (6), pp.
931-932 David, F.R. (1989) How Companies Define Their Mission Long Range Planning 22 (1), pp.
90-97 Piercy, N.F. (1994) Mission Analysis: An operational approach Journal of General Management 19 (3), pp.
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