No, it was not Peter Drucker* who said so!
Nevertheless, the statement is very relevant, especially whenever you start any type of business activity. Because this means managing your reality and the path to success: you need targets, KPI, objectivity, ways to monitor your progress. All that calls for measurability. Using culture as an element of your strategic equations translates into a call for measuring it as well.
So, a fair question, then, is if something so fluffy, so vague, so intangible as a culture can be measured. Certainly, it can! But for the measurement to bear the relevance needed for business applications it needs to stand an acid test: Show me the Money! Well, if culture is treated as an HR gimmick or a playground for enthusiasts then showing the money won't really be that easy. You need to have a proper apparatus and methodology to cope with this challenge. For example, using the Hofstede Insights MultiFocus™ Organizational Culture Transformation Framework.
I think that the usability of the approach can be best viewed through an actual application case.
A few years ago, in Europe, we had a client – a tv and video ad sales house. Let’s call it – for the sake of this story – TVHouse. Totally insignificant. But having a clear and simple vision: to make a real difference on their market. A small team of perhaps 15 professionals, having 0,14% of the market and a young executive team, fully devoted to delivering that vision by focusing on listening to their two customer groups (the corporate advertisers – frantic about the measurability of any moves they would be taking and the tv channels) and on adjusting the organization accordingly. They decided to adopt exactly the same approach as their clients – monitoring their progress towards the ultimate goal with patience and through full measurability of both focus areas, using on – one hand – the Customer Satisfaction Index evaluating (by the customers ) all the competing providers on the market and on the other – Hofstede Insights approach to scanning, measuring and fine-tuning the organization’s culture. They would repeat the scans and the analyses year after year, identifying the symptoms, their hot spots by looking at the business through the lenses of the customer and finding the roots of the situation analyzing how the organization was functioning, how aligned the culture actually was in relation their business strategy and the expectations. Each year that meant a row of enhancement steps, modifying their ways of working but also a steady increase of their market relevance and market share. Becoming #1 among independent tv/video ad sales houses on the market and #4 among all the providers there (including the three sales houses belonging to the major tv channels) was a natural consequence. Additionally – entering the remaining markets in the region where they were able to repeat the success story (by for instance within 7 years – winning a market share of 55% on one of the markets and gaining positions among the top 4 actors – on all the others).
It was to Lord Kelvin (19th-century British scientist) who stated that “if you can measure it, you can manage it”. But the origins date back to 1500s to the Austrian astronomer Rheticus in the 1500’s – the sole student of Nicolaus Copernicus!
What got them to choose Hofstede Insights’ approach? Two things:
The ability to actually manage culture, meaning to analyze, plan and execute the journey towards the expected financial outcomes, rooted in the company’s long-term strategy. Based upon own, direct strategic link.
And the second one – to have a measurement framework robust enough to rely on. Robust? Yes: having a sound scientific research as the foundation and providing a complete (exhausting) image of the organizational environment, thanks to a comprehensive data based filed with empirical data.
Well, by now, we have established that it IS possible to measure culture, so the question is HOW? What is the Hofstede Insights Multifocus Model™? The original scientific research by prof. Geert Hofstede proved distinctly that a large part of the differences among the units or companies could be explained by six independent factors related to organizational sociology. These six factors became eventually the six dimensions of Organizational Culture.
The dimensions of the MFM ™ are autonomous. Why is that autonomy worth mentioning at all? Well, because when you plan the target (future) profile of your culture, the one ensuring the strategic success, you want to be fully confident that the perspectives you use (or if you like – the dimensions) do not overlap or influence one another. In such a case all your planning would be meaningless.
The first dimension (D1) refers to the organization’s EFFECTIVENESS (means vs. goals orientation). It is closely connected to the core of the company’s existence – what is the concept of its value creation process? In a means-oriented culture, the key feature is the way in which work has to be carried out; people identify with the “how”. In a goal-oriented culture, employees are primarily out to achieve specific internal goals or results, even if these involve substantial risks; people identify with the “what”.
Dimension D2 is about CUSTOMER ORIENTATION. In a highly internally driven culture employees perceive their task towards the outside world as a given, based on the idea that business ethics and honesty matters most and that they know best what is good for the customer and the world at large. In a very externally driven culture, the only emphasis is on meeting the customer’s (or if you like – the stakeholder’s) requirements; results are most important, and a pragmatic rather than an ethical attitude prevails.
Discussing the third dimension (LEVEL OF FORMAL CONTROL) we touch the ways how the organization enforces the discipline of its members. This dimension refers to the amount of internal structuring, control, and formal discipline. A very easygoing culture reveals a fluid internal structure, a lack of predictability, and little control and discipline; there is a lot of improvisation and surprises. But on the other hand, such environment fosters creativity and innovativeness much easier than any other. A very strict formal control, leading to upscaling the work discipline reveals the reverse. People are very cost-conscious, punctual, quality oriented and serious. And thus – the organization becomes more predictable.
Dimension D4 is about the FOCUS OF INTEREST, or what glues the functionally different parts of the company into one organism. In a locally focused company, employees identify with the boss and/or the unit in which one works. In a professionally focused organization, the identity of an employee is determined by his profession and/or the content of the job. In a very local culture, employees are very short-term directed, they are focused on themselves (internally) and there is strong social control to be like everybody else. In a very professional culture, it is the reverse: people are united by their common strive for excellence, quest for knowledge and for improving the status quo, mastering how everybody works.
The fifth dimension D5 – APPROACHABILITY – relates to the accessibility of an organization. In a very open culture newcomers are made immediately welcome, one is open both to insiders and outsiders, and it is believed that almost anyone would fit in the organization. In a very closed organization, it is the reverse.
Dimension D6 – MANAGEMENT PHILOSOPHY – is mostly related to what really matters for the organization, HOW it is being managed. In very employee-oriented companies, members of staff feel that personal problems are taken into account and that the organization takes responsibility for the welfare of its employees, even if this is at the expense of the work. The decision-making processes are decentralized and involve those, who are impacted by the decisions in question. In very work-oriented companies, there is heavy pressure to perform the task even if this is at the expense of employees. And no-one – in short – is concerned with their opinions.
The dimensions – as mentioned before – are autonomous, but from the operational point of view – aligning the strategy and culture, the interaction among them plays a significant role for various business issues. If, for instance – you want to introduce a culture of learning into your company – look closely at the organization’s scores and characteristics in respect to Focus of Interest (D4) – professionalism and Effectiveness (D1) – high enough goal orientation. If there are some deficiencies, there – your efforts risk to be futile. Or if you plan to create a result driven organization, adjusting to needs and wishes of the customers in an effective way – definitely analyze the scores and behavioral indexes in regard to Effectiveness (D1) and Customer Orientation (D2).
It pays to understand those interactions and their business consequences. But they start being visible to you if you adopt the proper measurement framework instead of being stuck in meaningless conversations leading no-where. And only then you can consciously start managing the situation. Because you can get things done, if you can measure them…