Organizational Culture Change: from start-up to maturity
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Change is the new normal and global and technological challenges are often seen as the big cause. But there’s also an organizational life cycle that urges organizations to change, if they want to survive and even thrive. Let’s travel through organizational life and see how change and development are incorporated. By the way, did you realize that you create a company culture when starting out with two fellow entrepreneurs? Ever imagined that this would determine success right from the start?
Starting out as an entrepreneur can be a roller coaster. Coming up with your innovative idea, finding some friends to help you, testing and researching if your idea will stand the market test and next, starting to do it, based in your proverbial garage... it’s exciting, inspiring and constantly learning, adjusting, improvising, trying.
You have to stay open to seize opportunities and see possible threats coming, preventing your new baby business to collapse in the garage right away. You have to align with your entrepreneurial friends, checking whether you’re still on the same page and what criteria prevail when you have to make the inevitable choices: Go faster to market or improve further? Become perfect or settle for “good enough”? What do you value?
The name of this start-up game is: to create! Your fellow entrepreneurs are creative and dynamic like yourself, daring to take risks, to experiment, grow and learn, with a vision for the future. To create is to change and to learn... and you’re so busy doing this in your garage that the last thing you realize is - that you have created a culture, too, next to your product.
If 2 or more people collaborate, culture naturally emerges as in “the way we do things around here” and “what we value”. It become a habit to work late and have dinner at your desk. You develop the unspoken norm to challenge everything to improve the product and no-one ever takes anything for granted, resulting in fruitful but also endless “what-if”s. Entrepreneurs like you value freedom; so you don’t check on your partners and don’t mind if they solve problems on the beach. What counts is that problems get solved.
One of you takes the lead in your meetings - it just happens. There’s another who always fixes the technical issues and your third partner naturally plays the role of devil’s advocate when discussing new ventures. It evolves, whether you are aware or not. That’s culture.
Why can’t we have it all?
Professors Kim Cameron and Robert Quinn from the University of Michigan developed the Competing Values Framework based on extensive research. Competing values shape four archetypes of culture that emerge when people are working together. Each archetype values something else, because you can’t have it all at the same time. You start out with flexibility and innovation, move to flexibility and people, shift toward standardization and processes and, in the end, mature into stability and profits.
Your garage enterprise is in the phase of Adhocracy culture. Nothing is planned for or standardized. Innovating and beginning is simply doing things and improvising. Flexibility is key and so is the external focus to see what the market needs.
If you are successful, you start to feel some growing pains. The need for a bigger, decent office space becomes apparent. Customers order higher volumes and need helpful service. You contract a call center to to do cold calls and sell more. You negotiate your first contract with a bigger supplier. The three of you get exhausted and you’re in need of coworkers. But do you really want to be an employer...?
Coworkers! The decision is made. You need a nice receptionist who’s pleasant on the phone, you could use some dedicated sales people, a few guys to scale up production. You don’t need another wizz kid like yourself. So they’re different, the newbies.
Now it’s time to organize work. Your staff doesn’t have job descriptions or pension plans yet, they just have to collaborate, participate and commit themselves to your small company. They need to be flexible and friendly - you don’t need individualist inventors and critics. Naturally, your organization shifts to the people-oriented Clan Culture in the Competing Values Framework, whether you like it or not. To collaborate is the new game.
And chances are, you don’t like it one bit. Managing people can be a nuisance: keeping track of sick-days and days-off and negotiating perks, having meetings and explaining everything again. Here’s another challenge: you have survived the first phase in the market, but will the entrepreneurs survive with employees?
Yes, if you are aware of culture and the “natural order of things”. If you role model the right behaviors and show “the way we do things around here” and explain criteria and what is valued and what not - then your culture becomes distinct. People will copy you. They start to understand what the company is about and adopt your way of seeing and doing things.
That’s a challenge. Because culture could be the last thing you worry about. You’ve just left the garage. You’re relieved that you’ve hired a receptionist and a sales person. Let them do their jobs, so you can do yours.
No time to think about core values, beliefs and key behaviors that will stand out. C’m’on, do you have to spell it out? Yes. You do. Show your coworkers which competing value counts most. People over product innovation? Profit over people? People over procedures? If you want to stay innovative, then stimulate your people to improvise. Don’t criticize them if they sacrificed a procedure to fix a problem. Don’t compliment them for efficient standardization when you value customization.
Let your behaviors shape the company culture. If you start to build culture in your small team, you attract like-minded people and the company grows and stands out from the crowd.
One fine day you count 100 staff. You’ve been successful on the market. But wow, it’s a huge job to keep track of things - you need to control processes even though you personally prefer to keep work entrepreneurial and flexible. This is your company’s shift toward the process-oriented Hierarchy culture.
Which department is doing what? How come clients have to wait for shipping? Who signed for approval for this lousy project? You need reliability, timeliness, efficiency. Supplies get lost in the back of the warehouse if you don’t track inventory. You’re desperate for checks and balances. You need to organize it well. The game shifts to control.
The transition from flexibility with a bunch of people who know each other toward formalized stability with many employees can be painful. Suddenly, we have to get a signature for approval - instead of “I trust you, John”. Procedures prevail over people.
You’re happy with your accountant. You start to value your administration department that checks all the bloody details. You appreciate timely department reports and reliable procedures. Sitting in your office with a view, you check and check and check. Your secretary buzzes for the next meeting. Your homework is a new report to check on.
In spite of all your focusing on efficiency for quite some time, the profit margin starts to diminish. You start to hear customer complaints. Competitors win parts of your market share. Coworkers excuse themselves instead of taking responsibility. They hide behind signatures - waiting for the other department - trying to keep a low profile. But people shouldn’t wait, they should run because the competition is gaining speed. The product needs to be updated or it will be outdated. You’ve focused on the internal organization for too long - and you must regain that external focus. You turn to results-oriented Market culture.
You’re too big to be agile but you remember how to achieve results and service customers, just like you did in that garage, long ago. You need to get things done! You have to cut the signature-strings and speed up to give the market what it wants. To compete is the name of the game. Just like in the old days: work hard and never, never give up.
And then - after years of giving it all - the market is saturated, even bored. Technological innovations pass by. The market sees better stuff than yours. You need to innovate again - reinvent yourself - or you’re ready for retirement.
Shape culture and shape-shift in time!
This is the organizational life cycle. You move through four transformations of competing values, shifting focus each time. If your start-up survives and grows, you adjust to each phase and learn from it.
If you don’t consciously create culture, you might suffer confusion during the transformations - or worse - get stuck and perish. If you do shape culture however, you might have an interesting journey! Culture makes the difference: employees and customers sense it immediately. They test whether your image is true - and check if you and your company are authentic. What do you value most?
Who are you? What’s the way you do things around here? Action shapes culture and speaks louder than words. Your first coworkers will start to copy you and together you might develop a great place to work, while moving through and learning from the phases of work-life.
About the author
Marcella Bremer is the co-founder of OCAI Online. She works as a consultant guiding organizational change and personal development. Her motto is: "Develop the workers, the workplace and the world."
She published the book: “Organizational Culture Change: Unleashing your Organization’s Potential in Circles of 10”
If you want to read this blog and see the images of the Competing Values Framework, go to: http://www.ocai-online.com/blog/2012/12/Is-Your-Start-up-a-Successful-Shape-Shifter
Marcella is hosting the Culture Change Days (workshop) that is pre-approved for PHR, SPHR and GPHR 24 hours, see: http://www.ocai-online.com/products/culture-change-days