Corporate Dreams: Big Business in American Democracy from the Great Depression to the Great Recession

Chapter 22 - Creating the Concept of Corporate Culture

152 Chapter 22 Creating the Concept of Corporate Culture Cognate to the idea of managing by values was the idea of managing by culture. The words culture and value are both often used to imply normative goals and ends. But culture is a broader term, suggesting shared values that help unite a society. Corporate operations, whether with employees, customers, or suppliers, are nothing if not social. So it was easy for the corporate world to become captivated by a mistaken notion of culture at the same time that its leaders were subscribing to a mistaken notion of values. The same business leaders who want to “change the values” are eager to “change the culture.” The concept of culture was first developed by anthropologists and then, in the 1970s, made its way into other academic disciplines. It was probably inevitable that it would eventually become a staple of management theory. But the process was greatly facilitated by the discrediting of rationalistic, number-crunching management, which was widely blamed for 1970s disasters such as the near collapse of the American auto industry and the loss of the war in Vietnam. As the supposedly sharp ratiocination of managers like Robert McNamara fell into disrepute, the question was what would replace it. Precision dancing had gone out of style. The corporate world was ready for a little soft shoe. Tom Peters, more than any other guru, created the idea of corporate culture. He later became something of a parody of himself, preaching “liberation management” in table-pounding prose. But In Search of Excellence (1982), in which he and Robert Waterman expounded their notion of corporate culture, was an understandably appealing book to many managers. Some corporations do have something like a culture in the anthropological sense of the term. That is, they have something deeper than a pleasant ambience and good morale. They have shared ideas and values that employees have acquired and reinforced by working together, ideas and values that preceded any current employee and which will remain even after those employees have left. Peters and Waterman drew their examples from some of the best-run companies of the time—Proctor and Gamble, Johnson & Johnson, 3M, and others. In Search of Excellence shared with Managing by Values a tendency to downplay power, a tendency that violated the notions of some of the social scientists who had helped to develop the culture concept. Those social scientists had thought of culture as a “resource” to employ in a social “arena” shaped by “arrangements of status, power, and identity.”1 But Peters and Waterman did not aim to connect culture to power. They hoped to substitute culture for power. They argued that American companies were being hindered by their “structures and systems, both of which inhibit action.”2 They wanted to use culture to get around structures and systems, maybe even replace them. Where structures and systems inhibited action, culture would enable it. As Peters and Waterman told the story, the “conventional wisdom” was to “[g]et the strategic plan down on paper and the right organization structure will pop out with ease, grace, and beauty.” But their research taught them that “strategy rarely seemed to dictate unique structural solutions.” Rather, “the most crucial problems in strategy were often those of execution and continuous adaptation: getting it done, staying flexible.”3 Culture supposedly bound corporate employees to a common purpose while simultaneously liberating them. “The culture regulates rigorously the few variables that do count, and it provides meaning. But within those qualitative values (and in almost all other dimensions), people are encouraged to stick out, to innovate.”4 In Search of Excellence barely acknowledged that culture is a structure of ideas that may inhibit as well as liberate. For example, Peters and Waterman celebrated the stable culture at IBM. They claimed that “IBM’s values remain constant and the attendant stability permits it structurally to shift major hunks of resources to attack a particular problem .”5 But a few years later IBM hit a rough patch and acquired a new CEO, Lou Gerstner, from outside the company. He attacked elements of IBM’s culture such as the venerable tradition that everyone wore a dark suit and white shirt. For many employees the dark suit was a deeply Creating the Concept of Corporate Culture 153 embedded cultural value that they were reluctant to see go. That was precisely the reason why Gerstner, trying to shake...