Some time ago, I published a text entitled “Remote Work and the Underrated Concept of Organizational Culture”. The point of the article was what the title suggests: I wanted to highlight the importance of organizational culture to business performance and I connected it to the Covid-induced trend of working from home arrangements, which does not support building and maintaining a desirable organizational culture. I predicted that the trend will bounce back eventually and that we will see a return or (significant) partial return to traditional office working in more and more organizations as they find that the culture prevalent in work from home settings does not support long-term performance.
This summer, I used the quiet of the term break at THWS to re-read “The Goal” by Eli Goldratt (for the fourth time or so; I tend to re-read some books several times. There aren’t an awful lot of new books in logistics, manufacturing, management or philosophy that provide startling new insights. After all, principles don’t change and neither do we humans). If you work in production or logistics and haven’t read this book, you can consider that a knowledge gap. Do read the book. If someone had given me the book at the beginning of my studies, many courses would have made a lot more sense than they did. Since I had no industry experience other than a few months of internships and summer jobs, I couldn’t grasp many of the theoretical concepts my professors talked about because I had nothing to relate them to.
“The Goal” is a novel, so it comes with a case study, so to speak. And while case studies are very common teaching tools at US colleges, they are not at German universities – and that’s because of the way we measure student performance (which is precisely one of the themes in the book). It was only in my last student semester at my German university, that I was given the book as a gift by a good friend who probably has no idea how much it changed my life (hello Simeon!). So, these days I make it a mandatory reading for my students in the first semester in my Operations Management course. Importantly, I think it’s just as important that you read the book even if – or especially if – you’re not studying, but working in the industry, and regardless of your level of experience.
But I digress. Anyway. Much of the book revolves around technical concepts for increasing throughput in a production facility plagued by poor technical and financial performance. Towards the end of the book, however, the focus shifts to aspects of organizational culture. In a later follow-up book entitled “What is this thing called the Theory of Constraints and how should it be implemented?”, Goldratt writes in the introduction:
“Moreover, The Goal may have highlighted, but certainly did not address the major problem of changing the nature of a company. Changing it to the extent that change itself will become the norm, not the exception.
This is certainly a psychological problem that requires not just the know-how of dealing with the psychology of individuals, but more important and more difficult, the know-how of dealing with the psychology of the organization”.
Now, I’m not a Goldratt or Theory of Constraints (ToC) fanboy and I think ToC is by and large a useful and well thought out dialect of Lean. But his reference to organizational culture (he talks about the “psychology of the organization”, which as far as I’m concerned, is pretty much the same thing) is spot on. Goldratt is neither the only nor the first author to point out the fundamental role of organizational culture for performance. There is a huge body of literature on organizational culture that is largely ignored in many university curricula. Moreover, there is a wealth of management literature that deals implicitly or explicitly with aspects of culture. Peter Senge’s “The Fifth Discipline”, building on concepts from Systems Dynamics, investigates and demonstrates obstacles to, and tools for, organizational learning and improvement. Much of his book revolves around thought-patterns in organizations and how they lead to (un-) desirable outcomes. (Again, if you haven’t read this book, you should). The Harzburg Management Model (if you know it, you’re probably old) requires a change in organizational culture to enable its concept of leadership through delegation of responsibility. The St. Gallen management model includes “normative management” as the highest of its three layers of management and is based on the principles of systems theory. Again, this doesn’t fly without organizational culture as a principal component. The entire field of performance measurement and management, the offshoots of which can be found in every single larger organization, must inevitably take organizational culture into account as a pivotal element if it is to prevent its degradation (but often enough, the latter is exactly what it leads to). Also, renowned management scholars like Pfeffer and Sutton (“The Knowing-Doing Gap”) and more recent popular authors like Simon Sinek (“Start with Why”) address intangible aspects of strategy that influence and are influenced by organizational culture. Even highly technical books such as “Factory Physics” (by Hopp and Spearman) contain a thorough discussion of the human aspects, which always involve culture.
My impression is that, despite the wealth of relevant and good literature, management in many organizations is not doing a good job of understanding organizational culture as a key element of organizational success. This is as fascinating as it is frustrating. You would think that we humans would understand the role of culture very easily, but that doesn’t seem to be the case. I wonder why that is. Perhaps it is difficult to appreciate the role of culture when you are immersed in one and lack comparison. Perhaps we place too much importance on university curricula, which often do not include courses on organizational culture. Perhaps we are too fixated on tangible, measurable aspects, whereas organizational culture is hardly tangible and certainly not measurable. Perhaps performance management systems that fuel short-termism outweigh any concerns about maintaining long-term benefits of a healthy organizational culture. Or maybe it’s all of the above. Either way, I think we would benefit a lot from evaluating organizational actions in terms of their impact on organizational culture.
References
Goldratt, E.M., 1984. The Goal: A Process of Ongoing Improvement. Great Barrington, MA: North River Press.
Goldratt, E.M., 1990. What is this Thing Called the Theory of Constraints and How Should it be Implemented? Croton-on-Hudson, NY: North River Press.
Hopp, W.J. and Spearman, M.L., 2008. Factory Physics: Foundations of Manufacturing Management. 3rd ed., International Edition. Boston, MA: McGraw-Hill/Irwin.
Pfeffer, J. and Sutton, R.I., 2000. The Knowing-Doing Gap: How Smart Companies Turn Knowledge into Action. Boston: Harvard Business School Press.
Senge, P.M., 2006. The Fifth Discipline: The Art and Practice of the Learning Organization. Revised ed. New York: Crown Business.
Sinek, S., 2009. Start with Why: How Great Leaders Inspire Everyone to Take Action. New York: Portfolio.
