“A culture of discipline is not a principle of business; it is a principle of greatness.” – Jim Collins
 
Some years ago, I applied for a job with a Government organisation in Wellington. At the end, when you are asked if you have any questions, I asked if they could describe their organisational culture – how things were done within their department. The panel members looked at each other if I said something downright nasty. They were not able to explain to me their values, symbols and behaviours within their department or organisation. The same happened, not that long ago, when I was interviewed for a professional position in Sydney they tried to do their best, but what they were explaining to me had almost nothing to do with their organisational culture. Over the years, I have found that many businesses and large organisations are struggling or have problems defining their own organisational culture. Whatever the definition is, no type is better than the other. Especially in larger organisations, every department will have its own culture creating a common ground for the people who work there. Professor Geert Hofstede, who is a well-known scholar and pioneer in the field of cultures, describes organisational culture as (in a typical academic fashion):”the collective programming of the mind that distinguishes the members of one organisation to others”. It gives reference to what people in an organisation think, feel, and how they act, as Hofstede explains, ‘the unwritten rules of the social game’[1].     

Some of you may ask if a business culture is relevant in a micro or small business setting. Once you have started your business venture, you will notice after a while that you have developed and created your own norms and values within your small business. These norms and values will become more apparent and relevant when you start employing people, who will in most cases, accept and adapt to these commonalities. These norms and values will become an essential part of your business culture, not only for your employees, but also for your external stakeholders. They will recognise these behaviours in how credible you are as a business owner/manager, in how you conduct your overall business approach, the way you delight your customers and your engagement with your employees. I can understand that if your business is new and you just started out to get your head around things, and trying to make things work as well as contribution positively to the economy, building a culture might be the last thing on your mind at this stage. But after a while, you will find that, in this fast changing and sensitive world, organisational or business culture is an essential part in the development and sustainability of any business. Before I carry-on, I want to step-side the issue for a few seconds that all small business ventures will not contribute equally to a country's economy. Some small business owners will decide to keep their business small and are not interested in seeking growth as a means in order to develop a sustainable business. Others might see growth as the only way for long term survival. From a different perspective, a proportion of small businesses, who are innovative, and with high growth potential disproportionately drive economic activity and jobs.

Starting a new business venture is in a great way about building relationships. You need customers, because, without them you just don’t have a business to go to. Then there are suppliers, professional people like, accountants, lawyers, insurance people, as well as other business owners you would like to build a business relationship with. Developing and building respectful business relationships is hard work, but essential in the advancement of your business as it will say that your business is not a ‘one-day wonder’. In the beginning, most stakeholders will treat you cautiously as they do not have any or enough information about you as a business person or how your business is operating. Here, things like your honesty, ethics, commitment, professionalism, and determination will be tested. As many larger stakeholders have experience in dealing with small business owners, they soon pick up the signs if you are genuine in your business undertakings or not.

Over the years, I have come across an array of different types of business cultures, whereby some were hierarchical, and yet others appeared to be more collaborative or creative. Furthermore, many small business owners have been entrenched in their culture without adapting to changing environmental factors. As a result, they may become difficult to handle, especially with people from generation Y or Z participating and entering the work force. Compared to previous generations, these new entrants are strongly opinionated, want to participate in business decision making issues and have different ideas about what is right and wrong. Whatever the case may be, adapting to a business culture or “the way we do things over here” is not always that straightforward as it may seem for many employees. Fitting in, can be a struggle for many new employees, especially when they just left an organisational culture that was seen by the employee as a great culture. Whatever cultural approaches your business is going to favour, organic or mechanistic or somewhere in between, it should somehow reflect your trade or profession as well as your own ethical and moral standards. Yes, even small businesses should design their structure in such a way that it matches the dynamics and uncertainties of their environment. Let’s remind ourselves that one of the main reasons to start a business is making a profit and to develop an effective and efficient structure as well as preventing certain ‘business or financial leakages’. Furthermore, once the business starts expanding, the presence of a business orientated culture within a business will also be essential because of its impact on performance and employee contentment. As already mentioned, in larger businesses, you will find different cultural characteristics within a culture. For example, employees in a large car dealership are connected and confronted with several other departments. For instance, the sales people in the showroom will treat each other in a different way than employees who work in the mechanical repair or parts department. In other words, each department has their own language, symbols and behaviour, who then, as a whole, abide by the ethics, behaviours and vision of the business.  

So, what does it mean when a business leans more towards an organic or mechanistic structure and its behavioural patterns? Mechanistic businesses are characterised by widespread departmentalisation, highly formal, where information networking is limited, and mainly coming from central management. Organic oriented businesses have a relative flat structure, with the tendency that teams work closer together, low formalisation, a comprehensive information network, and rely on participative decision making. Organic businesses are quicker to implement change when economic conditions or consumer behaviour changes. In essence, there is no right or wrong in going mechanistic or organic. It all depends on strategy, size, technology, environment, and its association with performance and satisfaction.  

In my view, many small businesses operate predominantly towards an organic structure. As the business starts to expand, mechanistic elements might become an integrated part of a business. Have a look at the following table and see if you identify some of the characteristic occurring within your business or would like to see happening in your business.

Organic Structure
Employees working together on different tasks
Communication is lateral and the authority to control tasks is delegated and decentralised
Work processes are more unpredictable, more internal face-to-face communication and making mutual adjustments
Considerable verbal communication
Appears to be more informal based on perceived vividness
Business is a network of individuals, where over time people work in different capacities at the same time

Mechanistic Structure
Employees working separately on specialised tasks
Communication is vertical, and decision making is done by management and centralised
Well documented operational procedures, standardisation is the norm 
Considerable written communication
Appears to be more formal based on the size of the organisation 
Business is a network of positions conforming to various tasks, where by people relate to one task.

As mentioned before, depending on the size and complexity of your business, most small businesses will start operating their business towards an organic structure.  Moreover, an organic structure is more used in businesses facing unstable environments. What is meant by unstable environments? Small businesses are sensitive to shifts in economic and political conditions, which in return will have an effect on how consumers behave and spend their money. As most small businesses are confronted with stiff competition, consumers have a choice and go where they can buy their goods and services more conveniently, at the best price and service. Business owners and employees of organic businesses also need to have the ability to make rapid decisions and changes when the situation requires them to do so. In order to stay competitive, organic businesses need to have the ability to process, analyse, and distribute information and knowledge very quickly by using an effective two-way communication system. Practising a decentralised decision approach will mean that all employees are involved in the decision making process. This will also mean that you, the business owner, will have the final say in the matter, the buck stops with you. For this to work properly, it will be helpful to empower your employees, which will encourage them to become more motivated and productive.

A business culture and how it is structured will show how employees interact with each other as well as how they interact in regard to the relationship of their roles. Issues occur when a business structure shows flaws of incorrect implementation or when it is not keeping-up with other economic and socioeconomic changes. The result may be an increase in conflict among staff members, a lack of communication between staff and the business owner or confusion of the various roles between employees. Once businesses have the need for a more explicit formal or informal structure, you as the business owner might need to get involved in some form of problem solving. Three questions come to mind. 1) The problem you are currently facing, is that related to your business structure or the way you are managing it? 2) Is the current business structure compatible with your current business strategy? 3) Are their signs in your business that employees’ behaviour and personalities have taken over the initial business culture?       Not that long ago, I was engaged with a small not-for-profit organisation in Sydney. At this organisation, I was challenged with, in my view, a quite peculiar form of culture, led by a CEO with a fixed mindset and who seemed to be a ’controlling perfectionist’, with an insecure persona and strange mood swings. The way this person was “leading” this organisation was inconsistent and full of inequitable behaviour, let alone the way this person was condescending their staff. I had the feeling that this person was hiding some weaknesses. After observing the CEO for some time, I came to the conclusion that this person had a problem with people who were high achievers, with people who have strong opinions in how the operational side of the organisation was conducted as well as being troubled by people undermining the CEO’s authority. There were no ‘ifs’ and ‘buts’. It was also intriguing to see that all staff members employed by this organisation had an introvert personality, including the CEO. In general, one day the organisational culture was organic with a few elements of mechanistic behaviour, but the next day it could be the other way around. Communication was in many cases distorted and confusing, and listening skills from management were poor, groupthink was also present in this organisation. Disagreements with staff were blown out of proportion by the CEO, always finding ways by blaming the person in question and playing it out against others, making things more worse than what was actually happening. I found this culture quite deceptive where you mainly had to pretend and manipulate things. Overall, this small organisation had typical characteristics of a mainly coercive and controlled culture, including a high level of staff-turnover. Furthermore, roles were not highly defined, and on a regular basis; employees were allocated with new add-ons making it a lot harder in effectively planning their own work load and meeting certain deadlines. Secondly, tasks were constantly changing; even a straightforward assignment took a long time to complete, time that could have been better used in more important areas. Thirdly, activities were less formal, but there were a lot of unproductive meetings with many interruptions. Fourthly, control was decentralised, and decision making was fast, but not always accurate or properly researched, which eventuated in more meetings and more time wasting. I could not find any evidence of that the organisation was interested in making improvements regarding their operational efficiency and effectiveness of their organisational structure. Nobody probably would dare to ask for change anyway without getting a lecture on inappropriate behaviour.

As mentioned earlier, many businesses do things their way and stick to it for many years, without taking a step back to review if it still is the right thing to do in order to move their business forwards. The previous organisation was a typical example of that, which also was inundated with a high staff turnover. I found out that half of the staff left, since I moved-on from this organisation. Subsequently, to some extent, sticking to the old ways may be somewhat understandable as it will take time and effort to review to change things around as many businesses just do not have the time and capacity or can’t see the point of it. There might be a different viewpoint if you talk to owners from other small businesses, or the “mom and pop” businesses who’ initial way of doing things have been the same now as when they started several years ago. They might well say if it works, why should it be changed? If that is the case, then your customers might have the final say in that by using or buying your services or products in the long term.      So, what is the right organisational culture? I can’t tell you; this is something you need to figure out for yourself. But what I can tell you is that your business could be based on one of the four cultures[2], to be seen as archetypes. These are team, hierarchical, entrepreneurial and rational cultures. These cultures are categorised as internal, external, and controlled or flexible. As your business starts growing and employing more people, you will probably place your business in one of those cultures with a mixture of some of the other elements. Rest assured there is no such a thing as a perfect culture. The culture that your business will develop and adopt is one that will be based on its past, present and potential future. But as your business culture can work for your business advantage, it can also lead to failure if the culture is too egotistical or complacent.

When I started my first business in New Zealand, I was still learning the New Zealand way of life. As a new immigrant, you go through so many different phases of adaption, taking new things on board, making new friends, learning about operating a business and learning the language. At the same time, when we arrived, New Zealand was in the middle of a recession. And here I was, starting my own classic car interior restoration and upholstery business. My starting capital was $1,000. My cutting table was an old worn-out ping-pong table and a 1950’s Singer sewing machine. I leased a 200 square metre building on a 2 + 2 years lease in an industrial area in Stoke, which I shared with a guy who also just started his newly set-up screen printing business. It was quite enjoyable to have someone there who was also new in starting a business. He was a born and bred Kiwi and a good source to learn more about New Zealand’s cultural aspects. Moreover, we enjoyed each other’s company and stories about how our businesses would develop in the future. It turned out that both of us had a different approach in how to operate a small business. The screen printer guy, who I will call Dean, was extremely relaxed about his overall approach in conducting his business. Most of the time when he was not in his work shop, he was out surfing or he was out doing other things. He also had customer commitments, but he had a habit of leaving everything at the last moment. He also had a bit of a habit of overpromising and under delivering things. He was also easily frustrated, and one day he came to work with a large punch bag and a pair of boxing gloves. Every time he got frustrated he was beating the crap out of this bag, which probably took about five minutes, and then went back to work. Say whatever you want, but this punch bag was one of the best methods of stress relief, and getting rid of your frustrations. Several times, he employed young inexperienced people to do the screen printing work, but somehow he was never happy about their work performance, despite Dean training them. His business lacked consistency, making up and changing rules and norms almost on a daily basis, which were confusing for people working for him, his customers, and other stakeholders. His business was truly organic, but he survived, and Dean worked in his business for about 16 years. His aspiration was to stay small, to earn enough money to have a relaxed life style and to stay home if he felt to. Well, there you go, it worked out ok for him and he did quite well out of it.    For me, on the other hand, I had a complete different way of conducting my business. Between the two of us, it was not hard to see that we were two opposites, but we respected each other’s way in how we were conducting our business. It was crucial to me that there was a workable business structure available. For example, at some point I created an office manual, had a written document in how to deal with an incoming order, stock and time management procedures and the like. Yes, I am someone who follows a particular structure with the aim to be as effective and efficient as possible. I saw the benefits of it when I employed a full time person to do all the office work. Because, I wanted to operate an efficient business, it was my prerogative to employ people who had similar ways of thinking and working. I was fortunate to find an office person who was very well organised and able to run the business when I was out to see clients. Because I was the “new kid in town”, marketing became very important. I needed something to properly market my business that would attract new customers. I purchased a classic car, a blue 1957 MK1 Jaguar. The cars’ body was thoroughly restored, and the 2.4 engine had been reconditioned a few years earlier. I bought the car in 1990 for $9,000. The only thing that needed to be restored was the inside of the car. It was still good, but I needed to show people what I was capable of. I got hold of all specifications for the interior of the car, ordered new Connolly leather for the seats; wool cut pile carpet, wool head lining, and other bits and pieces. Once all the materials had arrived, I started restoring the interior of this car. Frequently, potential new customers would come to the workshop, checking out if I was any good in restoring classic car interiors. Not long after that, word got out that this “Dutch” guy was restoring the interior of a MK1 Jag. I estimate that about 80% of my work came from word-of-mouth advertising, saving me quite a bundle in overall advertising costs. Then, the business started to grow quite steadily, employing a number of other people, and diversifying in different directions like, commercial upholstery, interior design, furniture manufacturing and retailing. The business also got involved in working closely together with other businesses, which meant that there was continuous work coming in from other entities. What I want to portray in my situation is that, in the beginning, I was working in the business, but later, when the business had all the other things going on, I had to work on the business. Off course, we had our ups and downs, but overall, it was an enjoyable time in my life. O, by the way, I also had a lot of enjoyable moments with the MK1 Jag, using it in the weekends for weddings, together with a mate of mine from the local Jaguar Club.

Another example is that of a small manufacturing and retail business, employing 20 employees. The owner of this business, whom I will call David, started the business in the mid 1980’s. His business approach was different again, compared to the two previous examples, and he was still hanging on to his “old school” principles. For over two decades, not much had changed in his approach. He tried, but every time he lacked patience and commitment. In private life, he was the nicest guy to deal with, but in managing his business, he was all over the place. Financially, the business was in a poor financial and cash-flow position, but that did not stop him to arrange a six week overseas trip with his family, costing him thousands of dollars. He may be a good example of what I see a lot of that he is living beyond his means or living the life of Reily. I would even go that far to say that he had a fixed-mindset by not admitting and correcting his inadequacies. This became evident in times of slow economic growth when his business could not come up with new measures in attracting new customers or approaching existing customers. When the economic climate was buoyant, he made no provisions in upgrading machinery, researching and developing new products, repaying debt, or even up-skilling his staff. David has always been the central figure in the business. Everything had to be directed and approved by him. He felt no need to empower his employees as he wanted to be in control of everything as well as having the last word. The latter part is something that many small business owners prefer, to stay in control of all the activities going on within their business. But imagine the constant pressure on him, controlling work flow, managing 20 staff, dealing with employment issues and the like, as well as the constant pressure of keeping the business financially afloat, and constantly trying to make the right decisions, day in, day out. Wouldn’t that bite you in the back one day? In this case, it caught up with him. At some stage, he lost interest in the business, and he mainly wanted out to do other things that had nothing to do with his business. I already mentioned his overseas trip. When he came back from his overseas trip, he came back to his same old business, doing the same old things. Nothing changed. This had a negative effect on his employees who one by one left reducing his number of employees by more than half. Yet, he struggled on, just keeping his head above water.   

I don’t think this is a healthy way of operating a business. But as you might have noticed from these three examples, every business owner has a different perspective and a way in how to organise and structure their business. It is obvious that some business owners have a fixed-mindset and others have a growth-mindset, stimulating employment and business development. As a business owner, you will initially be responsible in the design and development of your business culture. When the business starts to grow, adding-on more departments who have cross-functional responsibilities, the business culture will take on different elements of values and behaviours. Once, in a court case, a judge asked an executive what he thought the meaning of an organisational cultural was the executive replied: “I can’t define it, but I know it when I see it”. I would classify his approach simplistic and inappropriate in today’s business environment. In many ways, culture enhances the business commitment and should increase the consistency of employee’s behaviour, which would benefit the business. Alternatively, from an employee’s viewpoint, the value of a business culture should reduce ambiguity. Are businesses with strong cultures always successful? I don’t think so; it will probably depend on how you would define success. In general terms, successful businesses with strong cultural elements will create positive momenta. Most people would like to work in a workplace that is associated with successful teams, and whereby the business can select from the best people around to fill their vacancies. On the flip side, a successful business with a strong culture may well become a failure, especially when they begin to believe in their own unreceptiveness, becoming egotistical, and as a result, they may lose their competitive edge. Changing a business culture is extremely difficult, but it is possible. Change will happen when the business is in a dramatic crisis, undermining the status quo and questioning the relevance of the current culture. Change in culture will be inevitable when new leadership is introduced or in acquisitions and mergers. Furthermore, cultures are more amendable where they are portrait as weak, lacking important values and behaviours. If one of these events occurs, business owners and managers may introduce new stories and rituals, attracting employees who respect these new values as well as changing the reward system in support of it. This may also lead by changing its subcultures through job rotation, transfers and termination.

Unless your business has something very unique to offer, competition will be a fact for the majority of businesses. Focussing on your customers will become more important than ever. For keeping the business in existence, creating a customer friendly and responsive culture will be paramount for any business, large or small. Fred Reichheld[3] once said: “Delighting your customers is the only path to true growth”. Focus on the word ‘delighting’, which means to give great pleasure or joy, and in this instance, to serve your customers in the best possible way by going beyond standard business practices. In order to do this effectively, business owners and staff members need to know all about their customers. In other words, the meaning of work is not the products or services produced, but it is in the enjoyment of the customers who are using these products or services. For example, let’s say your business is making a product or delivering a particular service, customer delight kicks-in when delivery is sooner, more safely and cheaper, as well as more environmentally friendly. You may also find that most of your competitors will deliver on time at the agreed price and safety standards, and attached to basic environmental standards. They may have served their customer well, but there was no delighting moment that the customer would remember. If the former is the way your business wants to treat customers, a business culture needs to be developed that is focussing purely on customers. Remember that a business culture is not something that just ‘drops out of the sky’. Once it appears, it will not go away. The founder of the business will have a major impact in the early development of a business culture. The development and process of a business culture can be divided into three stages, namely: 1) Pre-arrival – before joining the business the employee has undergone some form of training or schooling; 2) Encounter – the new employee is confronted between expectations about the job, colleagues, and owner. If expectations are more or less accurate, the employee will accept the new work environment; if not there will be a conflict, which in the extreme will result in disillusionment and resignation; 3) Metamorphosis – the new employee changes and adjusts to the new job, business environment and colleagues. If all stages are encountered in a positive manner, the employee will also have a positive impact on productivity, commitment and staying in the job.

Finally, studies have shown that culture within an organisation is very important. It is part of the bigger picture of a business, which will determine if it is a healthy, happy environment to work in. How people behave within the business depends on how the organisational ethos was promoted and communicated by the owner or management. Furthermore, organisational culture is positively correlated with job satisfaction and leadership behaviour. In 1967, Gordon Stephenson conducted a scientific research experiment with rhesus monkeys on certain behavioural patterns and somehow relevant in what has been discussed in this chapter. Despite that some people believe the story is true, others believe it is an overstated account of his research. True or not, his published research with rhesus monkeys makes a valid point. It began with a cage containing five rhesus monkeys. Inside this cage, they hung a banana on a string with a set of stairs placed under it. Before long, a monkey went to the stairs and started to climb towards the banana. As soon as he started up the stairs, the researcher sprayed all of the other monkeys with ice cold water. After a while, another monkey made an attempt to obtain the banana. As soon as his foot touched the stairs, all of the other monkeys were sprayed with ice cold water. It wasn't long before all of the other monkeys would physically prevent any monkey from climbing the stairs. At some point, the researcher shut off the cold water, removed one monkey from the cage and replaced it with a new one. The new monkey saw the banana and started to climb the stairs. To his surprise and horror, all of the other monkeys attacked him.  After another attempt and attack, he discovered that if he tried to climb the stairs, he would be assaulted by the other monkeys. Next they removed another of the original five monkeys and replaced it with a new one. The newcomer went to the stairs and was attacked. The previous newcomer took part in the punishment with enthusiasm! Likewise, they replaced a third original monkey with a new one, then a fourth, then the fifth. Every time the newest monkey tried to climb the stairs, he was attacked. The monkeys had no idea why they were not permitted to climb the stairs or why they were beating any monkey that tried. After replacing all the original monkeys, none of the remaining monkeys had ever been sprayed with cold water. Nevertheless, no monkey ever again approached the stairs to try for the banana. Why not? Because as far as they know that's the way it's always been around here[4]." 

As you might have gathered, a business culture is transmitted to staff members mainly by stories, rituals, material symbols and languages. In small businesses, storytelling is done by the owner of the business. In large organisations, this might be done by the founder or some of the senior executives within that organisation, elaborating what the organisation is all about. Rituals are repetitive arrangements of activities, outlining and underpinning key values of the business, pointing to important goals, people and who are expendable. Material symbols are often expressed by, for example, the layout of an office, simple or flash, staff perks and attire. Many of the material symbols convey to other staff members like, who is important, as well as indicating the degree of equality desired by the owner of the business. By language is meant the use of language that identifies various members of a particular unit within the business, creating a sub-culture. In general, a strong and supportive business culture will also influence the business’ ethical climate and the ethical behaviour of staff members. A business culture most likely to form elevated ethical standards is one that is high in risk tolerance, low to modest in aggressiveness, with the emphasis on means as well as outcomes.                                                        

Things for you to consider:

Try to find out if you are fixed- minded or growth minded.
Try to emphasise how you would like to develop your business culture.
Built lasting business relationships based on trust, commitment and integrity.
Determine if your business is more organic or mechanistic orientated, or a mixture of it.

[1] http://geerthofstede.nl/culture.aspx
[2] Kalliath, T. J., Bluedorn, A.C., & Gillespie, D.F. (1999). "A confirmatory factor analysis of the competing values instrument". Educational and Psychological Measurement 59(1): 143–58.
[3] Reichheld, F. (2006) The Ultimate Question: Driving Good Profit and True Growth. Boston: Harvard Business School Press, p. 118.
[4] http://www.psychologytoday.com/blog/games-primates-play/201203/what-monkeys-can-teach-us-about-human-behavior-facts-fiction