![]()
CHAPTER 6
Founders and Organizational Culture
Introduction
Not surprisingly, there are differences of opinion regarding the definition of organizational culture and how it develops. Schein offers one useful definition of the term by declaring that
[o]rganizational culture . . . is the pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with its problems of external adaptation and Âinternal integrationâa pattern of assumptions that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.
Schein has noted that the founders of an organization not only Âcreate the group but also launch the process of defining and shaping the groupâs âorganizational cultureâ through the force of their own personalities and by applying their own theories about how the organization can be successful based on their own previous experiences in the cultures in which they grew up. Schein cautions that while founders may prepare and Âdisseminate formal âchartersâ that describe their preferred Âphilosophy or value system, the actual organizational culture is the assumptions that underlie the values and which have been embraced by the organizational members in a way that determines acceptable behaviors by those Âmembers. In other words, while the assumptions and theories that the founders bring to the group are important they will be tested by the actual experiences of the group before they are ultimately accepted as part of the organizational culture.
Role of Founders in Creating Organizational Culture
The role of the founders with respect to creating the organizational culture can be understood by following the âtypicalâ progression of the firm as suggested by Schein. The first step, of course, is the identification of an idea for a new enterprise by a single personâthe âfounder.â While the founder could presumably act on his or her idea without the help of Âothers, what generally happens is that others are brought into what becomes a âfounding groupâ that operates based on a consensus that the idea is viable and worth pursuing even in the face of known and unknown risks and uncertainties. The founding group begins to take the necessary steps to launch and organize the firm, including obtaining capital, forming a business entity (e.g., a corporation), preparing and filing patent applications, and other things. As the launch process unfolds and resources become available the founding group brings other necessary parties into the process, including employees and external advisors and business partners, and the group begins to cope with its problems of external adaptation and internal integration and gather the information necessary to settle upon an organizational culture.
While the actual experiences of the group in coping with external adaptation and internal integration will determine which values and assumptions are accepted as part of the groupâs organizational culture, Schein had no doubt that the founder will have a strong influence for several reasons. First of all, the initial idea for the enterprise will almost certainly be accompanied by strong views about how the idea can be fulfilled and those views will be a by-product of the founderâs personality and his or her previous experiences in other cultural contexts. Second, the founders observed by Schein were generally quite strong-minded about what should be done and how it should be done and this included âstrong assumptions about the nature of the world, the role their organization will play in the world, the human nature, truth, relationships, time, and space.â In other words, founders bring to their role of organizational leader a distinct and pre-determined âview of the world.â Finally, the founder, in his or her role as the president or other titular leader of the group during the formation process, will necessarily have a strong influence on the strategies that are used to address the firmâs initial set of external survival and internal integration problems.
Founderâs Methods for Embedding Preferred Cultural Elements
Schein noted that in order for the founder to be successful in Âinjecting his or her preferred values and assumptions into the organizational Âculture he or she must first determine the best way to âteachâ those Âvalues and assumptions to other members of the group. Once the teaching Âprocess has been perfected group members can express their views as to whether or not those values and assumptions will work in overcoming the Âproblemsâexternal and internalâthreatening the survival of the group. Schein suggested the following list of âmechanismsâ that founders and other key organizational leaders can use to âembedâ their preferred Âcultural elements within the group:
- Formal statements of organizational philosophy, charters, creeds, materials used for recruitment and selection, and socialization.
- Design of physical spaces, facades, and buildings.
- Deliberate role modeling, teaching, and coaching by leaders.
- Explicit reward and status system and promotion criteria.
- Stories, legends, myths, and parables about key people and events.
- What leaders pay attention to, measure, and control.
- Leader reactions to critical incidents and organizational crises (times when organizational survival is threatened, norms are unclear or are challenged, insubordination occurs, threatening or meaningless events occur, and so forth).
- How the organization is designed and structured. (The design of work, who reports to whom, degree of decentralization, functional or other criteria for differentiation, and mechanisms used for integration carry implicit messages of what leaders assume and value.)
- Organizational systems and procedures. (The types of information, control, and decision support systems in terms of categories of information, time cycles, who gets what information, and when and how performance appraisal and other review processes are conducted carry implicit messages of what leaders assume and value.)
- Criteria used for recruitment, selection, promotion, leveling off, retirement, and âexcommunicationâ of people (the implicit and possibly unconscious criteria that leaders use to determine who âfitsâ and who doesnât âfitâ membership roles and key slots in the organization).
Schein listed the mechanisms from more or less explicit ones to more or less implicit ones and noted that the mechanisms will vary in terms of potency and effectiveness. Further complications arise from the fact that the mechanisms often are in conflict with one another, as well as the fact that different subgroups within the organization may have different assumptions about the way that the world should be viewed. Finally, as noted above, the process of âembeddingâ calls for teaching skills and tools and founders do not always do the best job of clearly conveying their meaning and may often unwittingly communicate implicit messages that they are not even aware of.
Stanford Project Study of Influence of Founders on Organizational Culture
An interesting study of organizational culture among early-stage technology companies in the Silicon Valley was undertaken by the Stanford ÂProject on Emerging Companies (SPEC). Among other things the researchers were interested in how the founders of those companies addressed key organizational design issues during the startup period. The SPEC was concerned not only with the actions taken, and decisions made, as these companies were launched and began to grow but also wanted to learn more about the long-term impact of those actions and decisions on the company as it continued forward and became larger and more mature. The researchers postulated that in order for a company to be successful it was necessary to develop and i...
