Diagnosing and changing organizational culture

Biagnosing and Changing
Organizational Culture
Based on

The Competing Values Framework

Kim S.-eron
The Weatherhead School of Management
Case Western Reserve University

Robert E. Quinn
School of Business Administrution
University ofMichigan

A ADDISON-WESLEY
vv

e____-

An imprint of Addison Wesley Longman, Inc.
Reading, Massachusetts *.Menlo Park, California * New York * Harlow, England
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This book is in the Addison-Wesley Series on Organization
Development.
Consulting Editors: Edgar H. Schein and Richard Beckhard
Copyright O 1999 by Addison-Wesley Publishing Company, Inc.
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any
means, electronic, mechanical, photocopying, recording, or otherwise,
without the prior written permission of the publisher. Printed in the
United States of America.
Library of Congress Cataloging-in-PublicationData
Cameron, Kim S.
Diagnosing and changing organizational culture : based on the
competing values framework I Kim S. Cameron and Robert E. Quinn.
p, cm.
Includes bibliographical references (p. ).
ISBN 0-201-33871-8
1. Organizational change. 2. Corporate culture. I. Quinn,
Robert E. 11. Title.
HD58.8.C32 1998
98-22049
658.4'0fGdc21
CIP

Series Foreword

The Addison-Wesley Series on Organization Development originated in the
late 1960s when a number of us recognized that the rapidly growing field of
"OD" was not well understood or well defined. We also recognized that there
was no one OD philosophy; hence, one could not at that time write a textbook on the theory and practice of OD, but one could make clear what various practitioners were doing under that label. So the original six books in the
OD Series launched what became a continuing enterprise, the essence of
which was to allow different authors to speak for themselves rather than to
summarize under one umbrella what was obviously a rapidly growing and
highly diverse field.
By the early 1980s, OD was growing by leaps and bounds and expanding into all kinds of organizational areas and technologies of intervention. By this time, many textbooks existed that tried to capture core concepts
in the field, but we felt that diversity and innovation continued to be the more
salient aspects of OD. Accordingly, our series had expanded to nineteen titles.
As we moved into the 1990s, we began to see some real convergence
in the underlying assumptions of OD. As we observed how different professionals working in different kinds of organizations and occupational communities made their cases, we saw that we were still far from having a single
"theory" of organizational development. Yet, some common premises were
surfacing. We began to see patterns in what was working and what was not,
and we were becoming more articulate about these patterns. We also started
to view the field of OD as increasingly connected to other organizational sciences and disciplines, such as information technology, coordination theory,
and organization theory.
In the early 90s, we added several new titles to the OD Series to describe important new themes: Ciampa's Total Quality illustrates the important
link to employee involvement in continuous improvement; Johansen et. al.'s
Leading Rusiness Teams explores the important arena of electronic information tools for teamwork; Tjosvold's The Conflict-Positive Organization shows


Series Foreword
how conflict management can turn conflict into constructive action; and
Hirschhorn's Managing in the New Teanz Environment builds bridges to group
psychodynamic theory.
In the mid 1990% we continued to explore emerging themes with
four revisions and three new books. Burke took his highly successful Organization Developmerzt into new realms with more current and expanded content; Galbraith updated and enlarged his classic theory of how information
management lies at the heart of organization design with his new edition of

Competing with Flexible Lateral Organizations; and Dyer wrote an important third edition of his classic book, Team Building. In addition, Rashford
and Coghlan introduced the important concept of levels of organizational
complexity as a basis for intervention theory in their book The Dynamics of
Organizational Levels; in Creating Labor-Management Partnerships. Woodworth and Meek take us into the critical realm of how OD can help in labor
relations-an area that has become increasingly important as productivity issues become critical for global competitiveness; In Integmted Strategic
Change, authors Worley,.Hitchin and Ross powerfully demonstrate how the
field of OD must be linked to the field of strategy by reviewing the role of
OD at each stage of the strategy planning and implementation process; and
finally, authors Argyris and Schon provided an important link to organizational leaming in a new version of their classic book entitled Organizationul
Learning II: Theory, Method, and Practice.
Now, as we continue to think about the field of OD and what it will
mean in the 21st century, we have added sever211titles that reflect the growing
connections between the original concepts of OD and the wider range of the
applications of these concepts. Rupert Chisholm's book Developing Network
Organizations: Learning from Practice and Theory, explores and illustrates
the link between OD and building community networks. In their new book
called Diagnosing and Changing Organizational Culture, Cameron and
Quinn explore one model and technique of how to get at the crucial concept
of culture and how to make this concept relevant for the practitioner. Finally,
the theme of process consultation has remained central in OD, and we have
found that it continues to be relevant in a variety of helping situations. In
Process Consultation Revisited: Building the Helping Relationship, Schein
has completely revised and updated this concept by focusing on process consultation as a general model of the helping process; his new volume pulls together material from previous work and also adds new concepts and cases.
Our series on Organization Development now includes over thirty
titles. We will continue to welcome new titles and revisions as we explore
the various frontiers of organization development and identify themes that
are
--.
-relevant to the ever more difficult problem of helping organizations to remain effective in an increasingly turbulent environment.
-

New York, New York

Richard H. Beckhard
Edgar H. Schein

Other Titles in the Organization
Development Series
Process Consultation Revisited: Building the Helping Relatioash$
Edgar H . Schein
1999 (0-201 -34596-X)
The latest addition to Ed Schein's well-loved set of process consultation
books, this new volume builds on the content of the two that precede it while
expanding to explore the critical area of the helping relationship. Process
Consultation Revisited focuses on the interaction between consultant and
client, explaining how to achieve the healthy helping relationship so essential to effective consultation. Whether the advisor is an OD consultant, therapist, social worker, manager, parent, or friend, the dynamics between advisor
and advisee can be difficult to understand and manage. Drawing on over 40
years of experience as a consultant. Schein creates a general theory and
methodology of helping that will enable a diverse group of readers to navigate the helping process successfully.
Developing Network Organizations: Learning from Theory and Practice
Rupert E Chisholm
1998 (0-20 1-87444-X)
The interorganizational network is rapidly emerging as a key type of organization, and the importance of the network is expected to increase throughout the
21st century. This text covers the process of developing these complex systems.
The author uses in-depth description and analysis based on direct involvement
with three diverse networks to identify critical aspects of the development
process. He explains relevant concepts and appropriate methods and practices
in the context of developing these three networks, and he also identifies ten key
learnings derived from his direct involvement with the development process.
Organizational Learning 11: Theory, Method, and Practice

Chris Argyris and Donald A. Schon
1996 (0-201-62983-6)
This text addresses how business firms, governments, non-governmental organizations, schools, health care systems, regions, and whole nations need to
adapt to changing environments, draw lessons from past successes and failures,
detect and correct the errors of the past, anticipate and respond to impending
threats, conduct experiments, engage in continuing innovation, and build and
realize images of a desirable future. There is a virtual consensus that we are all
subject to a "learning imperative," and in the academy no less than in the world
of practice, organizational learning has become an idea in good currency.
Integrated Strategic Change: How OD Builds Competitive Advantage
Christopher G . Worley, David E. Hitchin,
1996 (0-201-85777-4)
and Walter L. Ross
This book is about strategic change and how firms can improve their
performance and effectiveness. Its unique contribution is in describing how


Other Titles in the Organization Development Series
organization development practitioners can assist in the effort. Strategic
change is a type of organization change that realigns an organization's strategy, structure and process within a given competitive context. It is substantive
and systemic and therefore differs from traditional organization development
that produces incremental improvements, addresses only one system at a
time, or does not intend to increase firm-level performance.

Team Building: Current Issues and New Alternatives, Third Edition
1995 (0-201-62882- 1)
William G . Dyer
One of the major developmerlts in the field of organization redesign has been
the emergence of self-directed work teams. This book explains how teams
are most successful when the team becomes part of the culture and structure

or systems of the organization. It discusses the major new trends and emphasizes the degree of commitment that managers and members must bring
to the team-building process. It is written for managers and human resource
professionals who want to develop a more systematic program of team building in their organization or work unit.
Creating Labor-Management Partnerships
1995 (0-201-58823-4)
Warner P. Woodworth and Christopher B. Meek
This book begins with a call for changing the social and political barriers existing in unionized work settings and emphasizes the critical need for unionmanagement cooperation in the present context of international competition. It
demonstrates the shift from confrontational union-management relationships
toward more effective and positive systems of collaboration. It is written for
human resource management and industrial relations managers and staff,
union officials, professional arbitrators and mediators, government officials,
and professors and students involved in the study of organization development.
Or~anizationDevelopment: A Process of Learning
an; Changing, second Edition
W. Warner Burke
1994 (0-201-50835-4)
This text provides a comprehensive overview of the field of organization development. Written for managers, executives, administrators, practitioners,
and students, this book takes an in-depth look at organization development
with particular emphasis on the importance of learning and change. The author not only describes the basic tenets of OD, but he also looks at OD as a
change in an organization's culture. Frameworks and models like the BurkeLitwin model (Chapter 7), as well as numerous case examples, are used
throughout the book to enhance the reader's understanding of the principles
and practices involved in leading and managing organizational change.
Competing with Flexible Lateral Organizations, Second Edition
1994 (0-201-50836-2)
Jay R. Galbraith
This book focuses on creating- competitive advantage by building a lateral
--1 f l - * : h l x r i n an llncertain world.

Other Titles in the 0rgal;lizationDevelopment Series

vii
The book addresses international coordination and cross-business coordination as well as the usual cross-functional efforts. It is unique in covering both
cross-functional (lateral or horizontal) coordination, as well as international
and corporate issues.
The Dynamics of Organizational Levels:
A Change Framework for Managers and Consultants
Nicholas S. Rashford and David Coghlan
1994 (0-20 1-54323-0)
This book introduces the idea that, for successful change to occur, organizational interventions have to be coordinated across the major levels of issues
that all organizations face. Individual level, team level, inter-unit level, and
organizational level issues are identified and analyzed, and the kinds of intervention appropriate to each level are spelled out.
Total Quality: A User's Guide for Implementation
Dan Ciampa
1992 (0-20 1-54992- 1)
This is a book that directly addresses the challenge of how to make Total
Quality work in a practical, no-nonsense way. The companies that will dominate markets in the future will be those that deliver high quality, competitively priced products and service just when the customer wants them and in
a way that exceeds the customer's expectations. The vehicle by which these
companies move to that stage is Total Quality.
Managing in the New Team Environment: Skills, Tools, and Methods
Larry Hirschhorn
1991 (0-201-52503-8)
This text is designed to help manage the tensions and complexities that arise
for managers seeking to guide employees in a team environment. Based on
an interactive video course developed at IBM, the text takes managers step
by step through the process of building a team and authorizing it to act while
they learn to step back and delegate. Specific issues addressed include how
to give a team structure, how to facilitate its basic processes, and how to acknowledge differences in relationships among team members and between
the manager and individual team members.
Leading Business Teams: How Teams Can Use Technology
and Group Process Tools to Enhance Performance

Robert Johansen, David Sibbett, Suzyn Benson,
199 1 (0-201-52829-0)
Alexia Martin, Robert Mittman, and Paul Saffo
What technology or tools should organization development people or team
leaders have at their command, now and in the future? This text explores the
intersection of technology and business teams, a new and largely uncharted
area that goes by several labels, including "groupware"-a term that encompasses both electronic and nonelectronic tools for teams. This is the first
book of its kind from the field describing what works for business teams and
what does not.


Other Titles iit the Organization Developnzent Series

viii

The Conflict-Positive Organization: Stimulate Diversity and Create Unity
Dean Tjosvold
1991 (0-201-51485-0)
This book describes how managers and employees can use conflict to find
common ground, solve problems, and strengthen morale and relationships.
By showing how well-managed conflict invigorates and empowers teams
and organizations, the text demonstrates how conflict is vital for a company's continuous improvement and increased competitive advantage.

-

Change by Design
Robert R. Blake, Jane Srygley Mouton,
and Anne Adams McCanse
This book develops a systematic approach to organization development and
provides readers with rich illustrations of coherent planned change The

book involves testing, examining, revising, and strengthening conceptual
foundations in order to create sharper corporate focus and increased predictability of successf~~l
organization development.
Power and Organization Development:
Mobilizing Power to Implement Change
1988 (0-201-12185-9)
Larry E. Greiner and Virginia E. Schein
This book forges an important collaborative approach between two opposing
and often contradictory approaches to management: OD practitioners who
espouse a "more humane" workplace without understanding the political
realities of getting things done, and practicing managers who feel comfortable with power but overlook the role of human potential in contributing to
positive results.
Designing Organizations for High Performance
David P. Hanna
1988 (0-201-12693-1)
This book is the first to give insight into the actual processes you can use to
translate organizational concepts into bottom-line improvements. Hanna's
"how-to" approach shows not only the successful methods of intervention,
but also the plans behind them and the corresponding results.
Process Consultation, Volume 1, Second Edition:
Its Role in Organization Development, Second Edition
1988 (0-201-06736-6)
Edgar H. Schein
How can a situation be influenced in the workplace without the direct use of
nower
formal authority? This book presents the core theoretical foundar-.'-- or
-- tions and basic prescriptions for effective management.
Organizational Transitions: Managing Complex Change, Second Edition
1987 (0-201-10887-9)
Richard Beckhard and Reuben T. Harris

This book discusses the choices involved in developing a management sys+ha "+r3ncitinn state," It also discusses commitment to
--:-&-

4-

Other Titles in the Organization Development Series
change, organizational culture, and increasing and maintaining productivity,
creativity, and innovation.

Stream Analysis: A Powerful Way to Diagnose
and Manage Organizational Change
Jerry I . Porras
1987 (0-201 -05693-3)
Drawing on a conceptual framework that helps the reader to better understand organizations, this book shows how to diagnose failings in organizational functioning and how to plan a comprehensive set of actions needed to
change the organization into a more effective system.
Process Consultation, Volume 11: Lessonsfor Managers and Consllltants
Edgar H. Schein
1987 (0-201-06744-7)
This book shows the viability of the process consultation model for working
with human systems. Like Schein's first volume on process consultation, the
second volume focuses on the moment-to-moment behavior of the manager
or consultant rather than the design of the OD program.
Managing Conflict: Interpersonal Dialogue
and Third-Party Roles, Second Edition
Richard E. Walton
1987 (0-201-08859-2)
This book shows how to implement a dialogue approach to conflict management. It presents a framework for diagnosing recurring conflicts and suggests several basic options for controlling or resolving them.
Pay and Organization Development
Edward E. Lawler
198 1 (0-201-03990-7)

This book examines the important role that reward systems play in organization development efforts. By combining examples and specific recommendations with conceptual material, it organizes the various topics and puts
them into a total systems perspective. Specific pay approaches such as gainsharing, skill-based pay, and flexible benefits are discussed, and their impact
on productivity and the quality of work life is analyzed.
Work Redesign
J. Richard Hackman and Greg R. Oldham
1980 (0-201-02779-8)
This book is a comprehensive, clearly written study of work design as a
strategy for personal and organizational change. Linking theory and practical technologies, it develops traditional and alternative approaches to work
design that can benefit both individuals and organizations.
Organizational Dynamics: Diagnosis and Intervention
John P. Kotter
1978 (0-201 -03890-0)
This book offers managers and OD specialists a powerful metl~odof diagnosing organizational problems and of deciding when, where, and how to


Other Titles in the Organization Development Series

x

use (or not use) the diverse and growing number of organizational improvement tools that are available today. Comprehensive and fully integrated, the
book includes many different concepts, research findings, and competing
philosophies and provides specific examples of how to use the information
to improve organizational functioning.

Career Dynamics: Matching Individual and Organizational Needs
Edgar H . Schein
1978 (0-201-06834-6)
This book studies the complexities of career development from both an individual and an organizational perspective. Changing needs throughout the
adult life cycle, interaction of work and family, and integration of individual
and organizational goals through human resource planning and development

are all thoroughly explored.
Matrix
1977 (0-201-01115-8)
Stanley M . Davis and Paul Lawrence
This book defines and describes the matrix organization, a significant departure
from the traditional "one man-one boss" management system. The au....
thors note that the tension between the need for independence (fostering
innovation) and order (fostering efficiency) drives organizations to consider
a matrix system. Among the issues addressed are reasons for using a matrix,
methods for establishing one, the impact of the system on individuals, its
hazards, and what types of organizations can use a matrix system.
-

Feedback and Organization Development: Using Data-Based Methods
1977 (0-201-05006-4)
David A. Nadler
This
- -- - - hook
- - .. addresses the use of data as a tool for organizational change. It
attempts to bring together some of what is known from experience and
research and to translate that knowledge into useful insights for those who
are thinking about using data-based methods in organizations. The broad
anoroach
of the text is to treat a whole range of questions and issues consid--rz- ering the various uses of data as an organizational change tool.
-

Preface
This book was written to help you diagnose and initiate change in organizatknal culture, whether you are a manager, teacher, consultant, or change
ggent. We were motivated to write this book because of our own observation
that organizations often fail in their change and improvement efforts because

of their inability to bring about culture change. We were also motivated because of our conviction that the Competing Values Framework can be effectively applied to several important aspects of organizational and personal
performance. We know of consulting firms that have adopted the framework .'
as a key part of their services. And we know of business, government, and
educational organizations that have dramatically improved ihelr performance
as a result of applyjng the processes and approaches explained in the book,
i s well as individual managers who have become more effective by personalizing the principles we discuss. Of course, we don't claim to have found a
silver bullet or a panacea for all organizational and managerial problems.
Rather, we have written the book to share a set of tools and procedures that
our own empirical research and consulting experiences have found to be useful in assisting with cultural and personal change in organizations.
This book will be most useful to (1) consultants and change/agents
charged with helping organizations and managers implement change and
with making sense of their own culture; (2) teachers interested in helping
students understand organizational culture, the change process, and the
power of theoretical frameworks in guiding change efforts; and (3) managers
who are interested injdentifying ways to effectively lead a culture change
effort while finding ways to match their personal style and capabilities with
the demands of the organization's future environment. This book, therefore,
may be appropriate for the college classroom, the training and development
center, the executive's bookshelf, or the conference table around which employees meet to participate in the culture change process.

.


xii

xiii

Overall Purpose of the Book
This book offers you three contributions: (1) validated instruments for diagnosing organizational culture and management competency, (2) a theoretical
framework for understanding organizational culture, and (3) a systematic

strategy for changing organizational culture and personal behavior. It is intended to be a workbook in the sense that you can complete the instruments
and plot your own culture profile in the book itself, and you can also use it
as a resource for leading a culture change process. The management competency assessment instrument also helps fac~litatepersonal change in support
of the desired culture change. The book can also serve as an information
source for explaining a robust framework of culture types. This framework
has proven to be very useful to a variety of companies in clarifying the culture change process as well as instigating significant managerial leadership
improvement.
In Chapter 1, we discuss the importance of understanding organizational culture and its central place in facilitating or inhibiting organizational
improvement efforts. We illustrate how culture change can foster dramatic
improvement in organizational effectiveness, or else how it can be the major
obstacle that keeps organizations from fulfilling their objectives.
In Chapter 2, we provide the instrument for diagnosing organizational culture and instructions for how to complete and score it. This instrument-The
Organizational Culture Assessment Instrument (OCAIIproduces an overall organizational culture profile. Six dimensions of organizational culture are assessed. The six dimensions are based on a theoretical
framework of how organizations work and the kinds of values upon which
their cultures are founded. The OCAI identifies what the current organkathe organization's
or future
tional culture is lik
- " -preferred,
" ---culture should be like.
Chapter 3 provides a more thorough explanation of the theoretical
framework upon which the OCAI is based. This framework-The Competing Values Framework-explains the underlying value orientafions that characterize arganizatians. These value orientations are usually competing or
contradictory to one another. The chapter explains how these values, and the
organizational cultures that emerge from them, change over time, and how
the framework is applicable for making sense of a variety of organizational
phenomena, including structure, quality, leadership, and management skills.
Chapter 4 contains a step-by-step process for producing an organizational culture profile, identifying the ways in which the organization's culture should change, and formulating a strategy for accomplishing that
change. Information about the cultures of almost 1000 organizations is provided for comparison purposes.
Chapter 5 provides a six-step methodology for guiding a culture
change strategy. Also presented are examples of how several different organ"

I__-----

izations used the OCAI to diagnose their current and preferred organizational cultures. We illustrate how the organizations designed a strategy to
change their current culture to better match their preferred culture. These
examples and the methodology provide systematic guidelines to managers
and change agents who are charged with changing their own organization's
culture.
Chapter 6 focuses on the personal change needed to support and facilitate culture change. It explains critical management con~petenciesthat are
typical of effective managers, and it provides a methodology for helping
managers develop a personal improvement agenda. Included is a diagnostic
instrument that has been used with managers in more than a thousand organizations worldwide. Use of the diagnostic instrument is an inlportant element in aligning managerial competencies with desired culture change.
Chapter 7 summarizes the key points in the book and provides a condensed summary formula to guide culture change efforts.
Appendix I contains a more rigorous and scientifically based discussion of the OCAI and the Competing Values Framework. Its intent is to provide researchers and organizational scholars with the evidence they may
require in order to use this instrument to study organizational cultures and
culture change. Evidence for the validity and reliability of the OCAI is provided, as well as a discussion of cultural definitions and the power of cultural change to impact effectiveness. This material may be of interest more
to researchers and organizational scholars than to managers and change
agents.
Appendix I1 provides an instrument that helps managers identify the
key competencies they will need to develop or improve in order to foster organizational culture change. A discussion of the instrument's validity and
usefulness precedes the presentation of the questions themselves. The instrument is entitled the Management Skills Assessment 2n.rtrirment (MSAI). Information is provided for how to obtain scoring and feedback reports for
managers who are involved in the culture change effort as part of the strategy
to align management competencies with the organizational culture change
initiative.
Appendix I11 provides suggestions for initiating culture change in
each of four types of cultures. These suggestions are provided merely as
thought-starters and idea-generators when extra help is needed. They have
come from managers and change agents who have engaged in the culture
change process described in this book.
Appendix IV provides lists of suggestions for improving management skills and competencies associated with the MSAI. These suggestions
were generated by managers who have successfully implemented personal

change efforts in improving their own managerial competencies.
Appendix V contains some extra plotting forms and profile forms to
be used as part of the culture change initiative.


Acknowledgments
We have been educated and informed by many colleagues in our work on
this topic over the years. In particular, Robert Hooijberg and Frank Petrock
have helped us think through the culture change methodology. Several of our
colleagues have conducted insightful and informative research on our framework including John Rohrbaugh, Gretchen Spreitzer, Sarah Freeman, Arthur
Yeung, Wayne Brockbank, David Ulrich, Lee Collett, Carlos Mora, Dan
Denison, Susan Faerman, Michael Thompson, Michael McGrath, Ray Zammuto, and Jack Krackower. Outstanding insights and suggestions were provided on the book manuscript by Ed Schein, Jon Van Maanen, and Dick
Beckhard, as well as helpful reviews by Peter Frost, Deone Zell, and Tom
Gregoire. Particular thanks are due to our editor, Mike Roche at Addison
Wesley Longman, for his continued support and friendship, and to very competent support people including Ruth Berry at Addison-Wesley and Mary
Ansaldo and the team at Pre-Press Co. Of course, whereas we would like to
pass off onto these folks all the mistakes, oversights, or wrong-headed thinking that might remain in the manuscript, we must accept responsibility for it.
They have done their best with us.
Most importantly we want to acknowledge and thank our sweethearts, Melinda and Delsa and our children Katrina Cameron Powley, Tiara
Cameron Schwahn, Asher, Cheyenne, Britanny, Austin, and Cam Cameron
and Shauri, Ryan, Shawn, Kristin, Travis, and Garrett Quinn. Their love of
one another and of us has created a culture that we never want to change.

Provo, Utah

K.S.C.
R.E.Q.

Contents
Chapter 1: An Introduction to Changing Organizational Culture 1

The Need to Manage Organizational Change 2
The Necessity of Culture Change 6
Illustrating the Power of Culture Change 10
Fig. 1.1: Comparison of GM's Fremont and NUMMI Plants 12
The Meaning of Organizational Culture 14
Caveats 16
Chapter 2: The Organizational Culture Assessment Instrument 18
Instructions for Diagnosing Organizational Culture 19
Fig. 2.1: The Organizational Culture Assessment
Instrument-Current
20
Fig. 2.2: The Organizational Culture Assessment
Instrument-Preferred
22
Fig. 2.3: An Example of How Culture Ratings Might Appear 25
Scoring the OCAI 25
Fig. 2.4: A Worksheetfor Scoring the OCAI 26
Chapter 3: The Competing Values Framework 28
The Value of Frameworks 28
Development of the Competing Values Framework 30
Fig. 3,l: The Competing Values Framework 32
The Four Major Culture Types 33
The Applicability of the Competing Values Model 40
Fig. 3.2: The Competing Values of Leadership, Efecriveness, and
Organizational Theory 41
Total Quality Management 44
Fig. 3.3: The Competing Values of Total Quality Management 46
Human Resource Management Roles 46
Fig. 3.4: The Competing Values Human Resource
Management 46

xvi

Contents
Culture Change over Time 48
Fig. 3.5: The Life Cycle ofApple Computer 50
Culture Change in a Mature Organization 5 1
Fig. 3.6: The Culture Change of a Mature Organization 52

Chapter 4: Constructing an Organizational Culture Profile 55
The Purpose of the Profile 55
Plotting a Profile 55
Fig. 4.1: The Organizational Culture Profile 58
Fig. 4.2: Profiles for the Original Items on the OCAl 60
Fig. 4.3: Examples of Culture Profiles for Six Organizations 61
Interpreting the Culture Profiles 62
Fig. 4.4: An Average Culture Profile for More than 1000
Organizations 66
Fig. 4.5: An Average Profile for Each Item on the OCAI 67
Fig. 4.6: Average Culture Profiles for DiTerent Industry
Groups 68

Contents

xvii

Fig. 6.4: lndiiidual Question Feedback for the Clarz
Quadrant 116
Fig. 6.5: Projle of rhe Clan Quadrant Questions 118

Fig. 6.6: An Organizational Culture Profile 112
Personal Improvement Agendas 120
Chapter 7: A Condensed Formula for
Organizational Culture Change 126
Diagnosis 126
Interpretation 127
Implementation 128
Appendix I: Definition, Dimension, Reliability, and Validity of the
Organizational Culture Assessment Instrument (OCAI) 130
The Importance of Organizational Culture Assessment 131
Issues in Assessing Organizational Culture 132
Table IA.1: The Tvvo Main Disciplinary Foundations of
Organizational Culture 133
The Reliability and Validity of the Organizational Culture
Assessment Instrument 139
Fig. 1A.1 Multidimensional Scaling Results oj'the Competing
Values Di~nerzsions 143
A Note on the Response Scale 144

Chapter 5: Using the Framework to Diagnose
and Change Organizational Culture 72
An Example of Planning for Culture Change 73
Fig. 5.1: An Example of One Organization's Current Culture 75
Fig. 5.2: An Example of One Organization's Current versus
Preferred Culture 76
Steps in Designing an Organizational Culture Change Process 77
Fig. 5.3: An Example of One Organization's "Means-Does Not
Mean " Analysis 78
Fig. 5.4: The Organizational Culture Profile 82
Fig. 5.5: What the Culture Change Means and Does Not

Mean 84
Fig. 5.6: Actions to Be Taken 87
Fig. 5.7: Xerox's Strategy for Implementing Culture Change 91
Summary 92
Supplementing the OCAI Methodology 93
Fig. 5.8: An Organization's Culture Profile in a Sample
Company 96
Fig. 5.9: What Change Means and Does Not Mean in a Sample
Company 98

Appendix 11: Psychometric Analyses of the
Managerial Skills Instrument 146
The Within-Person D-Score 147
Characteristics of D-Scores 149
Results of the Analyses 149
Fig. A2.1: D-Score Correlations among Qurzrlmnts 150
Table A2-1: D-Score Correlations among Dimensions 151
The Management Skills Assessment Instrument 153
Managerial Behavior Self-Rating Form 154
Managerial Effectiveness Self-Rating Form 160
Importance Information 162
Demographic Information 164
Table A2.2: Managerial Competencies and Organizational
Culture Tjpes 166

Chapter 6: Individual Change as a Key to Culture Change 105
Critical Management Skills 106
Fig. 6.1: A Model of Critical Managerial Competencies 108
The Personal Management Skills Profile 110
Fig. 6.2: Managerial Information Summary 111

Fig. 6.3: Managerial Skills Profile 114

Appendix 111: Hints for Originating Organizational
Culture Change in Each Quadrant 167
Market Culture 168
Adhocracy Culture 17 1
Clan Culture 174
Hierarchy Culture 177


Contents

Appendix IV: Suggestions for Improving
Personal Management Competencies 181
Hierarchies Quadrant 181
Market Quadrant 186
Clan Quadrant 191
Adhocracy Quadrant 196
Appendix V: Plotting Forms and Profiles 203
Fig. A5.1: The Organizational Culture Profile 204
Fig. A5.2: Management Skills Profile 206
Fig. A5.3: Profles for Zndividrral Ztems on the OCAZ 208

An Introduction to Changing
Organizational Culture

References and Selected Readings 209
Index 216
Answer Sheet for Management Skills Assessment Inventory 220

No organization in the 1990s would boast about its constancy, sameness, or status quo compared to ten years ago. Stability is interpreted
more often as stagnation than steadiness, and organizations that are
not in the business of change and transition are generally viewed as
recalcitrant. The frightening uncertainty that traditionally accompanied major organizational change has been superseded by the frightening uncertainty now associated with staying the same.
The father of modern management, Peter Drucker, concluded
that, "We are in one of those great historical periods that occur every
200 or 300 years when people don't understand the world anymore,
and the past is not sufficient to explain the future." (Childress & Senn,
1995) Unremitting, unpredictable, and sometimes alarming change
makes it difficult for any organization or manager to stay current, to
accurately predict the future, and to maintain constancy of direction.
The failure rate of most planned organizational change initiatives is
dramatic. It is well known, for example, that as many as three quarters of reengineering, total quality management (TQM), strategic
planning, and downsizing efforts have failed entirely or have created
problems serious enough that the survival of the organization was
threatened (see Cameron, 1997, for references). What is most interesting about these failures, however, is the reported reasons for nonsuccess. Several studies reported that the most frequently cited reason
given for failure was a neglect of the organization's culture. In other
words, failure to change the organization's culture doomed the other
kinds of organizational changes that were initiated (CSC Index, 1994;
Caldwell, 1994; Gross, Pascale, & Athos, 1993; Kotter & Heskett,
1992).
Our purpose in this book is not to offer one more panacea for
coping with our turbulent times or to introduce another management


An Introduction to Changing Organizational Culture

fad. We agree with Tom Peters that, "If you're not confused, you're not
paying attention." Confusion abounds as do prescriptions and proposed
panaceas. Instead, our intent in this book is both more modest and, we

believe, potentially more helpful. The book provides a framework, a
sensemaking tool, a set of systematic steps, and a methodology for
helping managers and their organizations adapt to the demands of the
environment. It focuses less on the right answers than it does on the
methods and mechanisms available to help managers change the most
fundamental elements of their organizations. It provides a way for managers, at almost any level in an organization, to guide the change
process at the most basic level-the cultural level. It provides a systematic strategy for internal or external change agents to facilitate foundational change that can then support and supplement other kinds of
change initiatives.

The Need to Manage Organizational Culture
Most of the current scholarly literature argues that successful companies-those with sustained profitability and above-normal financial returns-are characterized by certain well-defined conditions (Porter,
1980). Six such conditions are argued to be critical. The first is the
presence of high barriers to entry. When other organizations face difficult obstacles to engaging in the same business as your organizationfor example, high costs, special technology, or proprietary knowledge
inhibit other firms' entry into your market-few, if any, competitors
will exist. Few competitors means more revenues for your firm. A second condition is nonsubstitutable products. When other organizations
cannot duplicate your firm's product or service and no alternatives
exist-for example, you are the sole supplier of a product or serviceit stands to reason that revenues are likely to be higher. Third, a large
market share enhances success by allowing your firm to capitalize on
economies of scale and efficiencies. The biggest player in a market
can negotiate concessions, sell at a discount, vertically integrate, or
even purchase smaller competitors, thereby generating more revenues.
A fourth condition is low levels of bargaining power for buyers. For
example, if purchasers of your firm's products become dependent on
your company because they have no other alternative sources, higher
revenues are an obvious result. Fifth, suppliers have low levels of bargaining power. Similar to the fourth condition, when suppliers become
dependent on your company because they have no other alternative
customers, you will have higher levels of financial returns. They must

The Need to Manage Organizational Culture

sell to you, making it possible for your firm to negotiate favorable
prices and time schedules, higher levels of quality, and/or more proprietary features. The sixth and final condition is rivalry among competitors. Rivalry helps deflect attention away from head-to-head
competition with your company. Competitors struggle against one another instead of targeting your firm as the central focus of attack.
Equally as important, stiff competition is likely to raise the standards
of performance in the entire industry. Incentives to improve are a product of rigorous competition (see Porter, 1980).
Unquestionably, these are desirable features that clearly should
enhance financial success. They seem pretty much common sense.
However, what is remarkable is that the most successful U.S. firms in
the last twenty years have had none of these competitive advantages.
The top five performers in the last two decades-those who have literally blown away the competition in financial returns-have not been
the recipients of any of the so-called prerequisites for success. These
highly successful firms are Southwest Airlines (21,775% return),
Wal-Mart (19,807% return), Tyson Foods (18,118% return).
Circuit
,,
City (16,410% return), and plenum publishing (15,689% return) (see
Pfeffer, 1995).
Think of it. If you were going to start a business and wanted to
make a killing, the markets you will most likely avoid are airlines,
discount retailing, food distribution, consumer electronic sales, and
publishing. The list of industries represented by these five highly
successful firms looks like an impending disaster for new entrantsmassive competition, horrendous losses, widespread bankruptcy, virtually no barriers to entry, little unique technology, and many substitute
products and services. None of these firms entered the industry with a
leadership position in market share. Yet, these five firms have outperformed all rivals, even with no special competitive advantages.
What differentiates these extraordinarily successful firms from
others? How have they been able to make it when others have failed?
How did Wal-Mart take on Sears and Kmart-the two largest retailers in the world-and, figuratively speaking, eat their lunch? While
Wal-Mart prospered, its largest rivals were forced to sell off divisions,
replace CEOs (more than once), downsize dramatically, and close
stores wholesale. How did Southwest Airlines thrive when several of

its competitors went belly-up (e.g., Eastern, Pan-Am, Texas Air, People Express)? How did Circuit City, Tyson Foods, and Plenum Publishing succeed when their competitors have gone out of business so
rapidly that it's hard to keep up? The key ingredient in each case is


4

I

i

/

1

1
I

An lntroducti~ntb Changing Organizational Culture

something less tangible, less blatant, but more powerful than the market factors listed previously. The major distinguishing feature in these
companies, their most important competitive advantage, the most
powerful factor they all highlight as a key ingredient in their success,
is their organizational culture.
The sustained success of these firms has had less to do with
market forces than company values; less to do with competitive positioning than personal beliefs; less to do with resource advantages than
vision. In fact, it is difficult to name even a single highly successful
company, one that is a recognized leader in its industry, that does not
have a distinctive, readily identifiable, organizational culture. Name
the most successful firms you know today, from large behemoths like
Coca-Cola, Disney, General Electric, Intel, McDonalds, Merck,

Microsoft, Rubbermaid, Sony, Toyota, to small, entrepreneurial startups. Virtually every leading firm you can name, small or large, has
developed a distinctive culture that is clearly identifiable by its employees. This culture is sometimes created by the initial founder of
the firm (e.g., Walt Disney). Sometimes it emerges over time as an
organization encounters and overcomes challenges and obstacles in
its environment (e.g., Coca-Cola). Sometimes it is developed consciously by management teams who decide to improve their company's performance in systematic ways (e.g., General Electric).
Simply stated, successful companies have developed something
special that supersedes corporate strategy, market presence, or technological advantages. Although strategy, market presence, and technology are clearly important, highly successful firms have capitalized
on the power that resides in developing and managing a unique corporate culture. This power abides in the ability of a strong, unique
culture to reduce collective uncertainties (i.e., facilitate a common interpretation system for members), create social order (i.e., make clear
to members what is expected), create continuity (i.e., perpetuate key
values and norms across generations of members), create a collective
identity and commitment (i.e., bind members together), and elucidate
a vision of the future (i.e., energize forward movement) (see Trice &
Beyer, 1993).
Most organizational scholars and observers now recognize that
organizational culture has a powerful effect on the performance and
long-term effectiveness of organizations. Empirical research has produced an impressive array of findings demonstrating the importance of
culture to enhancing organizational performance (for reviews see
Cameron & Ettington, 1988; Denison, 1990; and Trice & Beyer, 1993).

The Need to Manage Organizational Culture

Kotter and Heskett (1992) interviewed seventy-five highly regarded financial analysts whose job is to closely follow certain industries and
corporations. Each analyst compared the performance of twelve highly
successful firms to ten lower-performing firms. Although analysts are
stereotyped as focusing almost exclusively on hard data, only one of
the seventy-five indicated that culture had little or no impact on firm
performance. All acknowledged culture as a critical factor in long-term
financial success. In the Appendix, we summarize several scientific
studies that report a positive relationship between dimensions of organizational culture and organizational effectiveness. For those interested

in empirical evidence that supports the assessment procedures and culture change methodology explained in this book, the Appendix will be
a helpful review of the academic literature.
In addition to organization-level effects, the impact of organi- - . commitment,
_
__.
zational culture on individuals (e.g,, e-m.~loy_eemorale,
productivity, physical health, and emotional well-being) is also welldocumented (for a review, "see Kozlowski, Chao, Smith, & Hedlund,
1993). With health care costs still skyrocketing, burnout at an all-time
high, erosion of employee loyalty to firms costing millions of dollars
a year in replacement and retraining, organizational secrets lost due
to sabotage and defections, and lawsuits and other forms of retribution by disaffected employees, the impact of an organization's underlying culture on individuals is also an important area of concern.
Moreover, we will explain later in the book that culture change, at its
root, is intimately tied to individual change. Unless managers are
willing to commit to personal change, the organization's culture will
remain recalcitrant.
Our main focus in this book is on helping managers, change
agents, and scholars facilitate and manage organizational culture
change. Our purpose is to assist individuals in better understanding
an effective way to diagnose and change culture in order to enhance
organizational performance. We provide a framework as well as a
methodology for implementing this change process, and we integrate
a model of individual-level change as a way to foster cultural transformation and to align personal managerial behavior with the culture
change. Since culture is such a crucial factor in the long-term effectiveness of organizations, it is imperative that those charged with
studying and/or managing organizational culture be able to measure
key dimensions of culture, to develop a strategy for changing it, and
to begin an implementation process. This book helps to accomplish
those aims,


An Introduction'to Changing Organizational Culture

We begin by discussing the critical need for culture change in
most modern organizations. The chaotic, rapid-fire vacillations in the
external environment create the risk that yesterday's organizational
culture will inhibit rather than contribute to corporate success. We
also briefly address the meaning of the term organizational culture.
To understand how culture change can enhance organizational performance, it is important that we make clear what is and what isn't
culture. All this establishes a groundwork for introducing our framework of the core dimensions of organizational culture. Along with
that framework, we introduce an instrument and a method for diagnosing and initiating cultural change, and we supplement that with a
personal management competency assessment instrument and improvement tool that is congruent with the framework. We provide
some examples of companies that have successfully implemented our
methodology, and we provide some practical hints for how others
might successfully implement culture change.
This book, in other words, serves both as a workbook and as a
source guide. It is a workbook in the sense that it assists managers
and change agents to work through a systematic culture diagnosis and
change effort. It helps profile the current state of organizational culture and a preferred culture for the future; and it outlines a process for
moving from the current to the preferred state. It also links a personal
change methodology to an organizational change methodology.
The book serves as a source guide in the sense that it helps explain the core dimensions of culture and presents a theoretical framework for understanding culture forms. That is, the book helps explain
what to look for when initiating culture change and how individual
change and organizational change are linked. For individuals interested in examining the validity of this approach to culture change, a
summary of scientific evidence is presented in Appendix I.

The Need for Culture Change

\
[
I

As mentioned earlier, change in organizations is pervasive because of

the degree and rapidity of change in the external environment. The
conditions in which organizations operate demand a response without
which organizational demise is a frequent result. Of the largest one
hundred companies at the beginning of the 1900%for example, only
sixteen are still in existence. Of the firms on Fortune Magazine's first
list of the five hundred biggest companies, only twenty-nine firms
would still be included. During the last decade, 46 percent of the Fortune 500 dropped off the list.

The Need for C~lltureChange

7

Such dramatic change in organizational survival and effectiveness is understandable when considering the shift in the developed
world from an industrial-age economy to an information-age economy. For the first time (beginning in the 1990s) companies spent
more money on computing and communications gear than the combined monies spent on industrial, mining, farm, and construction
equipment. Whereas in the 1960s, approximately half of the workers
in industrialized countries were involved in making things, by the
year 2000, it is estimated that no developed country will have more
than one eighth of its workforce in the traditional roles of making and
moving goods. This shift away from industrialization and toward information is also illustrated by the fact that more information has
been produced in the last twenty years than was produced in the previous five thousand years. A weekday edition of the New York Times
or the Herald Tribune contains more information than the average
person was likely to come across in a lifetime during the seventeenth
century. The total amount of information available to the average person doubles every five years.
The rate of technological change associated with this information explosion has created an environment intolerant of the status quo.
A musical greeting card that plays "Happy Birthday" has more computer power than existed in the entire world before 1950. The average
watch contains more computing power than existed in the entire
world before 1960. The average home video camera has more processing power than the original IBM 360 mainframe. The average inhome video game system now has more power than the original Cray
supercomputer. Such rapid and dramatic change implies that no organization can remain the same for long and survive. The current
challenge, therefore, is not to determine whether to change but how

to change to increase organizational effectiveness. The demise of
some of the Fortune 500 companies, no doubt, resulted simply from
slow, laggard, or wrongheaded change efforts.
For instance, the three most common organizational change
initiatives implemented in the last two decades are TQM initiatives,
downsizing initiatives, and reengineering initiatives (Cameron, 1997).
Organizations that have implemented quality initiatives in order to
enhance effectiveness, however, have, by and large, fallen short (see
Cameron, 1997, for a listing of studies, some of which follow). To
illustrate, Rath and Strong (a consulting firm) surveyed Fortune 500
companies and found that only 20 percent reported having achieved
their quality objectives, and over 40 percent indicated that their quality initiatives were a complete flop. A study of thirty quality programs


8

An Introduction to Changing Organizational Culture

by McKinsey (another consulting firm) found that two thirds had
stalled, fallen short, or failed. Ernst and Young's study of 584 companies in four industries (autos, banks, computers, health care) in the
United States, Japan, Germany, and Canada found that most firms had
not successfully implemented their total quality practices. Most firms
labeled TQM a failure and were actually cutting back their quality
budgets.
Similarly, nearly every organization of moderate size or larger
has engaged in downsizing in the last decade. Downsizing has been
another attempt to improve productivity, efficiency, competitiveness,
and effectiveness. Unfortunately, two thirds of companies that downsize end up doing it again a year later, and the stock prices of firms
that downsized during the 1980s and early 1990s actually lagged the
industry average by the middle of the 1990s. A survey of corporate

executives in six industrialized countries found that less than half had
achieved their cost-cutting goals, and even fewer met operating objectives such as improved productivity. Another survey found that 74
percent of senior managers in downsized companies said that morale,
trust, and productivity suffered after downsizing, and half of the 1468
firms in still another survey indicated that productivity deteriorated
after downsizing. Almost three quarters of firms in another study
were found to be worse off in the long term after downsizing than
they were before. A majority of organizations that downsized in a
fourth survey failed to achieve desired results, with only 9 percent reporting an improvement in quality. These outcomes led one editorialist to accuse organizations of "dumbsizing" instead of downsizing
and another writer to conclude that "downsizing, as commonly practiced, is a dud" (see Cameron, 1997, for complete references to these
studies).
A third common approach to enhancing organizational performance has been reengineering, or the attempt to redesign completely
the processes and procedures in an organization. Similar to TQM and
downsizing initiatives, however, evidence suggests that this approach
to change has also had a checkered success record. A survey was conducted of reengineering projects by the consulting firm that invented
the reengineering change process (CSC Index, 1994). In all, 497 companies in the United States and another 1245 companies in Europe
were polled. The survey found that 69 percent of the firms in the
United States and 75 percent of the firms in Europe had engaged in at
least one reengineering project. Unfortunately, the study reported that
85 percent of those firms found little or no gain from their effort. Less

The Need for Culture Change

9

than half, for example, achieved any change in market share, one of
the primary goals. The authors concluded that reengineering was
not enough to achieve desirable change. It had to be integrated with
an overall approach to changing an organization's culture. In other
words, the failure of reengineering (as well as TQM and downsizing)

occurred in most cases because the culture of the organization
remained the same. The procedure was treated as a technique or
program of change, not as a fundamental shift in the organization's
direction, values, and culture.
The point we are reiterating with these examples is that without
another kind of fundamental change, namely, a change in organizational culture, there is little hope of enduring improvement in organizational performance. Although the tools and techniques may be
present and the change strategy implemented with vigor, many efforts
to improve organizational performance fail because the fundamental
culture of the organization remains the same; i.e., the values, the ways
of thinking, the managerial styles, the paradigms and approaches to
problem solving.
Scientific evidence of this fact was produced by Cameron and
his colleagues (Cameron, Freeman, & Mishra, 1991; Cameron, 1992;
Cameron, 1995), who conducted empirical studies in more than one
hundred organizations that had engaged in TQM and downsizing as
strategies for enhancing effectiveness. The results of those studies
were unequivocal. The successful implementation of both TQM and
downsizing programs, as well as the resulting effectiveness of the
organizations' performance, depended on having the improvement
strategies embedded in a culture change. When TQM and downsizing
were implemented independent of a culture change, they were unsuccessful. When the culture of these organizations was an explicit target
of change, so that the TQM and/or downsizing initiatives were embedded in an overall culture change effort, they were successf~~l.
Organizational effectiveness increased. Culture change was key.
This dependence of organizational improvement on culture
change is due to the fact that when the values, orientations, definitions, and goals stay constant-even when procedures and strategies are altered-organizations return quickly to the status quo. The
same is true for individuals. Personality types, personal styles, and
behavioral habits rarely change significantly, despite programs to
induce change such as diets, exercise regimens, or charm schools.
Without an alternation of the fundamental goals, values, and expectations of organizations or individuals, change remains superficial and

An Introduction to Changing Organizational Culture

short-term in duration (see Quinn, 1996). Failed attempts to change,
unfortunately, often produce cynicism, frustration, loss of trust, and
deterioration in morale among organization members. As found in
our research, organizations may be worse off than had the change
strategy not been attempted in the first place. Modifying organizational culture, in other words, is a key to the successful implementation of major improvement strategies (e.g., TQM, downsizing,
reengineering) as well as adaptation to the increasing turbulent environment faced by modern organizations.

Illustrating the Power of Culture Change
Consider the well-known case of General Motors' auto assembly
plant in Fremont, California. In the 1950s, General Motors had embarked on what was referred to as a sunbelt strategy. This means
that plants were built in the southern and western states in the
United States. Because these are all "right-to-work" states (i.e., few
unions), the United Auto Workers union (UAW) viewed this as a
union-avoidance move on the part of the company. It was interpreted
as a "leave the UAW in the upper-Midwest, and we'll avoid having to
deal with them by moving West" strategy. However, not only were
those GM plants organized by the UAW, they became among the
most hostile, conflict-ridden plants in the entire corporation. In particular, a plant had been built in Fremont, California, in which the
Chevrolet Nova car was assembled. It was a huge facility with several
million square feet under one roof. By 1982, the plant was operating
at a disastrously low level. To illustrate: Absenteeism averaged 20
percent per year. Approximately five thousand grievances were filed
each year by employees in the plant. With five thousand workers employed, that's an average of one per person per year. It also translates
to about twenty-one formally filed grievances each working day!
More than two thousand of those grievances were unresolved. Three
or four times each year a wildcat strike occurred (people just walked
off the job). Costs of assembling the car were 30 percent above the

Japanese competitors, sales trends were negative, the monthly quality
audit put Fremont on the bottom of the entire corporation, and productivity was the worst in the company. Customer satisfaction with
the Chevy Nova was at rock-bottom levels.
A variety of improvement programs had been tried-quality
circles, employee relations initiatives, statistical process control, new
incentive systems, tighter controls, downsizing, and a variety of other
im~rovementDrograms. Nothing worked. Quality, productivity, and

Illustrating the Power of Culture Change

satisfaction levels remained abysmal. Of course, it doesn't take a rocket
scientist to figure out that the company could not afford to continue
operating at that level of performance. The reputation of the entire corporation and all its divisions (i.e., Cadillac, Buick, Oldsmobile, Pontiac, Chevrolet, and GMC) was being negatively affected by the poorquality product, the cost of simply keeping the plant running was
overly burdensome, and management had nothing but grief from this
group of employees. The decision was made to close the plant at the
end of 1982.
Then GM did something interesting. The company approached
its best competitor, Toyota, and offered to design and build a car together. GM was losing market share to Toyota, the Toyota production
system was generally regarded as the best in the world at the time,
and GM was having a difficult time trying to figure out how to fix its
disastrous performance record, especially with the now-defunct Fremont plant. Toyota jumped at the chance. After all, GM was the
world's largest company with the world's largest supplier and dealer
networks, and it was a chance for Toyota to plant its feet firmly on
U.S. soil. GM offered to use the Fremont facility, but the plant was
not to be remodeled. Old equipment had to be used. Toyota said,
"Fine." GM indicated that because of the labor agreement, the joint
venture couldn't hire just anyone. UAW workers had to be hired first,
and they would come back on the basis of seniority. The oldest and
most recalcitrant employees, the ones who had complained about
management the longest, were given first crack at jobs. Toyota said,

"Fine." Toyota had just one request and that was to allow Toyota managers to run the place, not GM managers. GM said, "Fine." In late
198.5 the plant was opened. The name was changed to NUMMINew United Motors Manufacturing Incorporated. For the first two
years the Chevy Nova was produced, then it was phased out and
replaced by the Geo Prism and the Toyota Corolla. Fig. 1.1 shows the
performance data for the Fremont plant and the NUMMI plant after
one year of operation, at the end of 1986.
Sales trends at the NUMMI plant were positive, quality and
customer satisfaction were the highest in the company, the Toyota
Corolla had fewer things-gone-wrong than the comparable car produced in Japan, and productivity doubled the corporate average. More
than a decade later, the NUMMI plant continues to lead the company
(in most months) in quality and productivity. Although more than ten
years old, this experiment still serves as an example to GM (and to
other manufacturing businesses) of the dramatic improvement that is
possible.


An ~ntroduction'to Changing Organizational Culture

Figure 1.1
Comparison of GM's Fremont and NUMMI Plants
1982
GM Fremont Plant
Employees
Absenteeism
Unresolved Grievances
Total Annual Greivances
Wildcat Strikes
Product
Assembly Costs per Car
Productivity

Quality

5000
20%
2000
5000
3-4
Chevrolet Nova
30% over Japanese
Worst in GM
Worst in GM

1986
GM NUMMI Plant
Employees
Absenteeism
Unresolved Grievances
Total Annual Grievances
Wildcat Strikes
Product

Assembly Costs per Car
Productivity
Quality

2500
2%
0
2
0

Chevrolet Nova 1988
Geo Prism
Toyota Corolla
Same as Japanese
Double GM Average
Best in GM

How did the turnaround occur? What accounts for the dramatic improvement in performance? Of course, multiple factors were
involved, but the best explanation of the most important factor can be
illustrated by an interview with one of the production employees at

Illustrating the Power of Culture Change

13

NUMMI. He had worked in the facility for more than twenty years.
He was asked to describe the difference he experienced between the
plant while it was managed by GM and the plant after the joint venture was formed. This UAW employee said that prior to the joint venture, he would go home at night chuckling to himself about the things
he had thought up during the day to mess up the system. He'd leave
his sandwich behind the door panel of a car, for example. "Six
months later the customer would be driving down the road and
wouldn't be able to figure out where that terrible smell was coming
from. It would be my rotten sandwich in the door," he chuckled to
himself. Or, he would put loose screws in a compartment of the frame
that was to be welded shut. As the customer rode in the car, she or he
would never be able to tell exactly where that rattle was coming from
because it would reverberate throughout the entire car. "They'll never
figure it out," he said.
"Now," he commented, "because the number of job classifications has been so dramatically reduced, we have all been allowed
to have personal business cards and to make up our own titles. The

title I put on my card is 'Director of Welding Improvement' ." His
job was to monitor certain robots that spot-welded parts of the
frame together. "Now, when I go to a San Francisco Forty-Niners
game, or a Golden State Warriors game, or go down to Disneyland, I
look for Geo Prisms and Toyota Corollas in the parking lot. When
I see one, I take out my business card and write on the back of
it: 'I made your car. Any problems, call me.' I put it under the windshield wiper of the car. I do it because I feel personally responsible
for those cars."
The difference between Fremont in 1982 and Fremont in 1992,
at the time the interview was conducted, is a reflection of an organizational culture change. It was a gut-level, values-centered, in-thebones change from viewing the world one way in 1982 to viewing it
entirely differently a decade later. Employees had simply adopted a
different way to think about the company and their role in it. Higher
levels of productivity, quality, efficiency, and morale followed directly from this change in the firm's culture.
This is the kind of change that this book addresses. Unless it is
integrated with other types of change initiatives-for example, TQM,
downsizing, reengineering-it is unlikely that the changes will be
successful. The status quo will prevail. We repeat: Without culture
change, there is little hope of enduring improvement in organizational
performance.


An Introduction to Changing Organizational Culture

The Meaning of Organizational Culture
It was not until the beginning of the 1980s that organizational scholars began paying serious attention to the concept of culture (e.g.,
Ouchi, 1981; Pascale & Athos, 198 1; Peters & Waterman, 1982; Deal
& Kennedy, 1982). This is one of the few areas, in fact, in which organizational scholars led practicing managers in identifying a crucial
factor affecting organizational performance. In most instances, practice has led research, and scholars have focused mainly on documenting, explaining, and building models of organizational phenomena
that were already being tried by management. Organizational culture,
however, has been an area in which conceptual work and scholarship

have provided guidance for managers as they have searched for ways
to improve their organizations' effectiveness.
The reason organizational culture was ignored as an important
factor in accounting for organizational performance is that it refers to
the taken-for-granted values, underlying assumptions, expectations,
collective memories, and definitions present in an organization. It
represents "how things are around here." It reflects the prevailing ideology that people carry inside their heads. It conveys a sense of identity to employees, provides unwritten and, often, unspoken guidelines
for how to get along in the organization, and enhances the stability of
the social system that they experience? Unfortunately, people are unaware of their culture until it is challenged, until they experience a
new culture, or until it is made overt and explicit through, for example, a framework or model. This is why culture was ignored for so
long by managers and scholars. It is undetectable most of the time.
Of course, there are many kinds or levels of culture that affect
individual and organizational behavior. At the broadest level, a global
culture, such as a world religion's culture or the culture of the Eastern
hemisphere, would be the highest level. Researchers such as Hofstede (1980), Aiken and Bacharach (1979), and Tromperaars (1992)
have reported marked differences among continents and countries
based on certain key dimensions. For example, national differences
exist among countries on the basis of universalism versus particularism, individualism versus collectivism, neutrality versus emotionality, specificity versus diffuseness, focus on achievement versus
ascription, focus on past versus present versus future, and an internal
focus versus an external focus (Tromperaars, 1992).

* See footnote on page 17.

The Meaning ofOrgaizizationa1 Culture

At a less general level are subgroups such as gender-based cultures (i.e., distinctive ways in which men and women view the world,
e.g., Martin [1990], or Cox's [I9911 work on differences between
black and white cultures), occupational cultures (e.g., Van Maanan's
119751 studies of police culture), regional cultures (e.g., Blauner's
[I9641 work on regional and urban-rural cultures in the United States),

and industry cultures (e.g., Gordon's [I9911 work on competitiveness,
historical development, core technology, and customer requirements
that affect industry cultures). Each culture is generally reflected by
unique language, symbols, rules, and ethnocentric feelings. Still less
broad is the culture of a single organization, the level at which this
book is aimed. An organization's culture is reflected by what is valued,
the dominant leadership styles, the language and symbols, the procedures and routines, and the definitions of success that make an organization unique.
Inside an organization, subunits such as functional departments,
product groups, hierarchical levels, or even teams may also reflect their
own unique cultures. Difficulties in coordinating and integrating
processes or organizational activities, for example, are often a result of
culture clashes among different subunits. For example, it is common in
many organizations to hear of conflicts between marketing and manufacturing, or to hear of disparaging comments about the fuzzy-headed
HR department, or to hear put-downs of the white-coats in R&D. One
reason is that each different unit often has developed its own perspective, its own set of values, its own culture. A variety of investigators
have reported on the dysfunctions of subgroup culture clashes (e.g.,
Van Maanen & Barley, 1984, 1985; Jerimier, Slocum, Fry, & Gaines,
199 1). It is easy to see how these cultural differences can fragment an
organization and make high levels of effectiveness impossible to
achieve. Emphasizing subunit cultural differences, in other words, can
foster alienation and conflict.
On the other hand, it is important to keep in mind that each subunit in an organization also contains common elements typical of the
entire organization. Similar to a hologram in which each unique element in the image contains the characteristics of the entire image in
addition to its own identifying characteristics, subunit cultures also
contain core elements of the entire organization's culture in addition
to their own unique elements (e.g., Alpert & Whetten, 1985). There is
always an underlying glue that binds the organization together
(Schein, 1985; O'Reilly, Chatman, & Caldwell, 1991). In assessing an
organization's culture, therefore, one can focus on the entire organization as the unit of analysis, or assess different subunit cultures,

An Introduction to Changing Organizational Culture

identify the common dominant attributes of the subunit cultures, and
aggregate them. This combination can provide an approximation of
the overall organizational culture.
In this book we are interested primarily in helping managers
identify ways in which their organization's culture can be diagnosed
and changed. The relevant level of cultural analysis, therefore, is the
level at which change efforts are directed. This may be at the overall
organization level or it may be at the level of a subunit supervised by
a manager. The target is the level at which culture change is required
for organizational performance to improve.

Caveats
We do not claim that our framework or our methodology represents
the one best or the one right way to diagnose and change organizational culture. Doing so would be similar to claiming that one best
way exists to design an organization, that one best leadership style exists, that one best method exists for measuring organizations, or that
one best set of dimensions accounts for organizational success. None
of these claims, of course, is reasonable. Other authors have proposed
approaches to measuring organizational culture. Other frameworks
have been proposed in the literature. A variety of underlying dimensions of culture have been put forward. Some authors have even denied that assessment and change of organizational culture are possible
(e.g., Fitzgerald, 1988). Although we review a sampling of alternative
approaches in Chapter 3, our intent is not to provide an extensive review of the culture literature in this book. We have done so elsewhere
(e.g., Cameron, & Ettington, 1988; Beyer & Cameron, 1997). Instead, we are advocating here an approach that has several important
advantages to managers and change agents interested in diagnosing
and changing culture as well as to scholars interested in investigating
organizational culture using quantitative methods.
Our approach to diagnosing and changing organizational culture offers the advantage of being
0

0

Practical-It captures key dimensions of culture that have
been found to make a difference in organizations' success.
Timely-The process of diagnosing and creating a strategy
for change can be accomplished in a reasonable amount of
time.
Involving-The steps in the process can include every
member of the organization, but they especially involve all

Caveats

,

those with responsibility to establish direction, reinforce
values, and guide fundamental change.
Quantitative and qualitative-The process relies on quantitative measurement of key cultural dimensions as well
as qualitative methods including stories, incidents, and
symbols that represent the right-brained ambience of the
organization.
Manageable-This process of diagnosis and change can
be undertaken and implemented by a team within the organization-usually the management team. Outside diagnosticians, culture experts, or change consultants are not required
for successful implementation.
Valid-The framework on which the process is built not only
makes sense to people as they consider their own organization, but it is supported by an extensive empirical literature
and underlying dimensions that have a verified scholarly
foundation.

In other words, we do not stake a claim for the one-best-way

with our approach, but we do advocate this approach as a critically
important strategy in the organization's repertoire for changing
culture and improving performance.
-

* John Van Maanan (1997) of M.I.T., probably the best researcher on organizational culture in the organizational sciences, aptly pointed out that "leaving readers
with the suggestion that four and only four cultures represent the wonderful world of
organizations is a mistake. One can almost hear our anthropological ancestors turning over in their graves." We want to communicate clearly that our theoretical model
was developed in order to organize organizational culture types, but it does not pretend to be comprehensive of all cultural phenomena. Nor does it apply equally well
to cultures at levels other than the organization level-for example, national cultures.
The framework provides, instead, a way for organizations to discuss and interpret key
elements of organizational culture that can foster change and improvement. A major
problem in many organizations facing the need to change their cultures is that no language exists, no key elements or dimensions have been identified, and no common
perspective is available to help the conversation even get started. Change doesn't occur because it is difficult to know what to talk about and what to focus on. In our experience, this framework provides an intuitively appealing and easily interpretable
way to foster the process of culture change.


Instructions for Diagnosing Organizational Citlt~tre

19

volve your entire organization in developing a more broadbased culture assessment as well as creating a strategy for cultural change.

I~lstructionsfor Diagnosing Organizational Culture

The Organizational Culture
Assessment Instrument
In this chapter we provide the Organizational
- Culture-&sscescment
Instrument (OCAI) (see Fig. 2.1) to be used to diagnose your organization's culture. The instrument is in the form of a questionnaire that

requires individuals to respond to just six items. Although there are a
variety of ways to assess organizational culture (see Appendix I for a
discussion), this instrument has been found to be both useful and accurate in diagnosing important aspects of an organization's underlying culture. It has been used in more than a thousand organizations
that we know of, and it has been found to predict organizational performance. Its intent is to help identify the organization's current culture. That's step l . The same instrument helps identify the culture
organization members think should be developed to match the future
demands of the environment and the challenges to be faced by the
company. That's step 2.
We encourage you to take time now to answer the six questions for your own organization. Rate the organization in its current
state, not as you'd like it to be. It will take about five minutes to complete the six questions.
After you have completed the first instrument, take another
five minutes to complete the second instrument. These are the same
questions, but you'll respond to them as you would prefer your organization to be in five years. In other words, if your organization is
to become even more excellent, if it is to achieve what you think it
could, if it is to become an outstanding example of high performance,
if it is to outstrip the industry average, if it is to defeat the competition, what should the culture be like?
You are given instructions below for how to score these instruments and how to create an organizational culture profile for your
company. In Chapter 5, we provide instructions on how you can in\---

The purpose of the Organizational Culture Assessment Instrument
(OCAI) is to assess-six
- key dimensions of organizational culture.
These dimensions are explained in some detail in Chapter 3. In completing the instrument, you will be providing a picture of how your
organization operates and the values that characterize it. No right or
wrong answers exist for these questions just as there is no right or
wrong culture. Every organization will most likely produce a different set of responses. Therefore, be as accurate as you can in responding to the questions so that your resulting cultural diagnosis will be
as precise as possible.
You are asked to rate your organization in the questions. To determine which organization to rate, you will want to consider the organization that is managed by your boss, the strategic business unit to
which you belong, or the organizational unit in which you are a member that has clearly identifiable boundaries. Because the instrument is
most helpful for determining ways to change the culture, you'll want
to focus on the cultural unit that is the target for change. For example,

it may make little sense to try to describe the culture of the overall
Ford Motor Company. It is simply too large and complex. The new
product design unit is significantly different from a stamping plant or
from the Customer Assistance Center. Therefore, as you answer the
questions, keep in mind the organization that can be affected by the
change strategy you develop.
The OCAI consists of six questions. Each question has four
alternatives. Divide 100 points among these four alternatives depending on the extent to which each alternative is similar to your own
organization. Give a higher number of points to the alternative that is
most similar to your organization. For example, in question 1, if you
think alternative A is very similar to your organization, alternatives B
and C are somewhat similar, and alternative D is hardly similar at all,
you might give 55 points to A, 20 points each to B and C, and 5 points
to D. Just be sure that your total equals 100 for each question.
Note in Fig. 2.1 that the response column for the instrument is
labeled Now. These responses mean that you are rating your organization as it is currently. The instrument in Fig. 2.2 has a response column labeled Preferred. In this instrument you rate your organization


The Organizational Culture Assessment Instrument

20

Instructions for Diagnosing Organizational Citlture
-

as you think it should be i n p v e years in order to be highly successful.
You will note that the two instruments are identical except for the response column. Fig. 2.3 provides an illustration of how your ratings
might appear.

Figure 2.1

characterized by individual risk-taking,

The Organizational Culture Assessment Instrument-Current
Now
1. Dominant Characteristics
A The organization is a very personal place. It is
like an extended family. People seem to share a
lot of themselves.
B The organization is a very dynamic and entrepreneurial place. People are willing to stick their
necks out and take risks.

C The organization is very results oriented. A major
concern is with getting the job done. People are
very competitive and achievement oriented.

t. Commitment to this

D The organization is a very controlled and
structured place. Formal procedures generally
govern what people do.
Total

100
Now

2. Organizational Leadership
A The leadership in the organization is generally
considered to exemplify mentoring, facilitating,
or nurturing.

D The glue that holds the organization together is
formal rules and policies. Maintaining a smoothrunning organization is important.

B The leadership in the organization is generally
considered to exemplify entrepreneurship,
innovating, or risk taking.

Total

5. Strategic Emphases

C The leadership in the organization is generally
considered to exemplify a no-nonsense, aggressive, results-oriented focus.

A The organization emphasizes human development.
High trust, openness, and participation persist.

D The leadership in the organization is generally
I

considered to exemplify coordinating, organizing,
or smooth-running efficiency.
Total

100

B The organization emphasizes acquiring new
resources and creating new challenges. Trying
new things and prospecting for opportunities

are valued.

100
Now