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Reading - Summer 2003 | Vol.45 No.4 | REPRINT SERIES...

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California M anagement Review S u m m e r 2 0 0 3 | V o l . 4 5 , N o . 4 | R E P R I N T S E R I E S Leading by Leveraging Culture Jennifer A. Chatman Sandra Eunyoung Cha © 2003 by The Regents of the University of California
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W e occasionally get calls from prospective clients who, having heard that we consult with organizations to improve their cultures, ask us, “Come on down to our organization and get us a better one.” Perhaps they are thinking that, somehow, after we have worked our culture magic, employees will be singing and dancing in their cubicles. Although this is a nice image, simply trying to make employees happy misses the power of leveraging culture. The problem is that organizational culture has become faddish; and, as such, it has been over-applied and under- specified. Our goal here is to precisely clarify why culture is powerful and to provide specific criteria for developing a strong, strategically relevant culture that is likely to enhance an organization’s performance over the long haul. We will not claim that by simply managing culture, leaders will be assured of organizational success, or that by neglecting culture, they will be doomed to failure. Leveraging culture is but one of a number of key leadership tools. We will claim, however, that by actively managing culture, an organization will be more likely to deliver on its strategic objectives over the long run. Why Is Organizational Culture Powerful? Focusing People Intensely on Strategy Execution A 1999 Fortune magazine article highlighting pathbreaking research by Ram Charan and Geoffrey Colvin began with a provocative title: “Why CEOs Fail.” 1 The definitive answer had been found, and it was notoriously simple: CALIFORNIA MANAGEMENT REVIEW VOL. 45, NO. 4 SUMMER 2003 20 Leading by Leveraging Culture Jennifer A. Chatman Sandra Eunyoung Cha The first author wrote this article while a Marvin Bower Fellow at the Harvard Business School and is grateful for their support.
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CEOs failed when they were unable to fully execute their strategy. This was an amazing conclusion because it stood in contrast to what industrial economists have been telling us for years—that firms with well-formulated and hard-to- imitate business strategies emerge as the winners. 2 Charan and Colvin’s article suggested that firms whose strategies were merely reasonable but were executed fully could be the most successful. This shifts the focus from strategy formulation to strategy execution —and culture is all about execution. Consider the often-cited example of Southwest Airlines, a company with a transparent, almost simple, strategy: high volume along with short and convenient flights using only fuel-efficient 737s, culminat- ing in low costs and the ability to offer customers low-priced tickets. As a result, Southwest has been the only U.S. airline to be profitable for 28 consecutive years. 3 One key to Southwest’s success is its remarkably short turnaround time, 15 minutes versus competitors’ average of 35 minutes. 4 Planes don’t sit long at the jet way. Instead, employees across functional lines band together to get
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