"The way we do things around here" — the shared values, beliefs and behaviours of an organisation
Culture is mostly unwritten — it emerges from leadership, history, people and reward systems
Drucker: "Culture eats strategy for breakfast" — the right strategy fails in the wrong culture
Influences employee behaviour, motivation, and performance daily
Affects brand and customer experience — a service culture shows in every interaction
Determines how a firm responds to change — rigid cultures slow adaptation
Key factor in M&A success or failure — culture clash can destroy post-merger value
Changing visible elements (logo, office) doesn't change culture — you must reach the invisible layer
Central authority; decisions from top. Fast but dependent on leader quality.
Rules, procedures, hierarchies. Stable and predictable. Slow to change.
Project teams; expertise drives power. Flexible and creative. Harder to control.
Individuals are supreme. Common in law firms, consultancies. Hard to manage.
Control radiates from a central figure or small group — like a spider's web
Few rules and procedures — power is personal, not positional
Decisions are fast — no committee approval needed
Everything depends on the judgement of the central power figure
Works well: start-ups, entrepreneurial firms, crisis situations requiring rapid decisions
Fails when: the business scales — one person can't manage complexity; succession is a major risk
Examples: early Amazon (Bezos), Apple (Jobs era), Sports Direct (Mike Ashley)
Power culture can drive innovation but creates dependency risk — what happens if the leader leaves?
May suppress dissent — yes-men dominate, bad decisions go unchallenged
Power derives from position in a hierarchy, not personal charisma
Clear rules, job descriptions, procedures, and formal communication channels
Bureaucratic but predictable — everyone knows their role
Reward and promotion are based on following the rules correctly
Works well: large stable organisations — civil service, utilities, traditional banks, NHS
Fails when: rapid change is needed — bureaucracy becomes a bottleneck
Innovation is stifled — "that's not in my job description"
Security and clarity — people know what's expected; good for lower-risk employees
Frustration for creative, ambitious individuals — limited upward mobility or self-expression
Organised around completing specific projects or tasks — teams form, deliver, disband
Power comes from expertise, not seniority — "who can do this best?"
Cross-functional teams pull from different departments
High adaptability — structure changes as tasks change
Works well: consulting firms, ad agencies, R&D labs, tech start-ups, project-based businesses
Fails when: resource conflicts arise — competing projects all demand the best people
Difficult to manage — accountability can blur in matrix structures
Energising and empowering — high autonomy, variety of work, strong sense of purpose
Can be stressful if demands are constant and resources scarce
The Paradigm (centre) is shaped by all six surrounding elements — changing culture means changing multiple elements simultaneously
Culture is deeply embedded — takes years to build, hard to shift quickly
Employees who embody the old culture may actively resist
Cosmetic changes (new logo, new values poster) don't shift the hidden iceberg layer
Leadership modelling — leaders must visibly live the new values every day
New stories — celebrate people who exemplify the new culture, create new heroes
Reward alignment — performance management must reward new behaviours, not old ones
Structural change — flatten hierarchy, change team structures, shift power
New hires — recruit people who naturally embody the desired culture
Minor culture shifts: 2–5 years. Major culture transformation: 5–10+ years
M&A culture integration typically takes 3–7 years — often the reason mergers fail
Strong culture: shared values are widely held and deeply felt; behaviours are consistent
Weak culture: values aren't lived; high inconsistency between stated values and actual behaviour
Strong culture → lower monitoring costs (people self-regulate) + better coordination
BUT: strong culture can become a trap — groupthink, inability to adapt (e.g. Kodak)
Cost leadership requires efficiency culture — lean, process-driven, rule-following
Differentiation requires innovative culture — risk-tolerant, creative, customer-obsessed
Misalignment between strategy and culture is a major strategic failure mode
A large UK bank employs 50,000 people. Decisions are made through formal approval chains, all employees have defined job descriptions, and promotions are based on following procedures correctly. According to Handy's model, this BEST describes:
A software firm attempts to change its culture from hierarchical to collaborative by designing an open-plan office and updating its values poster. Six months later, managers still make all decisions and employees still avoid challenging them. This BEST illustrates which concept?
Johnson and Scholes' Cultural Web identifies six elements that shape organisational culture. Which of the following is the CENTRAL element around which all others revolve?