[Editor's note: Moussa's column appears courtesy of the Wharton/ASIS Program for Security Executives, an executive education program for those who aspire to be leaders in the field of security.]
When the Department of Homeland Security was created to improve the U.S. response to terrorism after the 9/11 attacks, it was the most extensive reorganization of government in 50 years. The restructuring brought together 22 separate entities, including the FBI, CIA, Department of Justice, Department of Agriculture, Centers for Disease Control and Prevention, and National Institutes of Health.
But it was much easier, as hard as it may have been, to reorganize the organizational chart than to truly bring all the diverse cultures of these agencies together. As Ashish Nanda, an associate professor at Harvard Business School, noted in an interview in Salon (The Homeland Security merger mess), the new department faces a serious challenge from "culture clashes." He said that one of the strengths of organizations such as the CIA and FBI "has been that they have very strong distinguishing cultures. And you'll put them together and then what do you want? Do you want the whole department to have a particular shared culture? How much of a commonality will there be and how much of a difference? This will resolve not right away but over a period of time."
The Importance of Culture
Culture is sometimes seen as a "soft issue," but it has a significant impact on performance, particularly the success of new initiatives. Culture is a key reason why implementations of new initiatives often fail. A UK study in 1997 found that 33 percent of companies failed to achieve their objectives, and another study found that 50 percent of all corporate initiatives become bogged down because people stop paying attention to them.
Culture is often at the root of these implementation problems. More than half of all mergers and acquisitions posted financial returns below their industry average three years after the transaction, with the leading cause of failure attributed to cultural incompatibility. A Coopers & Lybrand study found that 62 percent of all major organizational change efforts fail to achieve their stated goals, primarily due to organizational and behavioral factors.
Culture is hardly a soft issue. Sometimes the soft issues are the hard ones.
Culture is the way things are done in an organization. Webster defines it as, "The integrated pattern of human behavior that includes thought, speech, action, and artifacts and depends on man's capacity for learning and transmitting knowledge to succeeding generations." But perhaps the best way to understand culture is to look at it in action in different organizations. Consider the different cultures of the following organizations, as highlighted by William Bridges in The Character of Organizations:
* Apple-A "tent-revival" culture, people on a mission, "insanely great" products.
* Capital One-Analytic, testing-driven, data-heavy
* SAS-Family friendly, "people first," good feeling enhances creativity and productivity
* Enron-Competitive, dog-eat-dog, hyper-entrepreneurial
Think about how these very different cultures shaped very different strategies and took these organizations on different paths.
Saying, Doing, and Believing
Culture is not just what companies say but is also embodied in their actions and beliefs. (This distinction was pointed out by MIT Professor Ed Schein in the 1970s.) All three components-statements, behavior, and beliefs-are important in shaping culture.
Sometimes there are disconnects between what companies say, do, and believe. For example, Enron had a very clear set of written values that focused on communication, respect, integrity and excellence. But its underlying beliefs may have been more accurately captured by a statement on a Lucite cube on the desk of CFO Andy Fastow, which read: "When Enron says it's going to rip your face off, it will rip your face off."