Centre for Integral Transformation  


Corporate Culture- Background


The very beginnings

The term ‘Corporate Culture’ first started appearing in the late 1970’s and early 1980’s. Some of its beginnings go back to the problems being experienced by American Corporations and the astonishing rise of Japanese industry, a similar movement had taken place looking at  a quality.

Examples of books on the subject include:

  • In Search of Excellence by Tom Peters and Robert Waterman

  • Theory Z: How American Business Can Meet the Japanese Challenge by William G. Ouchi

  • The Art of Japanese Management by Richard Pascale and Anthony Athos

By 1989 the concept of ‘Corporate Culture’ had become so widely accepted that a hostile bid for Time Inc. by Paramount was rejected in court due to the ‘cultural differences’ between the two organisations.

In the 1990’s a new set of books were appearing, taking the theories previously expounded even further, these included:

  • Built to Last by Jim Collins and Jerry Porras

  • Liberating the Corporate Soul by Richard Barrett

  • Corporate Culture and Performance by John Kotter and James Heskett

The evolution of the various theories has been categorised as:

Theory I

Theory I is based on a having a ‘strong’ culture within an organisation which creates norms & values to help align, motivate & control the staff. However, it has been shown that some strong cultures have led to weak financial performance. Whilst there is a relationship between a strong culture and performance it is statistically only a modest one.

Theory II

Theory II is where organisations not only have a strong culture but one that is strategically appropriate to the operating conditions at the time. This recognises that ‘one size doesn’t fit all’ and that culture needs to change to meet the different prevailing conditions which different organisations find themselves in. This theory proved to be reasonably good for short to medium term results but there were still some significant exceptions.

Theory III

Theory III suggests that the best type of corporate culture is one that is strong and adaptive, one that can change to match the prevailing market conditions. This type of culture is driven very much by values and behaviours. Tom Peters, co-author of In Search of Excellence is a significant supporter of this approach and suggests you should focus exclusively on your customers. Others suggest you should focus on customers, employees and shareholders equally. This theory has the best fit to the measured results offered by research so far, and is the one which we here at CIT fully support.


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