Organisational Culture lies in the Vision
Marissa Mayer the CEO of Yahoo, ranked the eighth on the list of most powerful businesswoman in America of 2013, believes that strong companies have strong cultures, each has unique and individual flavor.
So what are Corporate cultures?
It understood as a shared common resource, a pattern of assumptions, beliefs and behaviors while coping with problems of external adaptation and internal integration.
Dave Dufield co-founder of People Soft described corporate culture saying “our true competence is our culture, that’s what attracts people and keep them here. It also helps sell to customers. Customers want to work with companies that are competent, trustworthy and fun”
Organizational cultures are created, maintained, or transformed by people. An organization’s culture is, in part, also created and maintained by the organization’s leadership. Leaders at the executive level are the principle source for the generation and re-infusion of an organization’s ideology, articulation of core values and specification of norms.
It believed that companies with strong cultures generally perform better than those with weak cultures, but only when the cultural content is appropriate for the organization’s environment.
But rapid growth enterprises are facing many unique management challenges. One of the challenges is that the management environment is constantly changing and leadership roles rapidly evolving.
So there is need to maintain a strong innovative culture despite a constant influx of new employees and ever-expanding product line that must be developed in the face of limited resources.
Business expansion presents myriad issues that have to be addressed. Growth causes a variety of changes all of which present different managerial, legal and financial challenges.
Growth means that new employees will be hired who will be looking to the top management of the company for leadership.
Growth means that the company’s management will become less and less centralized and this may raise the levels of internal politics, protectionism and dissension over what goals and projects the company should pursue.
Growth means that market share will expand calling for new strategies for dealing with larger competitors.
Growth means that additional capital will be required creating new responsibilities to shareholders, investors and institutional leaders.
Thus growth brings with it a variety of changes in the company’s structure, needs and objectives.
When Marissa Mayer was appointed the CEO of Yahoo in 2012, the company was suffering from team work and diminishing quality of work as the primary motives to the company’s struggling performance thus gradually losing its market share.
She decided to take an inventory of Yahoo’s culture and work practices, assessed workforce interaction as a principal productivity driver and then realized that a cultural shift was necessary.
She says that it’s around strong Corporate cultures that you find the energy and then enhance that energy into innovation. She is quoted saying “You can take that energy around culture and find fun ways to apply it to engage users”
First change Mayer made was that employees were no longer provided the option of work from home but must be physically present in an office space. It didn’t end there, she also reformed Yahoo’s hiring policy in which she now personally reviews every new hire after they’ve been assessed by a team of colleagues.
Mayer then set her eyes focused on the mobile platform as Yahoo’s new frontier market Yahoo.
Second strategy for Mayer was to turn around Yahoo by enticing the current users; she re-launched Yahoo mobile apps, redesigned the Flickr photo service and released a cleaner search results page.
Inspired by her former employer Google often buying small companies in order to gain talented staffers, Mayer’s spin on that strategy is now a key part of her plan to turn around the struggling Yahoo and also a glimpse at how she views the company’s future.
Almost all startups Yahoo has bought were centered on mobile content, apps and services. From all the acquisitions Mayer has made, most have been shut down and talent brought on Yahoo mobile team.
She is pulling in people who are excited about mobile, people who want to build a winning culture. Her strategy is to use these companies these companies’ technology to enhance and improve what Yahoo already has.
The few companies that have survived are Tumblr, gaming infrastructure creator Playerscale and Video app Qwiki which have been integrated into Yahoo’s core businesses which are in four areas; core business (content, apps and search), Social, Gaming, Video (Chat and Conferencing).
Mayers main strategy has been to make Yahoo a company that builds products’ people are excited to use every day.
A culture change in Yahoo has now been defined that the smart, innovative workers can get some attention while others will either unlock new potential or move on to some where similar to the old yahoo.
And with her strategy, Marissa Mayer has got the markets’ attention.
Yahoo’s advertising market share may look gloomy but its focus now is on adding content and updating advert formats to their site which promises to turn the outlook around.
Recently Yahoo has announced their recent first quarter results and had surpassed market expectations, first quarter revenues grew 1% over the year to $1.09 Billion when the market was looking for revenue of $ 1.08 Billion. Yahoo has also reported a 30% growth in mobile user base to 430 Million.
A company’s culture reflects what its leaders believe will make the company sustainably successful.
For many companies, Yahoo’s “aqui-hire” strategy is capital intensive to afford, because if Mayer wasn’t able to selling part of the company shares to Ali Baba, Yahoo wouldn’t have the financial muscle to acqui-hire the promising start up.
A good contrary example to Yahoo’s strategy in expansion and still maintains their culture is Bank of America’s, which moved away from Acquisition strategy to organic growth.
In 2001 Bank of America was positioned well, its strategy of mergers and acquisitions had made the company a coast-to-coast powerhouse with significant competitive advantages, including a national customer base of 27 million households; small, middle market and corporate customers in the nation’s hottest growth markets; a diverse and stable mix of blue chip businesses; world-class executive management and a strong focus on the bottom line.
Unfortunately, the company was not so well-positioned when it came to providing its customers with the kind of world-class performance that would lead to customer acquisition, retention, loyalty and revenue growth. Account growth was always stagnant.
The then-new Bank of America chairman and CEO Kenneth D. Lewis announced a major strategic shift for the company, from growth through acquisition and merger to organic growth—acquiring, retaining and deepening profitable customer relationships.
Lewis and other top executives determined Bank of America needed a more rigorous, disciplined and comprehensive approach to process improvement and decided to adopt a quality program based on Six Sigma.
Goslee moved to change the culture by changing expectations, an enterprise-wide metric was established for customer delight, replacing product and channel centric customer satisfaction research.
Its goal was to contribute about $1 billion per year toward the company’s revenue growth and expense-reduction efforts, which was achieved, the bank reaped about $2 billion in revenue gains and cost saving.
By October 2003, Six Sigma had penetrated Bank of America’s culture; the Bank was now handling almost 200 customer transactions per second, faster and more accurately than ever, same day payments had improved by more than 36% and deposit processing had improved by 47%.
In 2004, the Bank of America reaped a record $14.1 in profits.
By 2005, online banking had became a big success for Bank of America, the bank’s 19.8 million online customers typically applied for more loans, made more deposits and were 30% more profitable to the bank than its other customers.
In 2005 when the Bank of America merged with FleetBoston Financial, creating the first banking institution with a truly national scope that served approximately 33 million consumers in the United States, with leading or strong market shares throughout the Northeast, Southeast, Midwest, Southwest and West Coast.
The success of merger between Bank of America and FleetBoston Financial was attributed to the six sigma linkage, both companies were using Six Sigma successfully in recent years to streamline processes, improve quality, efficiency and accuracy, and to free up capital for strategic investment, creating one corporate culture.
On many occasions, it been argued that internationalization (process of increasing involvement in international operations) can cause culture change.
Internationalization constitutes a phenomenon which affects the entire organization, a process affecting the entire organization, rendering the relevant organizational environment more international and calling for organizational adaptations.
But the intrinsic definition and perspective of internationalization should be viewed as an inward process whereby, it is bringing the new foreign operations within the boundaries of a firm.
The key objective for commercially oriented firms is to continuously put large efforts in give high quality products and services in the market. This leverage is not found in the targeted market during the expansion process but within the organization environment.
Firms only have to increase flexibility since customer requirements are increasingly becoming demanding, unique and volatile in order to maximize profits which require little strategy adjustments but still be able to maintain your core corporate cultures.