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Three Cultures: Why Innovation Fails

By Shlomo Maital


 “Why don’t organizational innovations occur, or if they do, fail to survive and proliferate”?  This is the issue addressed by  the great MIT scholar Edgar H. Schein, in a 1996 article, “Three Cultures of Management” (Sloan Management Review Fall 1996).  He cites the standard answers, like ‘resistance to change’.  But his explanation is far more persuasive and powerful.

   “In every organization, there are three particular cultures among its subcultures,  two of which have their roots outside the organization and are therefore more fundamentally entrenched”, Schein writes. There is the internal culture of the organization. But, in technology-driven cultures, there is also the ‘engineering’ culture.  And in addition, there is the ‘managerial’ culture.  Very often, those cultures clash.   Schein might have added that, in the age of globalization, there is also ‘national culture’.  For instance, Israel has a sometime informal, get-it-done cut-the-corners culture that often clashes with organizations’ disciplined, orderly, by-the-book culture (such as Intel).

   Culture, recall, is simply shared values.  Engineers, for example, share the key value of quality and perfection. Make it work, make it right.  This is in part why it is so hard to convey the concept of “minimum viable product” (part of ‘get to market fast’ strategies) that are part of many organization’s value of ‘speed’.  The engineers in R&D simply will not part with the product, until by their culture it is perfected. That, often, is too late. 

   Recently, Goldman Sachs’ culture of profit maximization clashed with one of its senior managers’ values (create value for the customer, not for the bank). He quit, in a very public manner, blasting Goldman Sachs in a NYT Op-Ed. 

   And of course, underlying everything, there are sweeping changes in culture.  Management culture is changing, as profit maximization becomes discredited. Organizational culture is changing, as more companies are forced to relate with greater respect to their customers. 

   Innovator: As an exercise, I recommend this:  Draw three circles. One for organizational culture, one for management culture, one for engineering culture.  List the core values you find in each (for your own specific context). Look very closely at the intersection of the three circles.  Think about potential clashes.   Will these clashes hamper the innovation you plan or are involved with?  What can you do about it?  It is very hard to change cultures.  Sometimes it’s easier to change the project.

    Ed Schein’s article is rather old, nearly 16 years old, but is still valid.  Sometimes, the old truths are still the best ones. 

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
March 2012