The four to six words or statements that make up the core values reflect the basic principles that guide our interactions with every stakeholder of the organization. They also establish the boundaries of behavior for all associates of the culture or subculture. Highly effective organizations share a common quality that sustains their success and sets them apart as great places to work: a strong set of deeply imbedded and broadly held core values. They may be few in number but they are powerful in defining the manner in which associates are expected to interact with and treat other stakeholders both inside and outside the organization.

Core values establish the foundation of the culture. Until we decide what those values are, and how we will interact with each other, it’s very difficult to do anything else—whether setting goals, establishing measurements, solving problems or even making decisions—effectively. As such, core values cannot be left to chance and allowed to emerge through unconscious neglect. Core values determine whether people work in an open and trusting environment where opinions are valued, or in an environment that is tainted by suspicion and tension. Our societal values respect open communication Why should we expect anything less from our work environments? Few would say they thrive in an environment where they are criticized for sharing how they feel or are worried whether their personal values are in conflict with those of the people with whom they work. In environments like that, associates walk around as if on eggshells, afraid to say anything.

Positive core values allow us to identify with an organization. They tell us where we stand in relation to the goals of the organization and empower us to ensure the credibility of our organization in the eyes of customers. Values espoused or not, exist in every organization. Often they are historical in nature, based

Until we decide what those values are, and how we will interact with each other, it’s very difficult to do anything else effectively.

Values can vary from one organization to another, even among those in the same enterprise. Individual departments and divisions may even have their own core values. Even so, they have to consistently reflect the core values of the overarching or enterprise culture. Effective core values also provide clear expectations of personal interaction and set boundaries beyond which behavior becomes objectionable.

For example, if a core value is integrity in everything we do, every member of the culture is expected to honorably fulfill all of his or her obligations and commitments to stakeholders of the organization. If another core value is treating every stakeholder with dignity and respect, one might vehemently disagree with an associate’s opinions or actions but is expected to deal with the issue at hand without personally attacking the associate personall.

In contrast to strong cultures and opportunistic cultures, strong, adaptive cultures remain customer-focused and learn from customer relationships. They use this knowledge and insight to make changes in their products, services and marketing strategies. A good example of this type of culture is 3M. This company is constantly renewing itself by developing new products and effectively marketing them to both old and new customers. They have sold Post-it® notes to their Scotch Tape® customers and audio- and videotape to people who bought projection equipment. Organizations with a strong sense of adaptability not only demonstrate consistently outstanding performance, they also exhibit the ability to react to turmoil, adjust and speedily take advantage of opportunities their competitors miss.

General Electric is an example of such a culture. This 122-year-old company grew from making light bulbs to become a worldwide conglomerate that makes space-travel components, medical diagnostic equipment, lasers and self-cleaning ovens. It operates a huge loan company, a reinsurance firm and a television network. It has filed nearly 68,000 patents and was the first corporation, outside computer companies, to invest in the Internet revolution, which it remains committed to. Under its former chairman and CEO, John F. Welch, Jr., GE initiated a work-out process in 1988 to improve productivity, increase efficiency and reduce layers of bureaucracy that inhibited its ability to act swiftly.

Specifically, it shed any operating process that didn’t make sense and sought out new business opportunities in untamed global markets. GE made “change” one of the bulwarks of its strategy for global expansion as it sought, in the words of Welch, to see the world “the way it is, not the way you wish it to be.’’5 Along the way, GE was named Fortune magazine’s most admired company. Welch discussed his philosophy of change in a speech to his shareholders in 2000. He described GE as an organization “endlessly searching for new ideas,’’ that was “not only comfortable with change but relished it.’’ He said an organization today that saw change as an opportunity rather than a threat

Like strong cultures, opportunistic cultures work well for a period, but often falter as conditions—competition, market shifts and technology— change. For a variety of reasons these cultures possess, in one shining window of time, the right people, the right product and the right customers. The enterprise might be shaped around a new technology or an innovative way of doing something better than anyone else. But if it lacks the ability to adapt to the changes brought on by the new needs of customers, new competition or faster technologies, it can end up like yesterday’s news.

In its early days, Xerox was a strong example of an opportunistic culture because of its ability to maximize the potential of its unique technology. In the late 1960s, Xerox as I knew it was a collection of about 80 decentralized branch offices. Despite the company’s centralized approach to product innovation, the branches had a great deal of autonomy in terms of sales and marketing. These branches (subcultures) were focused on the needs of their local customers, allowing them to react quickly to changes in the market. Loyal customers graduated from buying small copiers to larger copiers, as their needs changed. Sales teams tended to be highly motivated. They had a wide range of products and pricing plans to attract and serve more customers. There were many opportunities for advancement, recognition and reward. And the branches had autonomy to deploy resources. Thus, much of the company’s early success took place in these decentralized markets that catered to local customers. 25 Is Your Organization Ready for Changing Times? But the fortunes of Xerox changed when new managers from outside the company sought to centralize control of their products and their sales and marketing strategies. Among other things, the new central control diluted the local identities of the branch offices. Sales and marketing representatives often answered to far-off managers who, unlike the local sales teams, were unable to respond as quickly and as personally to the customers’ needs. Focusing more attention on the short-term bottom line than on the strong culture Xerox had built up, the leadership decided to place the lion’s share of its marketing and sales efforts on its large copiers. This allowed the small-copier market, which had been the breeding ground for business for local branch offices, to slip away to emerging Japanese companies. The Japanese not only became very efficient at building low-cost, high quality small copiers, they also found that they could make large copiers. So soon they began to siphon away those loyal customers who once depended on Xerox to take care of their entire copier needs—from small copiers to large ones—further eating into Xerox’s market share.

While Xerox still dominates the high-end of the market, the rest of the market it once presided over has largely been conceded to the Japanese. Here is another textbook case of a tremendous culture decimated because of decisions made around products and services that, in the end, failed to account for the changing needs of its customers and the market. The leadership of Xerox was so focused on the bottom line that it robbed the energy from its once highly effective sales teams, which were the reason for the company’s profitable years to begin with. The company, which not only demonstrated consistently outstanding performance, also exhibited the ability to react to turmoil, adjust and speedily take advantage of opportunities their competitors miss. Xerox has gone through a number of reorganizations in an attempt to recapture its former glory, has also failed to capitalize on the many high-potential products coming from its own research because of its continual focus on the “copier business” rather than on where the marketplace is going.

Strong cultures can work well as long as they have strong leaders in place to make appropriate short- and long-term decisions. These cultures Is Your Organization Ready for Changing Times?

reflect the personality and inspiration of the dominant leader, and while they are often wildly successful, over time they can falter when these strong, visionary leaders leave or die without a succession plan. The Zenith Radio Corporation is perhaps one of the best examples of this style of culture. Zenith was a fabulous company that dominated the radio and television manufacturing industries early in the twentieth century. Commander Eugene F. McDonald, its charismatic founder, guided the enterprise for 45 years, during which time Zenith led with innovations that included the first portable radios, the first AC-powered radios and the first subscription TV system. McDonald not only led his company to greatness, he also helped develop and was the first president of the National Association of Broadcasters. However, as rigid as he was charismatic, McDonald made almost every major decision in the company himself. The effectiveness of Zenith was all based on McDonald’s ability to make proper decisions, issuing orders and having them carried out. Everyone in the organization looked to McDonald for direction. But he left no succession plan. So after his untimely death in 1958, there was no one in the company to fill the huge void he left. Zenith soon lost its number-one position in television manufacturing, and because of decisions that reflected the tastes and preferences of McDonald, the company had no other product lines to compete in a rapidly changing industry. But if any company lacks the ability to adapt to the changes brought on by the new needs of customers, new competition or faster technologies, it can end up like yesterday’s news.

Since then the company has gone through reorganizations, name changes and mergers as it struggles to survive. Strong cultures can do well while led by their founders or other strong leaders. But over time, they do not create enviable track records. Often, managers just below the leader never gain the experience necessary to be strong leaders on their own. Or they fail to see the possibility of any movement upward and therefore leave. Those leaders who are left behind, and who had looked to the strong leader for guidance, can suddenly feel directionless. Subcultures may even head off in different directions, weakening the entire enterprise’s identity and collective purpose.