Organizational Culture – The Equations

Perhaps you’ve seen the equation we’ve adopted at agilityIRL as a shorthand definition of organizational agility:

Organizational Agility = Process Agility x Cultural Agility

The multiplication sign reminds us of two very important things.  First, it reminds us that process and culture are interdependent.  Second, it reminds us that anything times zero is zero.

In fact, an adaptation of this equation is useful in defining the larger concept of organizational effectiveness:

Organizational Effectiveness = Process Quality x Cultural Acceptance

Introduced to me by Steven Kerr, this equation is useful if you’ve ever wondered why a technically elegant solution fell flat on its face when implemented, or when you are trying to assess how a particular solution will fare when it moves from the drawing board to the field. Consider two scenarios:

  • In scenario #1, your organization’s process quality was a “7” on a scale of “1” (the worst) to “10” (the best), while your culture’s acceptance of your processes’ design and operation was a “2” (perhaps it was being shoved down their throats by corporate). This yields an organizational effectiveness product of “14.”
  • Meanwhile, in scenario #2 the process quality was “6” (not bad, but not great), and cultural acceptance was also “6” (again, not bad, but not great). In this case, you have an organizational effectiveness product of “36.”

Between these two scenarios, Scenario #2 (36) is more effective than scenario #1 (14)—and not by a little but by a lot.

Another important aspect of this equation, is that the leverage is always better in raising the lower of the two variables. Here’s what I mean.

Let’s say you had the resources to raise one of these factors, process quality or cultural acceptance, one point.  Referring back to scenario #1, you could raise the process quality from “7” to “8”, or you could raise cultural acceptance from “2” to “3”.  If you could raise one of these two variables just one point, raising which of the two variables would produce the superior results?  Obviously, there is better leverage in raising cultural acceptance from “2” to “3.”  And that is another important aspect of this equation, the leverage is always better in raising the lower of the two variables.

Based on our experience and observational research, culture is almost always the lower of the two variables.  While engineering processes is a linear thinking problem, designing a culture is a non-linear thinking problem—the kind of problem that is uncomfortably foreign to most leaders. Organizational leadership becomes even more complicated because the processes and the culture cannot be designed independently—they are interdependent.

The fact is that culture is the key to almost everything.  There is a difference between what is technically possible and what is culturally doable, and when the irresistible force of facts and logic meet the immovable object of feeling and culture, culture wins—every time, all day long.

Yet, one of the most prevalent problems that we see is leaders (re)engineering their organization’s processes within an inch of their life, while they neglect their organization’s culture.  They don’t design their culture with the same mindfulness by which they design their processes. They allow their culture to be shaped by default, rather than designing it to sense, adapt, improvise, and overcome.

A common mistake is to think that running an organization is all about playing hardball and that touchy-feely culture business is best left to the folks in HR or OD.  Don’t make that mistake. Processes can be purchased or copied by competitors.  A culture cannot. Your organization’s culture is the key to your organization’s sustainable competitive advantage.