Organizational Culture Guidelines

For anyone who has any doubts about how important organizational culture is, all they have to do is find two sample organizational cultures, one that was healthy, one that was not, and take a look at the difference between the two companies.

One of the great all time examples of this is actually between two of the best known companies in the world: IBM and Microsoft. In this example, IBM didn't even necessarily have a terrible organizational culture, but they did fall into several of the traps that caused them to become stagnant.

This example is from the late 1980s. Microsoft was a fairly good company, with revenues in the tens of millions--but a long way from what they are now. At the time, IBM had the largest market share by far with over 80% of the mainframe market. Although long forgotten history by most people, at that time IBM spent a large amount of time and money investing in a software system that was supposed to "take over everything."

It was called OS/2, and at the time many people complained that there would be no more experimentation because obviously OS/2 would be with every IBM which would put a strangle hold on the industry. Obviously that didn’t happen . . . but why? With 80% of the market cornered, an international market, and their own new software, how did IBM not take over?

One of the obvious reasons is Microsoft. Microsoft has done what everyone thought IBM was going to do in the late 1980s. What ended up happening was the OS/2 was really memory heavy and not nearly as functional as it could have been. Bill Gates and Microsoft took advantage of IBM's blunders to take over the market. IBM stopped analyzing its own corporate culture because they were so dominate the thought became "everything we're doing is right," and in retrospect, the higher ups at IBM were completely concerned with internal measures, internal goals, and proving production.

They were so obsessed with keeping track of how many lines of programming were getting done that many programmers did not write the best of most efficient programming--because it wasn't enough lines!

Meanwhile, Microsoft's entire organizational culture was not focused on bureaucracy, but on getting things done. The bottom line was a better product, followed by an even better product, and so on. While IBM became so entangled with bulkier and bulkier programming and bureaucracy (they even had a class on how to order document manuals from the main company--just to get help).

Microsoft took advantage by making a product aimed at the customers, not at internal specs. Because of this they absolutely dominated the computer market. IBM had a series of setbacks that resulted in the stock tumbling and the need to hire a complete outsider to re-invent the company.

This is an example where becoming overconfident, falling into dangers of bureaucracy, and internal numbers and goals caused a company that never should have lost its near monopoly on the market to almost bust, while an upstart company who "had no business competing with IBM" according to most sources, had an outstanding organizational culture based on customers needs and getting things done (as opposed to how they were done and measured--IBM's downfall).

Microsoft is a sample organizational culture that showed how a company could work, and how important that culture was. While IBM has recovered into a great company, the late eighties to early nineties shows the cost of falling into the trap of weak organizational culture.