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Culture Cycle, The: How to Shape the Unseen Force that Transforms Performance

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Culture Cycle, The: How to Shape the Unseen Force that Transforms Performance


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The next indispensable book on organizational culture: shaping it, sustaining it, and quantifying its business value.

  • Introduces a comprehensive conceptual framework for managing corporate culture.
  • Demonstrates how culture can account for 20-30% of organizational performance differentials.
  • Based on extensive cases and decades of field work on the linkages between culture, productivity, and profits.
  • By Harvard's James Heskett, world-renowned thought leader on organizational culture.


  • Copyright 2012
  • Edition: 1st
  • Book
  • ISBN-10: 0-13-277978-1
  • ISBN-13: 978-0-13-277978-4

The contribution of culture to organizational performance is substantial and quantifiable. In The Culture Cycle, renowned thought leader James Heskett demonstrates how an effective culture can account for 20-30% of the differential in performance compared with "culturally unremarkable" competitors.

Drawing on decades of field research and dozens of case studies, Heskett introduces a powerful conceptual framework for managing culture, and shows it at work in a real-world setting. Heskett's "culture cycle" identifies cause-and-effect relationships that are crucial to shaping effective cultures, and demonstrates how to calculate culture's economic value through "Four Rs": referrals, retention, returns to labor, and relationships. This book:

  • Explains how culture evolves, can be shaped and sustained, and serve as the organization's "internal brand."
  • Shows how culture can promote innovation and survival in tough times.
  • Guides leaders in linking culture to strategy and managing forces that challenge it.
  • Shows how to credibly quantify culture's impact on performance, productivity, and profits.
  • Clarifies culture's unique role in mission-driven organizations.

A follow-up to the classic Corporate Culture and Performance (authored by Heskett and John Kotter), this is the next indispensable book on organizational culture.

"Heskett (emer., Harvard Business School) provides an exhaustive examination of corporate policies, practices, and behaviors in organizations." Summing Up: Recommended.

Reprinted with permission from CHOICE, copyright by the American Library Association.

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Introduction to The Culture Cycle: How to Shape the Unseen Force that Transforms Performance

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Table of Contents

Acknowledgments     x

About the Author     xii

Introduction     1

Two Visits, One Story     3

Questions to Be Addressed     12

How This Book Is Organized     13

Chapter 1 A Crisis in Organization Culture?      15

What Culture Is and Isn’t      17

Stealth Weapon or Humanizing Effort?      17

The Development of Interest in Organization Culture     19

The Nature of an Organization’s Culture     22

Culture and the Workplace     35

Culture and the Long-Term Erosion of Job Satisfaction     38

Chapter 2 Culture as “Know How”      41

ING Direct: Shaping a Culture     41

Culture and Purpose (“Know Why”)      45

Culture and Strategy (“Know What, When, Where”)      46

Culture and Execution (“Know Who”)      46

How Successful Managers View the Importance of Culture     48

Culture in the Context of Purpose, Strategy, and Execution     49

Chapter 3 Culture: A Multi-edged Sword     55

Nature and Results of the 1992 Study     59

Strong Cultures Affect Performance     60

Strength of Culture Is Not Correlated with Good Performance     61

Adaptability Keys Long-Term Success     61

The Question of Fit     62

The Role of Leadership      65

Chapter 4 Culture in an Organization’s Life Cycle     69

How Cultures Are Formed     69

The Process of Culture Formation     72

How Cultures Are Articulated and Institutionalized     72

How Cultures Are Diluted     75

Enemies of an Effective Culture     77

How Cultures Are Renewed     88

Reinforcing Effective Cultures     90

Chapter 5 Economics of Culture: The “Four Rs”      95

Economic Advantages of an Effective Culture: The “Four Rs”     97

Culture Impact Model     114

Several Caveats     114

Chapter 6 The Culture Cycle: Measuring Effectiveness     119

USAA: Effectiveness Through Trust     121

Nucor Steel: A Study in Learning, Accountability, Self-Direction, and Innovation     124

Toyota and the Importance of Alignment and Agility     128

Measuring a Culture’s Strength     132

Measuring a Culture’s Health: The Culture Cycle     134

Measuring a Culture’s Fit     146

Caveats     147

Chapter 7 The Four R Model: A Field Test     151

The Setting: RTL, Inc.      151

The Research and Findings     152

The Blind Results     156

Blind Result Comparisons     158

Caveats Regarding the Blind Estimates     159

Comparisons of Culture Cycle Elements     160

Management’s Interpretation of What Happened     164

Conclusions     165

Chapter 8 Culture and Innovation     169

The Culture Cycle and 3M Innovation     172

Levels of Innovation     174

Adaptability and Innovation     179

Value “Clusters” That Foster Innovation     179

Innovation “Value Clusters” at Apple     187

Chapter 9 Culture and Adversity     197

Adversity and Response at Intuit     197

Adversity and Response at BP     200

9/11 and the Southwest Airlines Response     203

Adversity and Response at Goldman Sachs     204

So What?      209

The Fit Between Culture, Leadership Style, and the Nature of Adversity     210

How Cultures Help and Hurt in Times of Adversity     212

Culture as a “Filter” Between Adversity and Performance     214

Chapter 10 Subcultures and Global Strategies     219

Enter the Culturalists     221

Global Management Challenges from Cultural Differences     223

What Do These Vignettes Suggest?      231

The Selection of Leaders     239

Managing the Relationship Between Headquarters and Subsidiaries     241

Organizing, Coordinating, and Controlling Effort     243

Implications for Subcultures in General     245

Chapter 11 Mission-Driven Organizations: Special Challenges     251

Supergrowth     251

Loss of Focus: “Mission Creep”      253

Making a Large Organization Seem Small     255

Deploying Human Resources: The Challenge of Volunteer Labor     255

Measuring and Rewarding Effectiveness Among an Organization’s Subcultures     257

Coordinating Efforts with Other Mission-Driven Organizations     259

Managing Board and Leadership Conflicts Concerning Basic Assumptions     260

Controlling Zealous Behavior     263

Chapter 12 Dealing with Forces That Challenge Organization Cultures Today     267

Information and Communications Technology     268

Increasing Emphasis on Transparency     270

New Generations of Employees     272

Team-Based Work     276

Employment and Deployment Strategies     277

The Rise of Free Agency     281

The Psychological Shrinking of the World     281

Chapter 13 Leading Culture Change     285

How Do You Know Change Is Needed?      288

Monitoring Links in the Culture Cycle: RTL, Inc. Revisited     289

Changing a Culture     297

Sustaining Culture Change     305

Conclusions     309

The Role of the Leader in Reshaping Culture     310

Chapter 14 Answers and Questions     317

Characteristics of Effective Cultures     318

Economic Outcomes: Profit and Satisfied Stakeholders     320

Behavioral Outcomes: Great Places to Work     320

Some Final Thoughts     322

Appendix A Sample Questions for Measuring the Strength and Health of a Culture      325

Appendix B Four R Assumptions and Computations      329

Appendix C Complete Results of Employee Surveys, 2009 and 2010, for Three RTL, Inc. Offices     333

Endnotes      339

Index     361

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