Corporate Culture: The Ultimate Strategic Asset

Throughout this book, we have discussed and examined how corporate culture can be an intangible asset, a source of strategic and competitive advantage, and a driver of superior financial performance. However, corporate culture also has a dark side: if managed incorrectly or left unmanaged, it can lose its positive aspects and become dysfunctional or toxic. This chapter deals with situations in which culture becomes a liability, not an asset.

We begin by revisiting the concept of dysfunctional culture, which was introduced in Chapter 1. We then identify dysfunctional cultural syndromes that companies can suffer from that in turn create problems with respect to the functionality of one or more of the five key dimensions of culture we described in Chapters 4 to 8: customer orientation, people orientation, performance standards and accountability, innovation and change, and company process orientation. Next, as in prior chapters, we examine and analyze selected companies with dysfunctional cultures to gain insight into how this unfortunate condition occurs and its consequences. We have selected some very important case examples of how companies (at various stages of their history) mismanaged their culture. Specifically, we discuss AIG, the once-great and powerful company that is the poster child for the financial collapse experienced in 2008–09. We explain how IBM, generally regarded as a company with an outstanding positive culture, mismanaged customer orientation in the 1980s and fell from grace. We discuss how American Express created a highly dysfunctional environment through low productivity and an excess of politically

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