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The Cultural Life Cycle of Organizations

A deeper understanding of how organizations change can help leaders adapt.

  • In addition to benefits, policies, and core values, organizational culture is determined by patterns of thoughts and behavior that govern daily interactions.
  • Culture continuously changes as employees adapt to new circumstances. For example, a start-up might focus on innovation and creativity and then shift to focus on growth and management.
  • Leaders can help shape the culture by modeling behavior that will lead to success at the organization's current stage.
Photo by Matt Ridley on Unsplash
Source: Photo by Matt Ridley on Unsplash

As organizations grow, they progress through somewhat predictable patterns of culture change. This happens because culture is an expression of how a group of people works together to solve collective problems (Schein & Schein, 2017), and as organizations grow the group of people involved in solving those problems evolves and changes. New people enter the system, the system adapts.

And yet, leaders frequently express their apprehension about culture change as a company grows. As a founder recently said to me, “We’re growing really fast right now, but I want to make sure we don’t lose what makes us, ‘us’.”

But what is “us” in a growing company? At best, it's is a moving target as hiring continues and new organizational layers are added to manage complexity. I suspect what drives this thought process is partly fear of change, but also, and perhaps more importantly, an insufficient consideration of the forces that actually shape culture.

What Is Culture?

When we think of organizational culture, we often think of things like branding, company benefits, hierarchy, time-off policies, etc. We also think of the core values posted on the wall and the vision and mission statement a company commits to. These are all important elements of culture, but they only describe the surface level—those elements of culture that we can see and hear.

There is a deeper structure to culture that is shaped by the unseen assumptions, beliefs, and values that drive how work actually gets done. As Edgar Schein, the godfather of organizational culture, described it, culture is “the accumulated shared learning of a group as it solves its problems of external adaptation and internal integration.”

Groups develop patterns of thought and behavior for how to interact internally, and how to perceive and prepare themselves for change, external threats, and the future (Cameron & Quinn, 2011). Patterns of internal interaction range from being highly relationally oriented and focused on collaboration, to being highly task oriented and focused on goal attainment. Patterns of external adaptation range from being more flexible and focused on innovation, to being more stable and focused on preparation and planning.

How Culture Changes

The reason culture changes as organizations grow is because as they are constantly having to adapt to changing external circumstances, which frequently requires new forms of internal interaction. For example, early-stage companies and startups are primarily focused on innovating, creating a new product or service, and trying to find a footing in the marketplace. They attend closely to customer needs and work feverishly to find product-market fit. For that reason, the culture of early-stage startups is frequently characterized by a high level of independence and adaptability. This way of organizing allows them to move quickly and iterate as they learn what works.

If the company is successful in developing a product and finding a market, the strategic imperative will tend to shift from innovation to growth, and that usually means hiring. New employees are brought into the organization and the culture changes because they import new ways of thinking and doing things, and because increased headcount inevitably leads to the need for management systems and processes.

If the company continues to grow, it will eventually reach a scale at which layers of management and other systems will likely need to be introduced to help manage communication, decision-making, and work processes. Here again, the culture will shift because the mechanisms for internal integration will have been altered. This is why (in a simplified way) once innovative, fast-moving companies ossify into more bureaucratic systems.

How Leaders Can Help the Culture Evolve

Culture is an emergent phenomenon. That is to say, it evolves as an effect of many complex causes, and cannot be directly manipulated in any consistent way.

The reason that many culture change initiatives fail is that they are pursued only at the surface level. Executives will read a book, attend an offsite, rewrite their values, vision, and mission, and boom—culture changed. This feels like good work because it’s fun, it’s tangible, and the result is something you can hold up and point to. Unfortunately, initiatives like this frequently only highlight the yawning gap between the leaders’ perception of the culture, and the employee’s day-to-day experience.

On a deeper level, the level of shared values and assumptions that drive how work gets done, culture is more like traffic. Traffic is shaped by the built environment and by individual drivers’ beliefs about what other drivers will do. City planners can shape traffic by changing the built environment in which traffic exists (think roundabouts versus four-way stops), but beliefs are shaped by the lived experience of the drivers (for practical experience, take a drive in New York, Atlanta, or L.A.).

In a similar way, leaders can intentionally shape the environment in which culture evolves by establishing certain structures (think matrix versus functional organizations), communication patterns, and decision-making rights, but they must also model the behavior that makes individuals successful within an organization. For example, if a leader wants to maintain a flexible culture as their organization grows and talks about that, but refuses to provide lower-level employees with discretion and decision-making rights, the culture will adapt to the leader’s behavior, not their intention.

The reality is that culture does (and should) change as organizations grow, and the most effective leaders will be those who help their organization adapt to present circumstances and challenges rather than trying to maintain what has made them successful in the past.

References

Cameron, K. S. & Quinn, R. E. (2011). Diagnosing and changing organizational culture: Based on the competing values framework. (3rd ed.). Jossey-Bass.

Schein, E. H. & Schein, P. (2017). Organizational culture and leadership. (5th ed.). John Wiley & Sons.

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