Organizational culture is not something that can be easily seen or measured. Yet it’s an undeniable force that can quickly change a company’s direction.
We’re going to be outlining the most common causes of organizational culture change and give examples of 5 companies that used these changes to improve business operations.
We’re getting into the invisible but powerful forces of cultural change, and ways you can manage it.
So get yourself a coffee, get comfy, and let’s explore cultural changes that pave the way to industry success.
What is cultural change in an organization?
Let’s start by defining culture. Culture is a shared set of values (what matters to us), beliefs (what we hold to be true), and norms of behavior (how we operate). Organizational culture is how these three apply to business operations.
So that’s company values, beliefs, and behavior, and none of those things are easily or quickly measured in a company. An allegory for culture is comparing it to the wind. You can't see it, but you can definitely feel its impact. When it's in your favor, everything flows smoothly. When it's against you, your teams need to get their heads down and face the challenge head-on.
A recent PwC survey found that 67% of their respondents felt company culture is more important than its strategy or operations. Younger Gen-Z workers entering the workforce certainly hold organizational culture dear to their hearts. An organization’s culture is a main indicator of staff satisfaction and a significant factor in why nearly two-thirds of employees choose to remain in their current jobs.
A company’s response to cultural change can make or break its operations. Deliberate efforts to adapt your organizational behavior can set your company apart. Your organizational behavior becomes the personality of the company, helping you deal with market changes and attracting top talent into your ranks.
So let’s highlight the causes of cultural change in a company and the best ways you can manage them.
Causes of cultural change in an organization, and how to manage them
Here are the 5 leading causes of organizational culture change and management methods to make the most out of them.
Leadership changes
Just like any sports team, a change in leadership has an immediate and profound impact. A leadership change can come through a promotion, retirement, or even a strategic realignment.
A new leader brings in different goals and management styles. They might value innovation over tradition or agility over stability. These changes can create ripple effects like a stone thrown into a lake, changing the way teams communicate and make decisions.
The cultural shifts that come from a leadership change can shake up the existing work culture and create uncertainty, but it also opens new doors of opportunity and potential. Managing these changes is best done through clear and open communication. The new leader should share their vision and values with the entire organization, reducing uncertainty and getting everyone on the same page.
After the change in leadership, celebrate those early wins. Highlight new successes to boost morale and show the positive impact of the changes. Get the whole squad involved and zoom in on those victories to help build team culture.
Keep all of these boxes ticked during a time of leadership change to reduce the risks that come with organizational culture changes. This ensures cultural changes are more likely to strengthen the organization rather than disrupt it.
Globalized workforces
Not many people in the world can deny the changes that workforce globalization causes. More countries than ever are connected through globalization, which results in cultural shifts as companies expand into new markets.
A globalized workforce brings people together from new cultures, each with their own values and working styles. This diversity can strengthen the company, but also create some new challenges in alignment and teamwork.
To manage the cultural changes that come with globalized teams, companies and leaders need to make sure they truly hear these diverse perspectives. Imagine the insight the locals can give you in a new country of operations. These perspectives are a rich tapestry of information and should not be overlooked. It’s important to remain culturally sensitive and inclusive to a globalized group. Training programs that educate and teach cultural sensitivity help build cross-cultural bonds.
Remote workers bring a new level to the potential of a fast workplace environment. Managing time-zone differences helps to get the most out of your globalized teams, and allocating time-zone leaders helps groups spread across different geographical locations. Make the most of the tools that help break down geographical barriers, from your video conference software to collaborative platforms like Asana and Trello.
Cultural evolution is never-ending, so you have to stay agile for the marathon, it’s not a sprint. Adapt new strategies regularly to stay up-to-speed and create cultural harmony among your globalized teams.
Technological advancements
Organizational culture is directly linked with company behaviors and norms, and advancements in technology have caused the biggest changes in those behaviors and norms.
Digitalization has completely transformed the way we work compared to even 30 years ago, and the truth is that a company won’t unlock the full potential of digital transformation without adapting to those transformations.
Technology is a powerful catalyst for change. Cloud platforms like AWS and Azure now allow seamless collaboration and data sharing for remote teams. Staying up-to-date with advancements in tech is no easy feat, but it’s crucial to do so.
Keep your teams tech-fluent with workshops to advance their skills. A little organizational support goes a long way for staff who might feel a little lost with the new office tool. Harness AI and data analytics for faster decision-making and make the most out of automation.
While all these transformations are happening, it’s also integral to keep that balance between digital and human interactions. Technology certainly does enhance efficiency, but don’t lose track of personal connections.
Keep your tech checks regular, at least once per year, measuring how much your current tech affects your business practices. Collect feedback from your teams who might use the office technology more than you, and incorporate their feedback.
Getting all of these aspects in order maximizes the potential of technological advancements in your company. There’s no way of fighting it, so put your hands up and enjoy the ride!
Regulation changes
As companies expand and tighten regulations, massive changes in organizational culture can occur.
The key to stopping regulation changes that negatively affect your organizational culture is to make sure you don’t rely only on compliance. Getting everyone to simply “do as they’re told” without question often leads to a breakdown of trust. Just like organizational culture, trust cannot be seen, but it can certainly be felt. A breakdown in trust quickly spells disaster.
There’s a lot that goes into a positive regulation change. It takes more than rules on the board to get them right. Consider an IT company shifting to stricter data privacy laws. The whole principle of the move is to create a culture of respect with its customers. This same principle of trust should be felt when regulations change for your teams.
Regulation changes can sometimes even act as a springboard for innovation. A company that proactively adapts to new energy regulations, for example, can try to embrace discoveries in greener technologies. Adapt your vision casting techniques to future changes in regulations and laws to stay ahead of the curve.
Keep your engagement high and communication transparent, and these regulation changes can end up with your staff feeling a sense of pride, as they see the company keeping ethics at the front of its mind.
Don’t let regulation changes only cause doom and gloom in the business. Proactively anticipate and work with them to keep your organizational culture strong.
Mergers and acquisitions
Merging companies and acquisitions are usually seismic events in the life of an organization. A company that goes through a merger or acquisition may end up with every other change on our list all at once. This is why they’re usually held with very serious care and consideration.
The most common reason for an M&A to fail is because of the human (cultural) factor. The Journal of Innovation and Applied Studies states the largest contributor to M&A failure is the human factor. The massive structural shift often results in staff being unable to cope with cultural differences and a lack of communication.
Often when two companies merge, the result is a huge clash of cultures, which stops integration and causes a massive ripple effect on the company as a whole. In a merger, one company might use a more traditional or hierarchical structure, while the other uses a more shared egalitarian style of work. Integrating these differences means finding a balance that respects both origins while making a new, unified culture that everyone can get behind.
Managing the changes in organizational culture that come from M&As takes patience and lots of understanding, but the risks are too high to rush the process. Keep our information in mind when going through M&As to keep the process as safe as possible. It’s worth it!
5 examples of organizational culture change
Let’s lay out 5 standout examples of companies that carried out organizational change positively. They were all affected by at least one of the changes mentioned today, so let’s get into how they did it right.
Netflix
In the mid-2000s, Netflix faced a critical challenge. Demand for DVDs faded (remember those old things?) and digital consumption of media started to skyrocket. Along with this was the growth of soaring new internet speeds. In stepped Netflix’s radical adoption plan.
The company launched its online streaming service in ‘07 and never looked back. Heavy investments in streaming platforms and user-friendly interfaces shifted them into the cultural embrace of digital transformation, with their future sights set firmly on continuous improvement and user experience.
Further cultural shifts came later as they started developing their own original productions. 2013’s House of Cards became the first major TV show that ran exclusively on a streaming service, to much success. Culturally, this showed a pivot towards content creation and revolutionized the spirit of the online TV viewing experience.
Netflix has only continued to expand ever since, collaborating with ISPs to optimize their network delivery and investing majorly in Content Delivery Networks (CNDs) to hit new heights.
These changes signify organizational culture shifts towards tech innovation. They went on to trust their employees in developing and implementing new technologies to boost the user experience, showing a standout culture of heightened company trust.
There’s an insightful recent post from Udemy’s co-founder Gagan Biyani from 15 years ago, which has a full PowerPoint from Netflix that highlights their shift in cultural change that set the industry ablaze. Check it on SlideShare.
Key takeaway: This focused shift into a culture of tech innovation came with risks, but paid off massively. Netflix kept the empowerment of its staff high to maintain trust and autonomy. These two factors used together created their transformative change.
Disney and Pixar
The acquisition of Pixar by Disney in 2006 was a seismic event in the entertainment industry and demonstrates how M&As can go above just financial transactions, involving the blend of creative and cultural entities.
In January ‘06, Disney put down a stunning $7.4 billion, with the overall goal of mixing Pixar’s outstanding animation skills with Disney’s legendary entertainment empire. Disney recognized how crucial it was to make sure they kept Pixar’s creative spark alive.
Disney prioritized keeping Pixar’s creative freedom intact, respecting the company’s individuality. They collaborated with open communication to keep ideas bouncing between the creative leaders of both companies. The spirit of collaboration allowed each to thrive. Pixar’s maestros John Lasseter and Ed Catmull stayed on board throughout, with both receiving promotions.
A cross-pollination of ideas gave life to moments of cinematic history, like Up (2009), Toy Story 3 (2010), and Inside Out (2015). Their successes were all the more sweet, as they were made through shared expertise and resources, showing off the best of both worlds
This thoughtful approach to culture blending was pragmatic, working to the strengths of both the acquired Pixar and the parent Disney. M&As can sometimes be cold and strictly transactional, but in this case, the creative sparks were kept and cinematic history was made.
Key takeaway: This acquisition went way above a financial move. By valuing and respecting Pixar’s strengths, Disney got the most out of what made Pixar so magical in the first place. Careful integration of company cultures helped cement the acquisition’s success.
IBM
In terms of organizational change through restructuring, one of the most impactful examples is IBM's transformation through the turn of the millennium.
Their organizational structure has undergone several major flips in the last 30 years. The 90s was a challenging time for the then-CEO Lou Gerstner. He introduced his radical transformation plan in ‘93, switching from hardware only to services and software, resulting in the landmark creation of IBM Global Services.
The company continued to grow in the services industry, divesting its PC business to Lenovo in ‘05. They moved on to bigger investments in emerging technologies of the time, like cloud computing and AI.
This shift in organizational culture saw the company selling off its less profitable segments, like its semiconductor business in 2014. Massive organizational restructuring showed their focus on capturing new market opportunities in cloud computing. Their approach becomes more client-centric, focusing on their customer needs more than their products.
Having restructured several times, IBM has undergone several organizational cultural changes. By capturing emerging markets and letting go of lost causes, they’ve kept their competitive edge and navigated the evolving tech landscape.
Key takeaways: This restructuring evolution from hardware to services highlights the company’s internal strength and resilience. Staying flexible through hard times helps to ride the wave of organizational culture shifts.
Southwest Airlines
Organizational culture change often comes with a certain amount of risk, but Southwest Airlines stands as a great example of mitigating these risks while boldly adapting its work ethic. Founded in the 1960s, they started as a small contender against much larger competition. Against the odds, they managed to survive and then thrive, thanks to its approach to company culture.
At their heart, their culture has a simple but powerful philosophy, which is that “employees come first.” It sounds counter-intuitive at first, as the air travel industry is very customer-centric, but Southwest stands by its principles. The company believes that taking exceptional care of its employees is the key to eventually achieving high customer satisfaction. Happy employees lead to happy customers.
They’ve kept this unique aspect of their culture through the years, introducing it into their marketing campaigns. They’re famously known for their “LUV” culture, a play on its stock heart symbol, and its headquarters at Love Field in Dallas. They emphasize mutual respect, support, and fun among their employees in a unique way.
Their standout employee-care culture has brought them a few awards, like being one of Fortune’s “Most Admired Companies” and consistently ranking in Glassdoor’s top 10 “Best Places to Work” list.
The results of this employee culture focus are evident, making them one of the most desirable workplaces to be. Their reputation now attracts the highest talent and strengthens the company’s competitive edge.
Key takeaways: Prioritizing your employees’ well-being and development can eventually lead to them taking exceptional care of your customers in return. SWA’s success story shows that sometimes, an employee-centric approach can ripple into outstanding business performance.
Etsy
From its creation in 2005, Etsy quickly became the go-to platform for artisans and crafters to showcase their products. After a few successful years, the company faced a challenge in the early 2010s. They needed to scale up its business while maintaining its unique, community-focused ethos.
The company became a proactive, early adopter of eco-friendly initiatives during a cultural revamp. They upped their sustainability game, rolling out initiatives like offsetting 100% of their carbon emissions. They encouraged sellers on the platform to adopt the same practices. In 2019, Etsy even became the first global e-commerce company to offset all of its shipping emissions. A big win for Mother Earth!
Etsy has placed an emphasis on a culture of transparency and open communication too. They hold regular town hall meetings, Q&A sessions with leaders, as well as open forums for staff to share their thoughts. This openness builds bridges of trust, not only between internal staff but between customers and stakeholders.
Their cultural transformation towards proactive green initiatives and eco-friendliness has created a new standard in the industry. They constantly report high employee satisfaction, while on the financial side, Etsy is thriving.
Key takeaways: By keeping an ear to the ground for changes in sustainability regulations, Etsy has moved to an industry-leading position. Being proactive instead of reactive to environmental social governance (ESG), they’ve created a positive atmosphere in the face of cultural change.
Cultural change needs all hands on board. Get everyone to one of our company retreats!
Here at Surf Office, we know how much cultural changes can impact companies. Strong team bonds are needed, and one of the best ways to do this is by inviting everyone to a team retreat. A twice-annual retreat bonds employees in new ways and paves the way for a healthy organizational culture.
We've had the pleasure of organizing over 700+ retreat experiences, including remote teams, for many different companies. Here’s what we offer:
- Stress-free transfers? We got you! ✅
- Quality-assured accommodations? Check! ✅
- Engaging team-building activities? Our speciality ✅
- Restaurant reservations? That's on us! ✅
- Expert retreat planning assistance? Of course, we have this covered! ✅
- Onsite support, tailored to your needs? Absolutely ✅
Not only this but we also have access to 160+ locations around Europe, APAC, the US, Latin America, and now Africa, meaning the sky is your limit when it comes to choosing the right location for you and your team.
As the winds of cultural change blow, your ship needs to be managed by teams with strong bonds and a sense of unity. Establish rock-solid bonds on one of our retreats. Spaces are limited, get in touch now.
