Page 48 - MS Year in Review 2020

emphasizes “perfection” in the customer experience from the product to the sales

19
process and the service process as well.

Four types or conditions of Corporate Culture. The two factors of cultural
strength (strong and weak) and cultural functionality (functional and dysfunctional)

can be combined into four different types of cultures, and show in the picture that
accompanies this article:

 Type A: Strong Functional Cultures

 Type B: Weak Functional Cultures
 Type C: Weak Dysfunctional Cultures
 Type D: Strong Dysfunctional Cultures

A strong-functional culture can be viewed as an asset, and strong-dysfunctional

culture can be viewed as a liability (in the colloquial sense of a 'handicap'-- not in
the technical sense of a liability.) There is also empirical research showing that
culture can have a positive impact upon financial performance. Specifically, my

published empirical research indicated that corporate culture impacts financial
performance measured as EBIT; and that culture explains as much as 46% of EBIT.

This was reported in Eric Flamholtz , "Corporate Culture and the Bottom Line,
" European Management Journal, 2001, 19 (3), 268-275. This, in turn, supports
that culture is an asset.

Examples of Strong Functional cultures include Starbucks and Ritz Carlton. In one
sense, Huawai is also strong functional culture; specifically, in how its culture is
managed internally. However, Huawai is a complex case. It appears to have done

some things that make it a "corporate outlaw." It has become a pariah.
Nevertheless, its culture management technique is that of a strong-functional
company.

Examples of "weak functional companies" include GM, Toyota, and Southwest.

Examples of Strong Dysfunctional companies include VW, United, and Theranos. VW
had problems of falsifying data about its automotive capabilities, and Theranos is

19 J.K. Liker, and M.Hoseus,. Toyota Culture: The Heart and Soul of the Toyota Way, McGraw-Hill
2008.

47
© Management Systems Consulting Corporation, 2020. All rights reserved