Corporate Culture and Performance (Hardcover)

by John P. Kotter (Author) "Almost all books on corporate culture state or imply a relationship to long-term economic performance..." (more)
Key Phrases: lower performers, more specific practices, adaptive cultures, Bankers Trust, First Chicago, Dayton Hudson (more...)

Editorial Reviews

From Kirkus Reviews
An attention-grabbing audit by two Harvard Business School professors of the role that culture (broadly defined as the shared attitudes, behavioral patterns, and values that cohesive human groups pass on from one generation to the next) can play in the capacity of major corporations to succeed or fail in the marketplace. The accessible study compiled by Kotter and Heskett is noteworthy on several counts. For one thing, it is based on empirical rather than anecdotal evidence, gathered from a canvass of more than 200 blue-chip enterprises in 22 industries, covering an 11-year span through 1990. For another, the authors measure performance against such valid bench marks as annual growth in net income, average returns on invested capital, and appreciation in stock prices. Last but not least, they refuse to advance a one- size-fits-all theory. While willing to state that corporate culture can have a significant impact on a company's reported results over the longer term, Kotter and Heskett caution that there's as much art as science in evaluating its contribution. Indeed, they assert that cultures adequate for one economic context may prove disastrous in another--as can those identifiable as arrogant, bureaucratic, and/or insular. The authors point out, for example, that K mart's lack of a customer-service ethos cost it dearly in competition with Wal-Mart. What's really needed, they argue, is an adaptive culture that automatically aligns an organization's interests with those of employees, investors, patrons, and other key constituencies. Drawing on case studies from their four-year research program, Kotter and Heskett outline practical ways in which top-down direction can motivate corporate personnel to pursue this objective. Down-to-earth analyses and advisories from authors who grasp the substantive differences between leadership and management. The reader-friendly text has a wealth of helpful tabular material throughout. -- Copyright ©1992, Kirkus Associates, LP. All rights reserved.

Review
Thomas N. Urban Chairman and President, Pioneer Hi-Bred International, Inc. Having passed through five years of significant change in a sixty-five year old company, I found the dissection of the relationship between culture and performance fascinating. It will provide an intellectual framework for even more detailed analysis of specific situations. -- Review

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Product Details

• Hardcover: 224 pages
• Publisher: Free Press (April 7, 1992)
• Language: English
• ISBN-10: 0029184673
• ISBN-13: 978-0029184677
• Product Dimensions: 9.3 x 6.4 x 1 inches
• Shipping Weight: 15.2 ounces (View shipping rates and policies)
• Average Customer Review: 4.4 out of 5 stars See all reviews (5 customer reviews)
• Amazon.com Sales Rank: #109,154 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

32 of 32 people found the following review helpful:

5.0 out of 5 stars Academic, but practical, must-read book, April 17, 2000

By	Duane Schermerhorn (Toronto, Ontario, Canada) - See all my reviews

Most popular and influential books on business management present the highly personal observations, interpretations, opinions, and conclusions of the author. The author's tenets - often in the form of a "newly discovered" business trend or critical success factor that business executives can ignore only at their own peril - seem objective and impersonal because they are supported by real-world examples that provide strong evidence in their support. Examples that do not support the premise are conveniently ignored or dealt with in a cursory, simplistic manner.

Basically, these books are the result of sharp minds drawing conclusions from their own experience. This approach is certainly valuable and has contributed many valuable ideas about the various means of improving business performance - and probably many more faulty notions that have led management up the garden path.

John Kotter and James Heskett's "Corporate Culture and Performance" sits at the other end of the spectrum from this norm. The book is in effect a report on their scientific investigations of a hypothesis. The authors set out a number of hypotheses and then test them against the hard data of long-term business performance. In doing so, they present solid insights into some of the conventional wisdom spouted by management consultants and authors of business books.

The fundamental source of their hypothesis is the question "What is the relationship between corporate culture and business performance?" The fruits of their research yield important observations on the nature of this relationship.

The authors' well-structured research study, and their sharp analytical abilities permit them to trek deep into the jungle of issues surrounding corporate culture. By speculating and then testing their notions against the research data, they uncover some insights that might be undervalued because they seem so intuitively obvious. One of these is central to the book, namely that "adaptive" cultures - ones that help organizations anticipate and adapt to environmental change - are the most effective at helping a company achieve good long-term financial performance.

If the book and - more important - the research were not infused with the analytical skills of the authors, the book would leave the reader with a great many empirically verified observations about culture and management and an understanding of the key issues, but with no practical way of dealing with the issues.

However, the authors have a lot to offer in the way of practical tips. For example, in presenting a fundamental dilemma, they follow it up with a research-tested approach for dealing with the issue:

"Holding onto a good culture requires being both inflexible with regard to core adaptive values and yet flexible with regard to most practices and other values....And it requires providing strong leadership, yet not strangling or smothering delicate leadership initiatives from below....

"...executives need to differentiate basic values and behaviors that aid adaptation from the more specific practices needed to perform well today. This distinction needs to be made explicit when talking about culture...although executives need to foster pride among employees, they also must be as intolerant as possible of arrogance in others and in themselves. They need to confront, and make others confront, as many of their failings as is practical."

In spite of its many qualities, it is easy enough to see why the book isn't likely to top any best-seller lists. In many places it reads too much like a doctoral thesis, severely limiting accessibility. The academic lingo - "Within the limits of this methodology, we conclude from this study...." - and the occasional embalming of the text in footnotes don't add to the readability, and certainly don't lend the text the "personality glamour" that appeals to the mass-cult audience of best-sellers.

However, the writing does have style and a dry humor, and - above all - important empirically verified, occasionally illuminating facts that business people would be better off knowing and using, rather than stumbling along in the dark.

15 of 19 people found the following review helpful:

5.0 out of 5 stars important research on company performance, January 3, 2001

By	Jeffrey L. Seglin "Seglin" (Boston, MA USA) - See all my reviews (REAL NAME)

If you buy into the argument that the only responsibility of a business is to its stockholders and that paying attention to areas outside of this will result in a lesser-performing company, the research of two Harvard Business School professors suggests just the opposite. John Kotter and James Heskett studied the performance of 207 large firms over an 11-year period. They wrote of their findings:

"Corporate culture can have a significant impact on a firm's long-term economic performance. We found that firms with cultures that emphasized all the key managerial constituencies (customers, stockholders, and employees) and leadership from managers at all levels outperformed firms that did not have those cultural traits by a huge margin. Over an eleven-year period, the former increased revenues by an average of 682 percent versus 166 percent for the latter, expanded their work forces by 282 percent versus 36 percent, grew their stock prices by 901 percent versus 74 percent, and improved their net incomes by 756 percent versus 1 percent."

Consider that final finding again: The companies that paid attention equally to customers, stockholders, and employees outperformed those that didn't in growth of net income over the 11-year period by a factor of 756. Paying attention to more than just returning profits to stockholders can have a huge payoff.

Heskett and Kotter's research presented in this book is important reading for anyone tracking company performance in relation to its culture.

3 of 4 people found the following review helpful:

5.0 out of 5 stars important research on company performance, February 2, 2002

By	Jeffrey L. Seglin "Seglin" (Boston, MA USA) - See all my reviews (REAL NAME)

If you buy into the argument that the only responsibility of a business is to its stockholders and that paying attention to areas outside of this will result in a lesser-performing company, the research of two Harvard Business School professors suggests just the opposite. John Kotter and James Heskett studied the performance of 207 large firms over an 11-year period. They wrote of their findings:

"Corporate culture can have a significant impact on a firm's long-term economic performance. We found that firms with cultures that emphasized all the key managerial constituencies (customers, stockholders, and employees) and leadership from managers at all levels outperformed firms that did not have those cultural traits by a huge margin. Over an eleven-year period, the former increased revenues by an average of 682 percent versus 166 percent for the latter, expanded their work forces by 282 percent versus 36 percent, grew their stock prices by 901 percent versus 74 percent, and improved their net incomes by 756 percent versus 1 percent."

Consider that final finding again: The companies that paid attention equally to customers, stockholders, and employees outperformed those that didn't in growth of net income over the 11-year period by a factor of 756. Paying attention to more than just returning profits to stockholders can have a huge payoff.

Heskett and Kotter's research presented in this book is important reading for anyone tracking company performance in relation to its culture.