Organizational Culture
With Examples from Liar's Poker


Culture refers to the shared beliefs, values and norms of a group. It includes:

Cognitive schemas (Scripts and frames that mold our expectations and help us assign meaning and order to the stream of experience)

Shared meanings & perceptions (Common interpretations of events; How the world is, how things work. Implicit theories of the market, of management, of politics, of human nature)

Prescriptions and Preferences (What the best way to do things is; What they want to happen)

Behavioral codes (How to dress, how to act, what kinds of things you can joke about, is it cool to be late?)

Basic values (What is really important; what is evil)


Myths and legends (Stories about the past: knowledge of the stories identifies you as belonging, and often the stories have hidden points like this is what happens to people who...)

Heroes and heroines.

Emblems & symbols & rituals (objects that have meaning, like group t-shirts, gold watches)


Aspects of Organizational Culture

Onion quality. Inner layers (e.g., fundamental values, basic technology) are slow to change. Outer layers (e.g. market tactics, perception of the customer) can change very quickly.

Consequently, organizational cultures can be logically inconsistent.

Can also have subgroups with different cultures.

Because individuals belong to multiple subgroups simultaneously, they participate in several cultures simultaneously, which may be contradictory.


Where it comes from

The culture of an organization can derive key features from the larger culture in which it is embedded. In other words, American organizations tend to be different from Japanese companies because they are embedded in different national cultures. Similarly, organizations in certain industries may have a discernable cultural style that derives from the industry.

Another important influence on organizational culture is the professional culture of the more powerful players. Orgs are made up of functional occupations: lawyers, traders, etc. who go to school and get degrees like MBAs where they teach you a certain way of doing things and looking at things.

Cultural items also diffuse through personal contacts: social networks.

Training programs, such as the one at Salomon Brothers also (often unwittingly) train people in the culture of the organization. 

What it causes

Culture is central: it helps to determine

Way to use it

Managerial point of view.

What kind of organizational culture is strategically useful? SB developed a Darwinian, jungle-type culture. Was that a good choice? An alternative might have been a more bureaucratic, machine-like culture. Each has its advantages.

The jungle-like culture helps to unleash each person's potential. They are free to develop professionally, to think creatively. The interpersonal competition provides powerful incentives to work hard. The culture is also consistent with the business they are in, which is a high-risk, highly unconstrained business. The culture probably maximizes revenues and market share. However, this culture is not likely to breed good managers: rather than work together to improve the company, the fight for political turf.

The machine-like culture probably prevents burn-out, lowers turnover, and smooths out financial performance. It probably minimizes costs. However, it requires a relatively slow-changing economic environment. When new opportunities present themselves, the organization moves too slowly to win the lion's share of profits.

Studies show that firm profitability is determined in part by the "strength" of culture, but only in highly competitive markets (where clients are many and disorganized and producers are few and organized). These results are similar to the effects of leadership. When the market is expanding and there are relatively few competitors, it doesn't seem to matter too much who is running the organization. But when the market is mature, and there are many powerful competitors, leadership can make the difference.

A strong culture is one that (a) is internally consistent, (b) is widely shared, and (c) makes it clear what appropriate behavior is. An organization with a strong culture has a vision that everyone understands. Culture can then act as a hidden mechanism of coordination: everybody works in synch because they understand what the goals are and how the organization is going about getting to them.

Career point of view

Understanding your corporate culture better than others is a key source of competitive advantage

A lot of what mentoring is is teaching someone the corporate culture (the other part is protecting them from politics). Politics is, in large part, manipulating the culture to your advantage.