Wishing on a Culture

Friday, August 17, 2007


Two situations have unfolded over the past few weeks that either directly or indirectly concern organizational culture. In last week’s posting, I talked about AirTran’s attempt to buy out Midwest Airlines and the changes that would bring to Midwest’s vaulted service culture. As well, Robert Nardelli started his job as the new Chrysler CEO this past Monday and the business press has written much about the drastic changes he may bring to Chrysler to get it profitable once again.

What caught my attention in both of these stories is the idea that a culture is worth fighting for or protecting. I see this as wrapped up in an anthropological view of organizational culture. Anthropologists study cultures, observe behaviors and practices, and identify core beliefs and values that drive these behaviors. It seems to imply that the best cultures are those whose members are most satisfied or happy. In the organization development field, there is a school of thought that believes happy workers in a happy workplace equals company profits. What concerns me about this philosophy is that there is an acceptance that the company’s culture should be democratically-determined, that it can be defined by what we would like it to be or what we are comfortable with. Rather, my experience has taught me that it is the marketplace and its critical success factors that should define a company’s culture. What does the culture need to be in order for the company to compete in its marketplace? Happy workers and a happy workplace environment are not enough to drive profits.

I talked about the Denison model of organizational culture in an earlier posting ("Next Time Call Me," 7/27/07). I think it’s important to view organizational culture through this type of lens because it captures the importance of organizational balance between external and internal focus, and adaptability and stability. We can have a company that treats its employees well but has lost touch with its customers and the changing marketplace. This is not a recipe for success. So it’s not a question of who wins, the employees or the customers. It needs to be both.

In the case of AirTran and Midwest, the resistance of Midwest’s management to AirTran’s offer seemed somewhat tied to a fear of what AirTran would do to the Midwest culture. All of this seemed to open the door for other buyers to enter. Late last week, the private-investment firm TPG Capital said they would team up with Northwest Airlines and beat AirTran latest offer by 25 cents. (Northwest, I think, could care less about preserving Midwest’s culture. They are all about protecting their midwest turf.) Despite having three new board members supposedly sympathetic to the AirTran overture, on Monday of this week, Midwest said it had accepted the TPG offer. Not to be out done, AirTran came back late Tuesday and beat the TPG offer by another 25 cents, offering $16.25 per share. Just today Midwest reported that it will accept a cash offer from TPG at $17 per share.

So is this offer in the best interests of the company, given its many stakeholders? A majority of the Midwest shareholders were ready to sell but the Midwest management insisted that their go-it-alone strategy is superior to becoming a part of AirTran. Midwest customers would probably experience lower fares but with less room and kiss the cookies good-bye. Midwest management would have been out on the street.

But whatever view you take on the business wisdom of this deal, are we aware that in some situations, a desire to hold on to a certain way of doing things can cloud our judgment? Can we fall into the trap that a culture’s preservation can trump what’s good for the business?