Organizational Culture

Today, we began our discussion not with any extraordinary tools or toys but on the basis of an extraordinary story of the Alibaba Group.

AliBaba Group is a privately owned China-based family of Internet-based eCommerce businesses that cover business-to-business online marketplaces, retail and payment platforms, shopping search engine and data-centric cloud computing services.

It started with the vision of its founder, Jack Ma, that :

(a) Empower SMEs through the power of the internet.

(b) At least 80% of these SMEs who are working with AliBaba MUST grow unimaginably.

(c) 0.0001% of the shares of AliBaba must be enough to support generations together.

Today AliBaba's consumer-to-consumer portal Taobao (similar to eBay) features nearly a billion products and is one of the 20 most-visited websites globally. Alibaba Group's sites account for over 60% of the parcels delivered in China.

And why was this so?

It was made possible due to the exceptional culture embedded in the fibre of the organization.

So, one asks, what is organizational culture?

Organizations, just like individuals, have their own personalities—more typically known as organizational cultures. Understanding how culture is created, communicated, and changed will help you to be a more effective manager. But first, let’s define organizational culture.   

Organizational Culture encompass the values and behaviours that contribute to the unique social and psychological environment of an organization.

Organizational culture includes an organization's expectations, experiences, philosophy, and values that hold it together. It is expressed in its self-image, inner workings, interactions with the outside world, and future expectations. It is based on shared attitudes, beliefs, customs, and written (sometimes) and unwritten rules that have been developed over time and are considered valid.   

There are various types of organizational cultures. We discussed a few of them in class. I am listing them below:

1. Open Culture - One where employees are motivated to voice their values-driven concerns regarding problematic business practices. An open culture helps to counteract any occasional lapse into passivity at the board level or on the part of institutional investors.

2. Safety Culture - One where safety is  ALWAYS first no matter what the cost. A safety culture is one were all employees are proactive in ensuring safety at work place. People immediately report any perceived short comings in the work place safety and in the safety of products given to customers or clients.

3. Quality Culture - A culture where utmost importance is given to the quality of the product or service being rendered. Volume takes a back seat. So does cost. Batch recalling of cars/computers when defects are found is a good example of the quality culture. Toyota is a notable example.

4. Performance Culture - We could also call this OUTCOME ORIENTED CULTURE.  This is one that emphasize achievement, results, and action as important values. A good example of an outcome-oriented culture may be the electronics retailer Best Buy. Having a culture emphasizing sales performance, Best Buy tallies revenues and other relevant figures daily by department. Employees are trained and mentored to sell company products effectively, and they learn how much money their department made every day.

5. Ethical Culture - A culture where great importance is given to ethical business practices and this importance is seen at all levels in the organization. We see that in such organizations, ethics are given precedence even if being so may lead to a loss of business and profit. The TATA Group is a good example to note.

The culture of organizations is usually inferred and remains invisible, much different from rules, which are explicit. It is not enforced as a rule but is much more powerful than rules in many cases.     

    

In creating organizations, you must have an understanding of both the rules and the culture. Being appreciative of both these parameters would help you guide yourselves and others through the organizations channels, which is what makes you a good manager. 

This was the most important takeaway from today’s lecture.

Grameen Bank

Today, before coming to class, prof. Mandi had asked us to view videos posted on certain links. Unpretentiously, after dinner, I and my friends started watching the video. And what we saw in the videos amazed us to a great extent. Although I knew about Mohd. Yunus, the exact extent of the work done by him was unknown to me. Before delving into what I learnt in class, I believe a small introduction is required.

The Grameen Bank is a community development bank started in Bangladesh. They give small loans (known as micro credit or "grameencredit”) to poor people without asking for collateral. The system of this bank is based on the idea that the poor have skills but have no chance to use their skills without some money that is their skills are under-utilised. Most of the banks loans go to women.

Muhammad Yusuf with his money lenders

The Grameen Bank was started 1976 when Professor Muhammad Yunus, a Fulbright scholar and Professor at University of Chittagong, researched how to provide banking for the rural poor. In October 1983, the Grameen Bank Project was made into an independent bank by the government. The group and its first member, Muhammad Yunus, were awarded the Nobel Peace Prize in 2006. Grameen Bank is owned by the people who borrow the money, mostly women. The borrowers own 94% of the bank, and the other 6% is owned by the Government of Bangladesh.

   Below is the video we were asked see. Watch it, it's worth your time. It will also give some context to what happened in class and the key learnings we had.

Our class did not focus solely on aspects of social business. Instead – being a Principles of Management class – we focused on the difference in style of management and in delivery of product. We started out by discussing the difference between a traditional banking system and the Grameen micro-credit system. For the sake of simplicity, I am tabulating the differences below:

		TRADITIONAL BANKING	GRAMEEN BANK
1.	Purpose	Maximizing Profit (Profit Motive)	Reducing Poverty
2.	Collateral	Needed. Without which no loans will be given.	No collateral needed
3.	Ownership	Businessmen – Rich People	By the Poor
4.	Loan Amount	Large Amounts	Very Small Amounts
5.	Type of Lending	To individuals	To small groups of people –Solidarity lending
6.	Type of Interest	Usually Interest is compounded	Simple Interest
7.	People Money given to	In most developing countries there seem to be a bias towards men.	Women are the primary focus. In fact women make up 97% of Grameen Bank Customers
8.	Location	Primarily located in urban areas	Primarily located in rural areas

We had earlier discussed about Management by Objective and Organisational Structure. Both these contribute to another phenomenon – Organisational Culture. Basically, it is the behaviour of humans who are part of an organisation and the meanings that the people attach to their actions. Culture includes the organisation values, visions, norms, working language, systems, symbols, beliefs and habits.

Management is like a rainbow/kaleidoscope, which can take different shapes as per the requirements of the organizational culture. Culture, structure values, etc. of different organizations would be different depending upon the purpose and management students should understand this.

The culture at Grameen Bank is to find ways to eradicate poverty. The Managing Director of the bank does not ask, “Why are Profits down?”

Instead he asks, “How many people have you taken out of poverty today?” It is precisely this culture that has allowed the Grameen Bank to achieve so much.

This is the most important take away from this class. It is the Organisational Culture that motivates employees to perform well. It is the Organisation Culture that affects the way people and groups interact with each other, with clients, and with stakeholders.

Leadership and management need to drive the culture and structure of any organization. Just having a roadmap is not enough; you need to drive it.

Navrang Puzzle

The day began with Prof. Mandi bringing in a colourful cube, breaking it into 27 cubes and asking us to assemble the individual blocks back into the cube such that each face contained only one colour. Unlike a standard Rubik's Cube, the Navrang Puzzle can be dismantled and reassembled. We were challenged to find an algorithm or method to reassemble the Puzzle in order to reach the intended objective. After a few desperately minutes of thinking, a few students devised a plan which didn't work too well.

And then Prof. Mandi took over.

Prof.Mandi solved the Puzzle in about 2 minutes using a well-defined method. Sir had used a 3-step algorithm.

He explained to us how a lot of problems, both in life, and in organizations, are similar in nature, multi-faceted, unexpected, and with time constraints. How they all have smaller, individual elements to them that have to be solved for us to solve the complete puzzle. And how, with the application of the right principles of management, we can actually, pretty easily, solve them.

It is here we were introduced to two important concepts: (a) Organizational Structure and (b) Unity of Objective.

An Organizational Structure consists of activities such as task allocation, coordination and supervision, which are directed towards the achievement of organizational aims. An organization can be structured in many different ways, depending on their objectives. The structure of an organization will determine the modes in which it operates and performs. This of course leads us to the next idea. Unity of Objectives stands for the philosophy according to which every individual and every process in an organization should aim to fulfil the organization's Objectives and Mission Statement.

The key to solving any problem, is organization. You organize your problems, and their sub-problems in order, and that is half the job taken care of. The first step is to segregate the similar elements of the problem - the like-colored cubes - together. Once you have done that, everything else falls into place, and your coming out successful is simply a matter of applying simple logic and common sense in each level, and avoiding any mistakes while you do so.

Another key concept in all of this is the importance of effective communication.

 The better you are at communication (either way), the better you learn how to do things, and how not to do things. You can watch and learn from the experiences of your seniors, or the mistakes of your peers, and nothing can teach you better.

The most important step was to understand is that without an objective, this puzzle would never have been solved. It is the objective that determines the method in which we have to solve the problem. Any method we device, it must be capable of being easily replicated. Only then can we achieve economies of scale and get effective outputs.

Alignment

Continuing his trait of bringing in seemingly unrelated artefacts into class,  Prof.Mandi walked into class with a chunk of magnet and asked us, “Why does a magnet attract?”. After many unsuccessful attempts by us at giving a good answer, the answer finally came up as the magic word – Alignment.

What is alignment? 

Alignment is done by regular ordering of repeated a number of times in a set process. it is in this ordering that the source of the power of any aligned entity lies. A Magnet has its power because it can align innate magnetic forces in metallic atoms. So, magnets align natural forces. 

Managers align people and power. They align tasks and objective. They synchronize both time and space. Management is Music, not noise. It is like the conductor of grand orchestra, where each instrument contributes to harmonious music. Only proper alignment would lead to music, else it would result in noise.
A Manager aligns human forces to get work done. In effect an organization is a force that is aligned. The bigger or better an organization, the more perfectly it is aligned.

Here we come to a very important management lesson – Management by Objective.



 Management by objectives (MBO) is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization in order to achieve them. The term "management by objectives" was popularized by Peter Drucker in his 1954 book The Practice of Management.





The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set.

In most organizations, there occurs alignment during appraisal/goal setting cycles, where the goals of the employees are aligned with the vision/mission statements of the company.


For greater clarity on the topic we compared two different styles of management we had previously studied in class – the blindfolded tower building and the three monk collaborative water collection. The major lessons we drew could be summarised as shown below:

	Blind Tower Building	Three Monk Collaboration
1	Management Present	Management absent and replaced by autonomous management/ maintenance
2	Loading is High and Low	Loading is more or less equal
3	Hierarchical set-up	No Hierarchy
4	Control Mechanism	Consensus Mechanism
5	Control with Top Management	Consensus among all

We ended our discussion by comparing two Indian Tennis stars - Leander Paes and Mahesh Bhupati and understanding why they were unable to cooperate and work. 

We concluded that the main reason was a skill set mismatch. Multiple skills could come as a disadvantage as the ability to exercise choice comes into the picture. Management should figure out which all skills to hone & nurture and which all to get rid of or discourage.

          Thus, the most important take away in today's class was the concept of MANAGEMENT BY ALIGNMENT.