The Marcos administration and various business groups hailed the Senate’s ratification of the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement among the Asia-Pacific nations of Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.
The agreement promises to attracting more investments in the country, investments and spur the export of Philippine-made products to the member countries. But some groups expressed concern, especially those belonging to the agriculture sector, which raise the risk of the flooding of importations.
This is why organizations need to be competitive. As business leaders, how do we transform our companies into high-performing organizations that can compete successfully in the global market? The answer lies in the kind of management culture that we, as business leaders, propagate and promote within our organizations.
Organizational culture is a collection of core values and beliefs of the members of the organization, and the policies and practices that goes along with it, like how an organization treats its customer and employees and by the rules that guide employee behavior. Thus, the effectiveness of an organization’s culture depends on the success of the business leader in translating core values and beliefs into policies and practices that help the organization capitalize on the opportunities and ward off threats in the competitive environment.
It has been well established in management literature that organizational culture drives performance. But what kind of organizational culture drives performance? From the seminal work of Deshpande, Farley, and Webster, it identified four types of organizational culture ― clan, adhocracy, hierarchy, and market (see figure). Each is defined by its dominant attributes, leadership style, the kind of bonding among employees, and the strategic emphasis of the organization.
The framework is divided into the internal maintenance cultures (clan and hierarchy) and external positioning cultures (adhocracy and market). Market culture is characterized by an emphasis on competitive advantage and market superiority; adhocracy culture, on the other hand, emphasize on entrepreneurial behavior, innovation and risk-taking. Hierarchy culture is characterized by bureaucratic regulations and formal structures; whereas clan culture emphasizes on loyalty, tradition and smoothing activities.
Operationally, organizations turn out to have a mixture of these four organizational culture types; but those which exhibit dominant externally oriented cultures of adhocracy and market generally outperform that of the internally-oriented clan and hierarchy cultures
In practical terms, it makes sense that a predominantly entrepreneurial and competitive organization will outperform a bureaucratic and consensual one. Consider a competitive and opportunity-seeking salesperson who would over-achieve his or her quota, compared to one who is burdened by the company’s bureaucracy and spends more time in unproductive activities.
Therefore, as business leaders, we need to develop and nurture competitive cultures that promote fast and effective response to environmental changes and opportunities that emerge from it. We can start by fighting complacency within our companies and build a sense of urgency in how we run our business. The sense of urgency should be translated into a vision and organization goals, and communicated to all employees. These are further translated into discrete goals of each employee and monitored and reviewed through a performance management system.
While a highly competitive culture will most likely make company successful, too much of it will also be detrimental in the long run as it will engender organizational stress, uncooperativeness, and in-fighting. That’s why a competitive culture should be supported by a good amount of clan and hierarchy cultures for teamwork, better control and coordination.
In the end, it’s all about striking a balance among the different culture types to make a competitive culture more effective in this ever-changing marketplace.
The author is the Founder and CEO of Hungry Workhorse, a digital and culture transformation consulting firm. He is a Fellow at the US-based Institute for Digital Transformation. He teaches strategic management in the MBA Program of De La Salle University. The author may be emailed at email@example.com.