Organizational Cultures of IBM and Toshiba - Term Paper Example

?Organizational Cultures of IBM and Toshiba Executive Summary Organizational culture is an integral part of the success of any company. Many companies fail to understand that without the right culture; even the best workers will not be able to work to their fullest potential. An organizational culture consists of various things such as stated or unstated values, behavioral norms or a specified culture climate, which is basically defined as the way employees are supposed to behave with each other, supervisors and the outside public. An organizational culture also consists of specific customs and traditions that have been passed on through the employees. Many companies encourage the use of historical stories and events to relate the company’s strong culture and how its people are its biggest asset. Slogans, taglines and symbols can also be categorized as part of the organizational culture; many employees will draw motivational forces from these objects and improve their productivity. IBM and Toshiba are two of the well-known computer manufacturers who have their own organizational culture present in their company. Each of them has specific strengths and weaknesses which they have overcome through the efforts of their employees. Although many people believe that since they are competitive companies, their cultures and norms will be more of less the same, however this is not the case. For simplicity, we have carried out a research of the companies based on their head-office culture which gives the most accurate description of the type of culture the original creators wanted. With the advent of globalization, this activity has become increasingly difficult, however some aspects are more clearly visible then others. What we have seen is that there are both similarities and differences in the cultures and both have their impact on the workings of the company, and while some have positive effects, others may prove to be disastrous. Introduction An organization is always affected by the culture it has. Culture can be defined as beliefs, behavior, language, and way of life for a particular group of people or a certain time. The importance of having a uniform culture throughout the company cannot be emphasized enough. In 1992, John Kotter and James Heskett published Corporate Culture and Performance, a landmark study of more than 200 US companies. They concluded that over time, organizations that managed their staff well saw their share prices increase more than 10 times higher than organizations that did not. In this article, we will be discussing the organization cultures of two large multinational companies which deal with the manufacture and distribution of laptops, computers, servers and other computer hardware devices. The companies are IBM and Toshiba. About the Companies IBM’s roots can be traced back to the year 1911 and has ever since been dominant in the IT business. While they remained competitive in some product categories, they failed in others. However, they remained true to their culture and this is the reason why they have remained a prominent player in the industry for so many years (Lesser & Prusak, 2004). Toshiba on the other hand, was started in the year 1939. Toshiba has always remained a competitive firm in the computer industry; however it has never missed out on opportunities in the electronics industry. Throughout its history, the group responsible for Toshiba expanded strongly, both by internal growth and by acquisitions, buying heavy engineering and primary industry firms in the 1940s and 1950s and then spinning off subsidiaries in the 1970s and beyond. They maintained its integrity and its strong culture. Some have attributed this strong culture as the backbone of its success. Some experts however say that it will be this culture that may lead to its eventual downfall; this argument is debatable and is out of the scope of this paper. What we must understand is that for a comparative analysis we must set a few parameters. For our purposes we will be discussing the following: Stated and Unstated Values These are the values which are part of the organization. These generally determine the code of conduct within an organization and how people will behave and interact with each other. Some of the important factors are: Promoting Innovation Innovation is described as a process of improving a certain process or product and making it more productive/efficient. Some experts have suggested that the key to a successful company lies in its ability to innovate and stay ahead of its competition. However, many companies do not allow employees to be very innovative as this may distract the company from its overall objective. Use of Technology As the world expands and geographical distances between offices increase there has been an increased demand for transferring/disseminating information at the fastest rate possible. Many companies may use the latest technology to its competitive advantage, while other may hesitate because of the cost associated with the change. Focus on Customers/Customer Orientation Having a customer oriented culture lets the employees focus on how they can improve their services to provide more benefits to the ultimate consumers. The opposite of this type of culture, is focus on product where companies focus on their product/service and not the utility it provides to the customer. This mostly leads to a reduction in the importance given to things such as customer relationship and service. Overt and implicit expectations for member behavior (also called Corporate Climate) These are the general guidelines of how the managers will behave with their peers and their subordinates. This may be largely un-stated however, every employee is aware of their part in the overall company. The biggest part in this is the Leadership style. One of the main aspects of culture is defined by the way the leader decides to take control of any situation or problem. While many managers will have a bureaucratic approach where they prefer to take the opinion of their peers and sub-ordinates before making the final decision, while others. The bureaucratic style will generally lead to a more team oriented culture where all the employees feel as if they are part of a team. Customs, rituals and other stories and myths about the history of the group There are always various customs and rituals within an organization which make it different from others. It is these shared rituals that make the employees feel a part of the family and help them find a unifying factor. Many times this will include and metaphors and symbols that are used within the company. Many companies focus extensively on publicizing its corporate history and heritage. They are proud as companies for the things that they have established. Many experts believe that they may help in motivating the employees who then are motivated to making their presence felt in the company. In the case of both the companies, there is no one single type of universal organizational culture exists as national, regional, cultural, and linguistic variables abound. But for the purposes of this study we will be focusing on the corporate headquarters, as it is mostly the most accurate image of what the company’s culture is all about. Stated and Unstated Values Promoting Innovation First, in the high tech world of today, IBM recognizes and encourages innovation and risk taking. IBM has always been a pioneer in the field and has always been a step above the other companies. This may seem as a very risky move considering the rate of technological progress and the tremendous amounts of costs that are involved in research and development. One internal study found that this innovation and risk taking generated more than $1 billion in licensing royalties and one third of the patents granted in 2000 are in the marketplace. What we must understand that this is a very competitive industry and wherever companies move away from innovative stance, they become less profitable and susceptible to market pressures. IBM is ranked number 18 in the worlds’ top most innovative companies. IBM has experienced this in its laptop division where it stopped being the leader in innovation hence lost out to more innovative companies like HP, Intel. This case has been one of the prime examples for scholars advocating the constant need for innovation in companies. While this may not be due to the culture, we can certainly correlate and the lack of innovation in the company altogether. In addition, if we remove the laptop case, IBM has always been the innovator in the right place at the right time. Many other companies have innovated products for which the consumers have not been ready for and hence the product has been rejected. Similarly, the management has always been encouraged to think outside the box and come up with innovative ways to tackle problems. One important aspect that we must consider here is the use of innovation to quickly adapt themselves to the change in the market conditions. Change Management has also been one of the key variables to the success of IBM. Toshiba has taking innovation to another level. Innovation has been incorporated into the company’s tag line. This type of importance definitely has to be backed up with actions that reflect this value to the consumers. While innovation was always at the forefront of Toshiba’s business model largely throughout its history any technological advancements would have been dealt in a much different manner. Most advances would be thought up and developed by the scientists and engineers at Toshiba and would be sold to other companies for manufacture. Hence, consumers generally do not regard Toshiba as the pioneer in innovation. However, innovation always has been the key to Toshibas survival over so many years. For many generations, companies have basically copied innovative ideas from Toshiba and made cheaper versions and attracted more customers. However, Toshiba’s CEO has finally decided that this must be stopped if Toshiba is to remain in business. The strategy would not apply to everything, but it will mean select innovations, such as next-generation memory chips, hard drives, and batteries that were developed in-house will stay in-house. And Toshiba has a strict no tolerance policy for anyone who dares piggyback on its patents without permission. Naturally, now more than ever before, innovation is being encouraged and is being promoted from the top management. This new approach has had a positive impact on the culture prevalent in the company employees are now more motivated to prove not only themselves but the company also in the world. The new innovative culture is promoted at all levels in the company and employees are now encouraged to think out loud and discuss their concepts on an open forum, from which the company can take more advantage off. Use of Technology The use of technology is rampant in both organizations. Both companies are generally a head of companies when it comes to adopting new technology. This is one of the few traits of organizational culture which is common to both companies. This is also one of the few traits which is consistent along all the offices of the companies also. Experts have attributed this to the fact that both of these companies have identified the importance of adapting the latest technologies into their business model to gain the maximum profits. One important field where both the companies have worked extensively is the field of knowledge management. Both companies now pay bears tremendous costs in using the knowledge base they have acquired through years of working. Through the implementation of ERPs and knowledge management tools, they are able to predict trends and use this knowledge to gain a competitive edge over the other companies. Another very important aspect, which can also be associated with the leadership style is the ease with which both companies adapt these changes in technology. Their success lies in the culture which is imbedded in the company. All the employees are part of the change process and share a common long term vision which makes the process of change management easier. IBM has always paid a greater attention to detail in this process as they want more precise results however this dynamically increases the costs involved. Out of the many tools in place, one is a web accessible database to track, quantify, qualify, correlate, and otherwise analyze all production changes, production experiments, and failure analysis. Using this, IBM management is able to stay on top of all the products of the company (Ringo, 2007). Toshiba “have developed an Environmental Management Information System in order to collect and manage environmental data required to promote environmental management. The Environmental Management Information System makes it possible to centrally manage and register not only performance data, such as energy consumption required for business activities and the amount of waste generated from these activities, but also environmental accounting information and the results of site environment audits.”1 Focus on Customers/Customer Orientation Customer orientation of the frontline employees is crucial for business success as the behaviour of the employees affects the customer perception of the service. A study was carried out to check how important this factor is to the perception of the customers, the results showed that customer orientation was the most important attribute for all segments, except the employees’ tenure, which chose interpersonal relations as the most important service attribute. It is important to understand that there are 2 dimensions to customer orientation, the internal and the external. The intra-organisational perspectives of customer orientation are the employee’s organisational commitment and his or her job satisfaction. The basic principles that have an impact on customer orientation of the employee include: organizational constructs, such as organisational climate and socialisation; and personal construct, such as motivational effort and direction. The top management must take an interest in promoting a positive culture by incorporating all these variables. IBM has always been focused on providing the best services to its customers. This focus on providing the best possible services has been termed as outcome orientation. The outcome, vision, or big picture is regularly stressed in monthly department meetings. The big picture within my organization is delivering a quality product at cost, on time, and responsiveness to the customers’ needs. Often times, it is the details that dominate most of the meetings and work time, yet the outcome does rate high. For example, a task force is already in place developing the second and third generation of the product. This task force has before it clearly defined goals that must be reached (Paprzycki, 2004). These goals are the desired outcome and must be fulfilled in order to have a successful outcome. Continuous product development and process refinement takes place only because of this focus. Toshiba has carried out several product developments not only because of the economic benefit the product will bring to the company but because of the overall benefit it will have on the consumers’ lives. Time and again Toshiba has focused on satisfaction of consumers’ needs and improvement of the society as a whole. Some managers have asked their employees to focus on the lives of their target market and then think of any solution that comes to their mind. These ideas are discussed and then evaluated. Of course these ideas have to have some sense and logic behind them. What we have to remember that the Japanese are always looking to maximize their benefit using the minimum amount of resources and any wastage is not viewed positively hence employees at the headquarters are very specific on the things they want to be done and more than often they have developed ways to improve the consumers’ utility. Overt and implicit expectations for member behavior (also called Corporate Climate) Now, we would like to focus on the leadership styles adopted by the management. Again, there may be clear differences between the styles however there are certain codes that govern the leadership style at both companies. Leaders must take an active role within their organization's culture. Whether positive or negative, in an organization, things tend to follow suit "down-hill". A leader has the power and influence to maintain, create, or repair an organizational culture. However, this can prove to be a delicate and challenging task. When trying to maintain a healthy organizational culture the leader has many factors that he/she must balance. Two important aspects that should be discussed here are People Orientation and Team Orientation. People orientation is the ability of the top management to enable each employee to achieve their potential, improve their capabilities and perceive his/her role and responsibilities and participate and contribute to the growth and success of the company. Team Orientation is the amount of encouragement that is given to employees to form teams and groups to solve problems faced by the company. Management at IBM is highly committed to both people and teams. One-on-one informal sit down discussions are common and occur regularly. These one-on-one discussions are designed for each employee and their first line manager to develop a personal as well as a professional relationship. The employee may discuss work related concerns, goals, as well as solicit performance feedback. Moreover, these meetings take place behind closed doors, no phone calls are answered, and pagers are turned off. Team work is highly promoted and cross functional teams are the norm. Moreover, many different departments work together towards a common goal and meetings often include conference calls with other important individuals or sites. This type of atmosphere increases the ownership of the business by the all the employees. These steps help maintain a high level of employee motivation and it’s the leaders interest in his/her employees actions and behaviors that helps him gain their respect. He is able to incorporate them into decision making and other top management activities. At the core of Toshiba’s management lie the same principles that are employed in other companies such as Hitachi, Sony, etc. The basic principle is that of a collectivist culture where the employees of an organization are viewed as part of an extended family. The fact is that many employees stay with their companies for longer durations hence leadership is naturally collaborative. One of the core areas where Toshiba has excelled is through collaborative management. This is where the management is taking 'sophisticated collaboration' with suppliers and customers to new heights. Not only are the employees being consulted, but suppliers and vendors are part of the decision making. The final high-tech concept, 'focusing on core capabilities to execute strategy successfully', is another Japanese foundation, which is adapted to its fullest. Some experts have commented on the failure of IBM, and success of Toshiba in the portables industry can be associated with this management style difference. It was identified that the IBM management could not handle the stress associated with the product failures; however Toshibas strong leadership and commitment to the company allowed them to overcome any hiccups in product development. Customs, rituals and other stories and myths about the history of the group At IBM, a great amount of emphasis is paid to the customs and rituals that are operating as they mold the present and future employees of the country. IBM has always has a strong tradition and a set of customs. In 1914, CEO Thomas J. Watson boosted company spirit by created employee sports teams, hosting family outings, and furnishing a company band. However the most important custom for IBM over the years has been the dark (or gray) suit, white shirt, and a "sincere" tie was the public uniform for IBM employees for most of the 20th century. During IBM's management transformation in the 1990s, CEO Lou Gerstner relaxed these codes, normalizing the dress and behavior of IBM employees to resemble their counterparts in other large technology companies (Kenney & Florida, 2004). This was a major changing point in IBM’s history and is always quoted by experts who want to show how small actions can have a positive effect on the overall company. Another important aspect has been the IBM logo which has become a symbol for quality and reliability all over the world. IBM's current "8-bar" logo was designed in 1972 by graphic designer Paul Rand. The story behind the development of the logo is that logos designed in the 1970s tended to be sensitive to the technical limitations of photocopiers, which were then being widely deployed. A logo with large solid areas tended to be poorly copied by copiers in the 1970s, so companies preferred logos that avoided large solid areas. IBM also has an illustrious history. One of the prime examples of stories circulated around the company is the nickname i.e. Big Blue. Although the actual story is not clear but “one theory, substantiated by people who worked for IBM at the time, is that IBM field representatives coined the term in the 1960s, referring to the color of the mainframes IBM installed in the 1960s and early 1970s. "All blue" was a term used to describe a loyal IBM customer, and business writers later picked up the term. Another theory suggests that Big Blue simply refers to the Company's logo. A third theory suggests that Big Blue refers to a former company dress code that required many IBM employees to wear only white shirts and many wore blue suits.”2 At Toshiba, as is the case in the Japanese culture, they put a lot of emphasis on the history and heritage of the company. However, they show the utmost respect to their traditions and rarely take it non-seriously. The main figures behind Toshiba mainly Hisashige Tanaka and Ichisuke Fujioka are constantly remembered and their work honored. The new employees are told about their brilliance and how they envisioned the company for the future. Through-out its history and accomplishments, the management has stayed true to these values and has always tried to stay on course with the vision of the “founding fathers”. Toshiba’s tag line has been a critical factor in its success story. As discussed earlier, more innovation may not be visible to end users but behind the doors, it is the uniting force behind all the employees. Each new development is acknowledged and the person is praised from Toshiba offices all over the world. One thing that we must understand at this point is that Japanese people by culture are not very open and like to remain quiet about their achievements. They are more likely to start working on their next project rather than gloat about their achievements, and this ability makes literature on their successes rarer. Similar to many other companies, Toshiba has become a pioneer in the field of CSR where it has gone beyond looking at only the benefit of its direct customers. This constant desire has created a culture where all employees are working to improve the world that we live in. Every year since 2004, the Toshiba President's "ASHITA" (Japanese for tomorrow) Awards are presented to a company or employees who made an outstanding contribution to strengthen and promote good corporate citizenship activities throughout the Toshiba Group worldwide to earn the trust of society and to ensure sustainable development in the community we operate. This award in itself shows how concerned Toshiba is of not only its own survival but the words sustainability. Conclusion Over the course of this discussion, we saw the similarities and differences in the organizational cultures of IBM and Toshiba. The last thing that we must single out and describe is that fact that societal culture has a major impact on the organizational culture and hence a company must adapt itself to accommodate the culture in different countries. When companies fail to do this it generally it generally leads to break down of the structure of the company (Davis & Daniel, 2009). Johnson & Johnson was a victim to this as it implemented a global policy which had to be followed by all the country offices. Not everyone could associate with this change and eventually the management had to revert back to the old style of management. Adapting all the processes to meet the overall corporate mission may take up time and resources of the company however the benefit of having the right culture and the right people is much greater in the long run. Works Cited Davis, Charles R. & Daniel, Lisa J. What Makes High-Performance Teams Excel? Research Technology Management, 52, 2009 Kenney, Martin & Florida, Richard. Locating Global Advantage: Industry Dynamics in the International Economy. Stanford University Press, 2004 Lesser, Eric & Prusak, Laurence. Creating Value with Knowledge: Insights from the IBM Institute for Business Value. Oxford University Press, 2004 Paprzycki, Ralph. Japanese Interfirm Networks: Adapting to Survive in the Global Electronics Industry. Routledge, 2004 Ringo, Tim. IBM Explores New Frontiers in Collaborative Innovation. Research Technology Management, 50, 2007 Read More