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Corporate Culture and Performance

Corporate Culture and Performance

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Going far beyond previous empirical work, John Kotter and James Heskett provide the first comprehensive critical analysis of how the "culture" of a corporation powerfully influences its economic performance, for better or for worse. Through painstaking research at such firms as Hewlett-Packard, Xerox, ICI, Nissan, and First Chicago, as well as a quantitative study of the relationship between culture and performance in more than 200 companies, the authors describe how shared values and unwritten rules can profoundly enhance economic success or, conversely, lead to failure to adapt to changing markets and environments.

With penetrating insight, Kotter and Heskett trace the roots of both healthy and unhealthy cultures, demonstrating how easily the latter emerge, especially in firms which have experienced much past success. Challenging the widely held belief that "strong" corporate cultures create excellent business performance, Kotter and Heskett show that while many shared values and institutionalized practices can promote good performances in some instances, those cultures can also be characterized by arrogance, inward focus, and bureaucracy -- features that undermine an organization's ability to adapt to change. They also show that even "contextually or strategically appropriate" cultures -- ones that fit a firm's strategy and business context -- will not promote excellent performance over long periods of time unless they facilitate the adoption of strategies and practices that continuously respond to changing markets and new competitive environments.

Fundamental to the process of reversing unhealthy cultures and making them more adaptive, the authors assert, is effective leadership. At the heart of this groundbreaking book, Kotter and Heskett describe how executives in ten corporations established new visions, aligned and motivated their managers to provide leadership to serve their customers, employees, and stockholders, and thus created more externally focused and responsive cultures.
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  • Free Press | 
  • 224 pages | 
  • ISBN 9781451655322 | 
  • May 2011
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Read an Excerpt

Chapter 1

The Power of Culture

We encounter organizational cultures all the time. When they are not our own, their most visible and unusual qualities seem striking: the look of the traditionally dressed IBM salesman, the commitment to firm and product expressed by employees at Honda or Matsushita, the informality of Apple and many other high-tech companies. When the cultures are our own, they often go unnoticed -- until we try to implement a new strategy or program which is incompatible with their central norms and values. Then we observe, first hand, the power of culture.

The term "culture" originally comes from... see more

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