What is a business? It is a question I have been pondering of late while thinking about how to apply engineering processes and tools and highly visual video game technologies to the design and operations of business systems, as well as trying to figure out the kinds of skills and education needed by future engineers and managers dealing with such technology-based business systems.
The question is relatively easy to answer when talking about the kind of small businesses we deal with in our everyday life - a favorite restaurant, the local dry cleaner, the neighborhood drugstore. But the question is much harder to answer when it comes to global enterprises like IBM, BP, Fidelity or Colgate-Palmolive, to cite a few companies with which I work closely.
Global companies, which generally offer a variety of products and services, seem somewhat abstract, with their employees and clients distributed all over the world. These companies are becoming even less concrete, as once vertically integrated enterprises disaggregate into business webs, or open, virtual enterprises to do business more effectively in a highly networked world. In fact, these trajectories are spawning a shift in the basic corporate model - from the multinational corporation, with relatively independent subsidiaries in countries around the world, to the globally integrated enterprise.
What binds together a virtual, distributed, globally integrated business? Wikipedia defines business as " . . . the social science of managing people to organize and maintain collective productivity toward accomplishing particular creative and productive goals, usually to generate revenue." I like this definition because it focuses on people as the essence of a business, and it is by effectively organizing and managing people that a business develops products and services and generates revenue and profit.
Organizing and managing a globally distributed work force to be creative and productive is very difficult, especially if many of these people do not even work directly for the company but rather for its suppliers, dealers and partners. You need something to help bind such a work force together, which is why culture is so important to the success of global companies. In Who Says Elephants Can't Dance?, Lou Gerstner devoted a major part of his excellent chronicle of IBM’s transformation to the role of culture in business.
He wrote (p 182), "I came to see in my time at IBM that culture isn't just one aspect of the game - it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value. Vision, strategy, marketing, financial management - any management system, in fact - can set you on the right path and can carry you for a while. But no enterprise - whether in business, government, education, health care or any area of human endeavor - will succeed over the long haul if those elements aren't part of its DNA.”
In IBM, we have been thinking hard about how best to create a common culture, in particular one suitable for a global, independent-minded, 21st century work force like ours. It was clear that whatever business values we came up with to express our culture could not be dictated from the top, so in the summer of 2003 we organized a ValuesJam in which all employees were invited to participate to help us shape and define IBM’s values.
In a letter to employees explaining the importance of these values, IBM Chairman and CEO Sam Palmisano said, "Clearly, leading by values is very different from some kinds of leadership demonstrated in the past by business. It is empowering, and I think that's much healthier. Rather than burden our people with excessive controls, we are trusting them to make decisions and to act based on values - values they themselves shaped." Shared values and a common culture are the only way to bind together a highly distributed company like IBM, where work force and partners constantly have to make important business decisions and create entirely new solutions, all around the world.
If your company has a strong internal culture and set of values, that will be manifest in its external image or brand - that is, the "symbolic embodiment of all the information connected to a company, product or service." Every enterprise, institution – or individual, for that matter – has a brand – that is, is seen by the world in a definable way. If that image is not in harmony with the culture and values that person or organization espouses – in other words, if the brand is not truly values-driven – then the gap can be damaging, even fatal.
This is particularly the case in today's increasingly transparent world, where people who think a company's behavior is not consistent with the brand image it projects can take it to task over the Internet, using social networking tools like blogs. Every so often, one such disgruntled blog starts circulating over the Internet, gathering more and more readers and significantly damaging the image of the company being criticized. Walking the talk - that is, living by the values you espouse - is more important than ever for companies, especially global companies with a strong brand.
This is much easier said than done, because competitive and market pressures will often pull companies into behaviors that may go against their established culture and image. For example, the recent "pretexting" scandal at Hewlett-Packard may have done real damage to both external and internal perceptions of a company that has always been an icon for values and corporate culture. It's too soon to know, of course - and the company's effective operational management under Chairman and CEO Mark Hurd has done much to soften the blow. But wounds inflicted at the level of brand, values and culture are long-lasting, and their impact can be deep.
Also, as IBM discovered to its woe in the early 1990s, losing sight of the true center of a company's identity - coming to associate culture and brand with particular products, particular management strategies, particular markets - can blind you to what lies deeper and therefore endures - namely, values. We did that when we came to see IBM in the 1980s as "a mainframe company" - and we almost died as a result. Brand, culture and especially values need to function not just as your anchors to a successful past, but as your headlights into a changing future.
Today, I am a bit incredulous that recently Microsoft's CEO Steve Ballmer made another round of attacks against the Linux community and Linux customers. Many of Microsoft’s present customers are quite comfortable using Windows for some applications and Linux for others. What do these customers think about such statements now? How do these statements by the CEO of such a renowned company affect its employees and overall culture?
This is crucial – and very tricky – stuff. Even in an organization where diversity of public communication is a core part of the company – as in a journalistic enterprise – I believe that the brand can be at risk if stretched too far. One of the flashpoints for such risk is the shift underway today not just to a global economy, but to an increasingly flat world where news travels from one end to the other in a matter of seconds.
I have a generally positive image of CNN and its parent company TimeWarner. I associate both CNN and TimeWarner with a highly professional, international work force, - precisely the kind of companies to serve a global, flat world - an image perhaps best embodied by Time's founder Henry Luce and CNN's founder Ted Turner.
So I am flabbergasted by the totally different note struck by CNN's Lou Dobbs Tonight, a program I associate, perhaps unfairly, with a strong anti-immigrant tone, especially aimed at poor Mexican immigrants; an angry, strident voice that sounds to me more like populist xenophobia than professional journalism; and a nativist style so inconsistent with everything I associate with CNN and TimeWarner.
I read that the ratings for Lou Dobbs Tonight are quite high, and that probably explains why the program is so prominent on CNN's schedule. But I do wonder how such a program will impact CNN's and TimeWarner's brand in the long run. Whatever else you can say about Lou Dobbs Tonight, there is no question that the program is aimed at a purely domestic U.S. audience. What does CNN's large international audience think of Lou Dobbs Tonight? How do the other CNN journalists feel about having such a program in their midst? Does it have any impact on CNN's overall culture?
I strongly believe that today, more than ever, the soul and very essence of a business, especially a globally integrated business, lies in its people, culture and brand. These may sound like “soft” subjects, but in the long run the very survival of the business may depend on them.