Every new group or organization must develop a shared concept of its ultimate survival problem, from which usually is derived its most basic sense of core mission, primary task, or “reason to be.” In most business organizations, this shared definition revolves around the issue of economic survival and growth, which, in turn, involves the maintenance of good relationships with the major stakeholders of the organization: (1) the investors and stockholders; (2) the suppliers of the materials needed to produce; (3) the managers and employees; (4) the community and government; and, last, but not least, (5) the customers willing to pay for the product or service.
Many studies of organizations have shown that the key to long-range growth and survival is to keep the needs of these constituencies in some kind of balance, and that the mission of the organization, as a set of beliefs about its core competencies and basic functions in society, is usually a reflection of this balance (Donaldson and Lorsch, 1983; Kotter and Heskett, 1992; Porras and Collins, 1994). It has been a mistake to think in terms of a total focus on any one of these constituencies because all of them together make up the environment in which the organization must succeed.
In religious, educational, social, and governmental organizations, the core mission or primary task is clearly different, but the logic that the mission ultimately derives from a balancing of the needs of different stakeholders is the same. Thus, for example, the mission of a university must balance the learning needs of the students (which includes housing, feeding, and often acting as in loco parentis), the needs of the faculty to do research and further knowledge, the needs of the community to have a repository for knowledge and skill, the needs of the financial investors to have a viable institution, and, ultimately, even the needs of society to have an institution to facilitate the transition of late adolescents into the labor market and to sort them into skill groups.
Though core missions or primary tasks are usually stated in terms of a single constituency, such as customers, a more useful way to think about ultimate or core mission is to change the question to “What is our function in the larger scheme of things?” or “What justifies our continued existence?” Posing the question this way reveals that most organizations have multiple functions reflecting the multiple stakeholders and that some of these functions are public justifications, while others are “ latent ” and, in a sense, not spoken of (Merton, 1957). For example, the manifest function of a school system is to educate. But a close examination of what goes on in school systems suggests several latent functions as well: (1) To keep children (young adults) off the streets and out of the labor market until there is room for them, and they have some relevant skills; (2) to sort and group the next generation into talent and skill categories according to the needs of the society; and (3) to enable the various occupations associated with the school system to survive and maintain their professional autonomy. In examining the manifest and latent functions, the organization’s leaders and members will recognize that to survive, the organization must to some degree fulfill all of these functions. Some of the most important shared assumptions concern how to fulfill the latent functions without publicly admitting the existence of those functions.
Core mission thus becomes a complex multifunctional issue, and some of the functions must remain latent to protect the manifest identity of the organization. For a university to announce publicly the babysitting, sorting, and professional autonomy functions would be embarrassing, but these functions often play an important role in determining the activities of the organization and determining key elements of the culture of the organization. In business organizations, the latent functions include, for instance, the provision of jobs in the community where the business is located, the provision of economic resources to that community in the form of goods and raw materials purchased, and the provision of managerial talent to be used in activities other than running the business.
For example, as DEC became a major economic force in New England, the choice of where to build new factories and other organizational units was partly driven by Ken Olsen’s perception of what the economic impact would be on the local areas. The analysis of DEC ’s culture then revealed a set of tacit assumptions about maintaining the economic health of the regions in which it operated. Though Ciba-Geigy would never have publicly admitted it, members of the so-called “Basel Aristocracy” had career advantages that non-Swiss did not have, and one of the latent functions of the business was to sustain those careers.
Overall corporate culture dimensions evolve around these issues, and subculture dimensions show up in the subunits whose interests are involved in the latent functions. The importance of these latent functions may not surface until an organization is forced to contemplate closing or moving. Then subculture conflicts may erupt if the interests of some of these groups become threatened. The commonest example is, of course, how the subculture of labor surfaces when companies find a need to downsize or move.
Mission relates directly to what organizations call “strategy.” To fulfill its manifest and latent functions, the organization evolves shared assumptions about its “reason to be” and formulates long-range plans to fulfill those functions. That involves decisions about products and services and reflects what could usefully be called the “identity” of the organization (Hatch and Schultz, 2004). The shared assumptions about “who we are” become an important element of the organization’s culture and limits the strategic options available to the organization. Strategy consultants are often frustrated by the fact that their recommendations are not acted upon. They forget that unless those recommendations are consistent with the organization’s assumptions about itself, they will not make sense and hence will not be implemented.
For example, at one stage in the evolution of Ciba-Geigy, I heard lengthy debates among top managers on the question of whether Ciba-Geigy should design and produce “any” product, provided it could be sold at a profit, or whether designs and products should be limited to what some senior managers believed to be “sound” or “valuable” products, based on their conception of what their company had originally been built on, and what their unique talents were. The debate focused on whether or not to keep Airwick, which had been acquired in the American subsidiary, to help Ciba-Geigy become more competent in consumer-oriented marketing. Airwick made air fresheners to remove pet or other odors, and at one of the annual meetings of top management, the president of the U.S subsidiary was very proudly displaying some TV ads for a new product called Carpet Fresh. I was sitting next to a senior member of the internal board, a Swiss researcher who had developed several of the company’s key chemical products. He was visibly agitated by the TV ads and finally leaned over to me and loudly whispered, “You know, Schein, those things are not even products.”
In the later debates about whether to sell Airwick (even though it was financially sound and profitable), I finally understood this comment when it was revealed that Ciba-Geigy could not stomach the image of being a company that produced something as seemingly trivial as an air freshener. Thus a major strategic decision was made on the basis of the company ’s culture, not on marketing or financial grounds. Ciba-Geigy sold Airwick and affirmed the assumption that they should only be in businesses that had a clear scientific base and that dealt with major problems such as disease and starvation.
This issue came up in a different way in General Foods when it had to face the accusation from consumer groups and nutrition experts that some of its products, although they tasted good because of high sugar and artificial flavoring content, had no nutritional value. The accusation raised for the top management not merely an economic question but an identity question: Is this company a “food” company, or a “consumer-oriented edibles” (i.e., anything that tastes good) company, or both, or neither?
At first the company responded by attempting to develop and sell more nutritious products, but it found that customers genuinely preferred the cheaper, less nutritious but better-tasting ones. An advertising campaign to sell “nutrition” did not overcome this customer resistance, nor did lowering the price. A debate ensued in the company about its basic mission beyond economic survival, and, in this debate, the pragmatic market-oriented subculture was able to argue much more successfully. The company discovered that its commitment to nutrition was not fundamental and that its identity rested much more on the assumption that they were in the “consumer- oriented edibles” business. They would make and sell any kind of food that people were willing to pay money for.
In summary, one of the most central elements of any culture is the assumption the members of the organization share about their identity and ultimate mission or functions. These are not necessarily very conscious but can surface if we probe the strategic decisions that the organization makes.
Source: Schein Edgar H. (2010), Organizational Culture and Leadership, Jossey-Bass; 4th edition.