Culture and IT-Driven Strategic Change

1. Effect of Culture on an Organisation’s Ability to Adapt to IT-Driven Strategic Change
Introduction
Culture plays a pivotal, yet often under-recognised role in organisations in the modern world. By gaining
a discrete understanding of the individual and group psychology within an organisation, management
can plan change in an effective manner based upon the culture of the organisation. An understanding of
the prevailing culture, and indeed micro-cultures within different business units, allows IT-driven change
to take place in an efficient and effective manner, reducing resistance and increasing compliance. IT-
driven change, as opposed to change in general (e.g. restructuring after redundancies, acquisition etc.),
has its own unique fingerprint and requires an intrinsic understanding of the requirements and
expectations of each business unit effected. For example when implementing a new Enterprise
Resource Planning (ERP) system, each business unit’s requirements must be ascertained,
management needs to be bought-in, champion’s identified and timelines set. Knowledge of the existing
culture of the organisation will allow the elucidation of the best strategy for achieving change and predict
how the organisation will adapt to these changes.
Understanding Organisational Culture
A number of different definitions of organisational culture have being put forward by thought leaders in
the field. According to Becker and Geer (1960), culture can be defined as “a set of common
understandings around which action is organized which finds expression in language whose nuances
are peculiar to the group”, while Ouchi (1981) describes culture as “a set of symbols, ceremonies and
myths that communicate the underlying values and beliefs of the organisation to its employees”. Thus
culture can be viewed as the intrinsic fabric of the organisation, the common vision shared by all
employees or the group mentality.
There are a number of key characteristics by which organisations differ, outlined as follows: individual
initiative, the degree to which employees are given freedom of choice and responsibility and the ability
to make independent decisions, e.g. a management consultancy; risk tolerance, the degree to which
employees are encouraged to be creative, innovative, aggressive or risk-seeking, e.g. an investment
bank; direction, the degree to which organisations sets clear goals and performance expectations, e.g.
a online sales company; integration, the degree to which the organisation is encouraged to operated in
a coordinated manner, e.g. as in a high-output manufacturing environment and a number of other

2. characteristics including management support, control identity, reward system, conflict tolerance
and communication patterns.
Several methods have being used to describe different organisation cultures. According to Handy
(1985), the four main organisational cultures are as follows: the power culture, where a small minority
are in possession of the majority of the power. These organisations are characterised by centralised
control mechanisms, little if any bureaucracy and rapid decision making processes; the role culture,
where there are clear lines in terms of delegation of authority. These organisations are characterised by
hierarchical bureaucracies, where multiple layers are involved in the decision making process; the task
culture, where business units and teams are created to carry out particular functions or solve problems.
These organisations often are characterised by a matrix structure, with multiple reporting lines; and the
person culture, where individuals within the organisations believe themselves superior to the
organisation as a whole. These types of organisations are characterised usually by their difficulty in
survival, as each stakeholder doesn’t embrace the goals of the organisation, rather individual goals.
A useful complimentary set of dimensions in addition to those of Handy are Hofstede’s five dimensions
of culture – Power Distance, Uncertainty Avoidance, Masculinity, Time Orientation and Individualism
(Hofstede, 2001). Power distance (PD) is characterised by the degree to which unequal distributions of
power are accepted. A high PD score within an organisation implies that large status differences
between employees and management are acceptable and management tends to be autocratic and
dictatorial with employees being submissive and compliant. Uncertainty avoidance (UA) reflects the
degree of acceptance of ambiguous situations and the extent to which strategies are adopted to
minimise or avoid these situations. Managers in high UA cultures tend to depend extensively on rules
and regulations. Comprehensive strategies are adopted to plan for and even control the future.
Masculinity (MAS) reflects the degree to which tough and assertive behaviour is encouraged.
Conversely, femininity (FEM) encourages tender and nurturing behaviour. Time Orientation reflects the
degree to which short-term pain is accepted in return for long-term gain. Organisations with a short-term
orientation (STO) will be more likely to seek out immediate gratification than those with a long term
orientation (LTO), but they are less likely to plan or invest for the future. Individualism (IND) reflects the
degree to which personal independence is valued over group membership. An organisation scoring high
on IND values personal goals, initiative, autonomy and privacy. Conversely, collectivistic (low IND)
societies value group goals and objectives over individual preferences (Martinsons et. al, 2009).

3. The foundations of corporate culture lie in a number of factors which are instilled at the formation of the
organisation or develop over time. The founding member(s) of an organisation play an important role is
setting out the mission and vision of the organisation and often the organisations culture develops from
the beliefs and values set out by the founder(s). For example, a founder may have split from a previous
organisation because of inhibitory bureaucracy; hence the prevailing culture that will form in the new
company will be one where little bureaucracy exists. The cultural and social setting of the organisation
will also have an impact on culture – in Ireland, an organisation founded outside the main metropolis of
Dublin may have a different culture that one formed in a regional city. Culture will also naturally develop
based upon the nature of the business – a relaxed, consultative culture may form where intellectual
activities are core to the business, while an achievement culture may form where metrics and
performance goals are set by management, as in a sales environment.
IT­Driven Strategic Change and Organisational Culture
IT-driven strategic change can be a daunting prospect for management within an organisation because
of the significant risks involved if not implemented properly. Change can be reactive, due to problems or
insufficiencies in existing legacy systems, or process driven, as part of quality improvement programs
for example. Whatever the reason for change, expert planning and implementation is required to
mitigate the risk of detrimental effects to the business as IT systems often form a critical part of many
organisations.
When planning IT-driven change, a discrete understanding of the prevailing corporate culture is
required. One of the greatest predictors of implementation success is whether the existing culture is
adaptive or un-adaptive. Adaptive corporate cultures are characterised by employees who care deeply
about customers, shareholders and each other. They value any process which creates useful change
and which improves the organisation and hence its service to others. In contrast, un-adaptive corporate
cultures are characterised by management who care mainly for themselves and their business unit.
They place value in processes which reduce risk and may see change, especially IT driven change, as
unnecessary and as a threat to the happy equilibrium they exist in.
Corporate cultures which inhibit strong long-term performance are common, especially here in Ireland.
A legacy of the ‘Celtic Tiger’ is the pervasion of many such organisations, where the boom years,
characterised by unprecedented success and growth, allowed the development of negative cultural
elements, especially among top performing companies. These toxic corporate cultures developed slowly

4. and silently over a number of years, even when employees were reasonable and intelligent (Kotter and
Heskett, 1992). Such cultures can be very resistant to change as the toxicity of the prevailing culture
can be invisible to both management and employees.
A prime example of this can be seen in a company I previously worked for as a scientific HR consultant.
The company was exceptionally successful during the boom years, with strong growth and turnover.
The organisation was a mix between a power culture and an achievement culture. IT was seen as a
cost of business and not as a strategic driver. Prior to the recession of 2008, the company had seen
little value in the use of internet technologies as a strategic driver for their business, even though from
the outside it was a logical progression to utilise internet marketing strategies, and as such top
management forcibly inhibited any suggestions from employees and middle-management with regard to
the utilisation of such technologies. The Managing Director believed that internet technologies and
marketing would taint the brand of the company as he believed them to be perceived as ‘cheap’ in the
industry. This resistance to change was very detrimental to the company as once the recession hit, 90%
of the workforce was made redundant as competition from new entrants using the significantly more
cost effective internet technologies took business from them.
Effecting successful change within organisations can be achieved if a number of cultural factors are
considered, and if applicable modified, in the planning and early implementation phases of an IT
system. The literature surrounding implementation of information technology and software projects
clearly demonstrates that if the project is to succeed, buy-in and support from top management is critical
(Johnson, 1995). If top management are clearly seen to embrace the change, the rest of the
organisation will find it easier to adapt to the change. Another critical factor is engaging middle-
management, as they act as the functional bridge between top management and the employee on the
ground. Middle-managers are more approachable, and as such can entertain queries and concerns
about the new system without fear of reprisals, as which may be the case with top management.
Middle-managers also possess knowledge of key influencers within the organisation and have the ability
to bring these key personnel on board, leading to the rest of the employees following suit. Other critical
success factors in effecting IT-driven change include forming a culture of inclusion and collaboration
with all potential stakeholders in the new system and the provision of tangible benefits within an
acceptable timeframe, usually 2 years.

5. A critical precursor to any implementation is the identification of attributes that have the potential to slow
or prevent a successful IT implementation, while concurrently instilling cultural attributes that support
successful implementation. Furthermore, identification and knowledge of the adaptability of different
cultures allows pre-emptive strategies to enable successful change. Table 1 describes the different
effects of culture on IT-driven strategic change (adapted from Martinsons et. al, 2009)
Table 1. Effect of Culture on IT­Driven Strategic Change
Uncertainty Time
Power Distance Masculinity Individualism
Avoidance Orientation
IT used to Emphasis on
reduce material rewards
uncertainty and Firms in STO of IT Managers tend to
Centralised
make forecasts. cultures accept implementation. feel lacking in
authority leads to
Significant radical IT Managers tend personal authority
easy authorisation
planning change easier. to view the or strategic
and initiation of
High change, however
involved in IT Rapid results implementation relationships
change involving promised were as a battle to be required to drive
can be difficult to
multiple attractive to won. change. Difficult
complete
stakeholders. managers due Manageable to form cohesive
implementation.
Potential for to fiscal gains. levels of teams.
‘paralysis by resistance
analysis’ experienced.
Difficult to initiate
Culture of
due to repeated LTO companies Managers tend to
incrementalism.
revisions and Tend to be more preferred work together with
Cautious
multiple flexible and smooth and cohesive
progress
Low stakeholders planning tends to steady progress
philosophy to
leadership.
involved but once be more loose rather that quick Consensus
prototype, test
initiated and directional. fixes which may necessary to
and implement
implementation be disruptive. avoid conflict.
new IT systems.
proceeds rapidly
Conclusion
As outlined in this paper, culture has a significant effect on an organisations ability to adapt to IT-driven
strategic change. The implementation project champion or change manager has multiple factors to take
into account when planning the implementation including prevailing culture and indeed sub-cultures
within the organisation. Management needs to be engaged and key influencers identified. Given the
broad range of cultural intricacies that exist, no one standard system of change will apply. The change
manager must analyse the culture and plan the implementation based upon their analysis, always
leaving flexibility for unforeseen events.

6. References
Becker, H.S. and Geer, B. (1960).“Latent Culture: A Note on the Theory of Latent Social Roles”.
Administrative Science Quarterly, Vol. 5, No. 2 (Sep., 1960), pp. 304-313.
Handy, C.B. (1985) “Understanding Organizations”, 3rd Edn, Harmondsworth, Penguin Books
Hofstede, G. (2001) Culture’s Consequences: Comparing Values, Behaviors, Institutions, and
Organizations across Nations. Sage, London
Johnson, J. (1995) ‘Chaos: The Dollar Drain of IT Project Failures’. Application Development Trends,
January pp. 41-48.
Kotter, J. and Heskett, L. (1992) “Organisational Culture and Performance” New York, NY. Free Press
Martinsons, M.G., Davison, R., Martinsons, V. (2009) “How Culture Influences IT-enabled
Organizational Change and Information Systems” Communications of the ACM. 118(6).
Ouchi, William G (1981). “Theory Z: How American Business can meet the Japanese Challenge”.
Reading, MA: Addison-Wesley.