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When it comes to corporate culture, Allan Kennedy wrote the book. Too bad American managers misread it

In 1982, with a small book called Corporate Cultures: The Rites and Rituals of Corporate Life, coauthors Terrence E. Deal, then a professor at Harvard University Graduate School of Education, and Allan A. Kennedy, then a consultant at McKinsey & Co., popularized a phrase and legitimized an idea that has since been used and abused by a generation of company builders and managers.

The idea that companies had cultures wasn't itself new. The book's value was to suggest ways that entrepreneurs and managers could evaluate and describe the cultures in their companies, understand how those cultures are created, and appreciate the role cultures play in promoting or inhibiting a company's business success. Predictably, Corporate Cultures sparked a management fad and spawned an industry of "culture consultants." Also predictably, much of what the consultants preached, and what managers did in the name of corporate culture, was not what Deal and Kennedy had intended.

Inc. executive editor Michael Hopkins and former senior writer Tom Richman recently talked with Allan Kennedy.

Inc.: For all of what Corporate Cultures told its readers, you never really said what they should do with the information. What did they do with it?

Kennedy: Our original purpose in writing the book was to get the subject of culture on the management agenda and to sensitize managers to its importance. Some people, however, heard only part of what we said, the part about culture being helpful to a company's performance. A lot of managers of companies large and small came to us and said, "We want one of those things." We said, "But you have one." They said, "But we want the kind that produces superior performance." Bizarre. Also, what I call the "culture industry" grew quite large after the book came out. Numerous consulting firms claimed to do cultural change--almost as many as claim to do reengineering nowadays.

Inc.: And you think that was quackery?

Kennedy: I think it was close to quackery. I am and have been an old-fashioned business consultant, concerned about what it takes to make a business work. Obviously, I try to be sensitive to cultural issues, but easily three-quarters of my professional career, almost 30 years, has been spent on what most of the world would view as strategic matters: How do we make this business grow? How do we make it survive? Those are not really cultural problems. You can't work on cultural problems except in a strategic-business context.

Inc.: I take it then that you don't believe that culture is everything in managing a company?

Kennedy: After Corporate Cultures came out, people kept asking us, "So, what you're saying is, 'Manage the culture and forget everything else'?" And we kept protesting, "No, no, cultural management is just part of management." There are good current examples of how cultural management can improve a company's performance. I'm thinking of Southwest Airlines and Continental Airlines, for instance. Both managements understood that they had to build cultures that worked for their respective strategies, which are very different. Both managements were conscious that they needed employees to buy into their strategies and to contribute enormously if the companies were going to be successful. So they tilted their management to create self-reinforcing cultural mechanisms. And they've been successful, not because they created particular cultures but because they created cultures that are consistent with their business strategies. A culture may help or hinder a company, but if you get the strategy wrong, you're dead in the water no matter what you do culturally.

Inc.: Now that you've seen how people have used--or misused--the idea of managing corporate cultures, have you given new thought to the subject?

Kennedy: We have, and a lot of other people have thought about it, too, but I'm not sure that anyone has cracked the problem of managing an organization's culture in a way that represents a breakthrough. The culture of any organization is still a reflection of the deeply held values and behaviors of relatively few individuals--in the case of large companies, those of the CEO and maybe a handful of very senior executives. In the case of small companies, culture may flow from the values held by the founder or CEO alone. Thus, personal leadership is central to building a strong culture in a company. Which, by the way, gives small companies a real competitive advantage in today's business environment, I think.