Culture Analysis

 

Applied Innovation Culture Analysis

Andy Gruenbaum

February 26, 1998

 

 

Introduction

 

Applied Innovation(“AI”) is a fourteen year old technology manufacturing company located in Dublin, Ohio. Most of the 250 employees are either hardware or software engineers. The rest of the employees are made up of manufacturing, sales, and variety of support staff. Within AI, there are two divisions. The Dublin division is the leading manufacturer of mediation products for the management of telecommunications carrier’s networks. The Raleigh, North Carolina office is developing products which will assist service providers in handling the rapidly increasing Internet traffic. In addition to these offices, there are 7 field offices scattered across the United States. Most of AI’s nearly $50 million in sales are generated within the United States. However, due to recent changes in Asia, Latin America and eastern Europe, a new focus has been placed on international sales opportunities. Although the company is divided into departments, it is still small enough to foster cooperation between groups. The information for this report was gathered mainly through conversations with various employees of AI as well as its annual reports for the last two years.

Cultural Characteristics

Like many organizations, AI is presently undergoing a transitional period. When I first started at AI nearly two years ago, it had an attitude and culture similar to those companies found Silicon Valley. Now, due to financial constraints and the introduction of much stronger management, the shift is towards a market driven culture. Although there has been a shift to more of a marketing focus, Applied Innovation still displays remnants of the early clan culture and an underlying adhocracy culture. Also, the hierarchical culture has asserted itself. The mix of cultures probably gives a very typical view of a technology company using Petrock’s corporate culture typing model.

If a clan culture truly “shares a lot of itself, like an extended family”, this culture was established early in AI’s history. Members of human resources try to continue this feeling of family by following the philosophy that “Hiring good people is more important than hiring someone with perfect the skill set.” The rapid growth AI has experienced recently and the shortage of qualified engineers is largely responsible for the difficulty in honoring this philosophy and the disappearing of the clan culture.

In the early years, the company would close down and everyone would go and eat lunch together. Now, new employees go to lunch with their department to a restaurant of their choice. Usually, within the first couple of weeks, the employee receives an AI T-shirt, sweatshirt, and mug. Also, to inform the company about the new employee, the manager sends out a brief email on the new person encouraging everyone to introduce themselves. Further, for the first month of their employment, their picture is prominently displayed on the front page of the Intranet. Although these are signs of a clan culture, they seem to be more of a “going through the motions” than of any real importance. The size of the company and lack of genuine management support for this type of culture has caused most aspects of the clan culture to disappear.

Adhocracy is strongly nestled in the fibers of AI’s being. AI’s ongoing emphasis is creating a workplace that encourages creativity and individuality. Often the joke is heard in the halls or circulated in e-mail, “We have only had one innovation, but it was a good one.” This nerdy, quirky approach has also permeated many other aspects of the company culture. Because of the technical similarities to Silicon Valley companies, much of the culture found in that type of enterprise is also present at AI. Employees are given freedom in their dress regardless of the season. The ties of new managers may last for a couple of days, but most are very content to settle on business casual. Additionally, the company has a variety of ways of addressing physical needs. Whenever a meeting is held over lunch time, food is generally provided. Of course, it would not be a Silicon Valley type company without free access to whatever caffeinated beverage a tired brain demands. On site, employee can relax in a variety of ways, including: pinball machines, a foosball table, a pool table, a horseshoe pit, a volleyball court, a weight room and aerobics twice a week. AI also insures future needs are addressed. AI will reimburse employees for tuition even if is not for classes relating to their job. Of course, the coveted stock options are made available at AI as they are in many Silicon Valley companies.

The strength of AI’s adhocracy culture is strongly reflected in the recently completed headquarters. When first viewing the Applied Innovation building, the simple but unique structure is memorable. Both sides of the building peak in the center and taper down as it goes to the sides. This look combined with the company shade of green accents, makes for a rather interesting structure. The external structure is covered with stucco, aluminum and many windows. These materials give the impression of a company balancing the technical and the creative. The pond outside of the building is often graced with many Canadian geese, but when they are not on the pond, you would be well advised to watch your step as you leave your car. As a visitor enters a well-windowed lobby, he will see no magazines. He will see numerous display cases which showcase equipment AI has developed. The cases also have a number of pictures of early developers and early advertisements of the telecommunications industry. A glance behind the reception area shows it is open to the outdoors. This area contains picnic tables, horseshoe pits, and a volleyball court. During the warmer months, this area is often the site for company sponsored cookouts. Because of the many windows that open to this area, a large part of the company gains access to its view. A final glance through many of the hallways shows them lined with white boards eagerly awaiting a thought provoking idea. The modest building clearly fits the casual style of the company.

The legends of the company also focus on the adhocracy/entrepreneurial side. Because the composition of the company is largely engineers, they serve as the source of most of the company’s heritage. The president is a college dropout who started AI, his second company, out of his garage. He is often seen playing with electronic toys throughout the business day. Despite the president’s occasionally display of immaturity, offensive language, and unprofessional demeanor, the president had a vision for the company, and AI eventually grew into a very large organization. Three years ago it moved into its present office.

Without a doubt, the innovation of the people and its product, not its management style, have driven the company to its present position. The “moonings” and “21 bun salutes” of earlier years are disappearing as the soldiers of that era travel on. Recent events have been the “spud launcher”. This device brought out a large crowd on a fall morning. Even the president came out to help launch a screaming potato into the atmosphere. Events like this show the AI workplace is supposed to be fun and that the stresses of work should not be taken to seriously.

Although there were hierarchical qualities in the past, new management has recognized the need to establish better defined roles so AI can be a company with larger financial growth potential. In the early years, AI relied on its superior product and large demand for it. With recent changes in technology and large investment in R&D, AI did not make a profit for 1997. The recent management decision to create a more organized structure with clearly defined roles and responsibilities is due in part to this event. In the earlier days, the hierarchical culture meant the president had a reserved parking place and was the only one who could smoke cigars in the building. The new hierarchical culture is indicated by the greater presence of rules and roles . Due to concerns regarding the Internet, the information systems department has implemented many monitoring devices that track employee’s Internet usage. This and other security issues has caused the need for specific policies and procedures to be implemented over all aspects of the company. Additionally, the previous CFO avoided conflict. The present CFO would rather have conflict than a company expenses that is not justifiable. Departments are being asked, for the first time, to have budgets and then to honor the budgets. Many longer term employees regard the changing rules and responsibilities as “nazi” activity. This is not true. The changes are being made to better prepare for the challenges and responsibilities a growing company will face. Although there is resistance to this change, the motives for this change are for the company betterment. Thus, the strength of the hierarchical culture type is more a perception issue than reality.

Now that new management is in place, AI seems to be on track towards embarking on a journey toward greater marketing focus and “treating customers as partners”. The impetus for this change is the new Senior Vice President of Sales. He was very successful at another local company, and he has enthusiastically embraced the challenge of making Applied Innovation’s marketing missions a reality. At a recent company meeting, he did something that had never been done before. He had employees shake each others hands as a way of congratulating them for their contributions. At the same meeting, he introduced a quote from Winston Churchill to govern the company over the next year, “The price of greatness is responsibility”. He has also been responsible for distributing signs and T-shirts to employees which have generated excitement about our products and our possibilities. The AI sales and marketing department is growing New positions within the department include: 3 new product line manager; an international sales manager; and a director of marketing services. Besides sales and marketing, the VP of Sales has taken the responsibility for all of customer service. Changes within the customer service department, specifically the customer response center, are being done to focus on individual customer needs. Additionally, the VP has set up a conference in Tucson for our customers. This has never been done before, and it is just one example of the types of changes, both subtle and otherwise, being done so that AI can better serve its customers which, in turn, will lead to an increase in the bottom line.

Conclusions

As this paper was being put together, I made several references to “Silicon Valley-like” company. This was not accidental. Because of the growth in technology companies, many companies are being forced to develop environments that encourage and enhance creativity. The reliance on “knowledge workers” will continue, and as it does, the greater the pressure for the creation of flexible work arrangements. Failure to achieve this goal will result in continued turnover within specialized fields. The more aware an employee is of the value of his knowledge, the greater the challenge faced by companies in maintaining employees with critical skills.

Fortunately, my present company culture recognizes these challenges (see graphic). Unfortunately, the departmental culture is not nearly as good of a fit. In a more perfect world, I would be a member of a department that more closely espouses the qualities of the company culture. My role as webmaster is very much focused on individual efforts. The more focused my efforts, the more routine and predictable each day becomes. As creativity becomes less of an asset, the greater the realization of the mismatch between present and desired cultures. Ultimately, I would like to perform my present position as a member of the marketing department rather than as a member of the information systems department. This change in departments would make AI a nearly perfect cultural match.

If I need to leave AI to find a better departmental culture match, I will do so. As I interview for new positions, I know the things to look for and to listen for as I visit potential employers. I will pay particular attention to “red flags” throughout my visit. During the interview, I am marketing myself, and the company needs to ensure it is marketing itself and its culture adequately. The company is not going to become my employer based solely upon the salary that is offered. Any company I might consider must convince me their culture will provide the challenge and the direction that will fulfill my preferred culture.

In conclusion, this paper gave me the chance to review some of my present concerns. I have an employer that does a lot of things well, but it also has room for much improvement. Additionally, this paper allowed me to compare my departmental culture to the company culture. Without this paper, I would not have found the time to gather this information and put it under the cultural microscope. Now that I have done so, I feel well armed to face the cultural challenges of my present and future employers.

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