The Competing Values Framework: Enhancing the Effectiveness of Changes in Organizational Culture
At or around the year 2001, the original Circuit City Stores, Inc., was highly regarded and heralded as one of the business market's top Wall Street performers (Collins, 2001; Cameron & Quinn, 2006). Yet less than a decade later, Circuit City was forced to declare bankruptcy, liquidate its assets, and close its doors; leaving many to wonder what went wrong (Eames, 2009). Eames identified six factors related to Circuit City’s demise, two of which described a failure to make appropriate shifts in strategy and organizational culture.
Indeed, the rapidity of change in the global marketplace continues to increase, causing a growing sense of uncertainty and ambiguity, and making it difficult for individual managers and leadership teams “to stay current, accurately predict the future, and maintain constancy of direction” (Hughes & Beatty, 2005; Cameron & Quinn, 2006). Those organizations which are unable to keep pace and radically reinvent themselves through evolving strategy and compatible organizational change will soon find themselves cast out of the marketplace in the manner of Circuit City (Hughes & Beatty; Hamel, 2002). Simply devising a new strategy or business concept model is not enough to guarantee long-term viability; for to be effective any new strategy must be matched by suitable changes in core assumptions and behaviors (Cameron & Quinn). If this is so, how can corporate leaders assess and make relevant alterations in their company cultures in order to enhance strategy performance?
The Competing Values Framework is one method and mechanism designed to help organizations diagnose and make proper changes to organizational culture that will improve execution of a new company-wide direction (Cameron & Quinn, 2006). This paper discusses how an organization can employ the Competing Values Framework to enhance the effectiveness of organizational change in light of a fast-changing global business environment; and thereby, improve overall strategy performance. First, the hub takes a brief look at the concept of organizational culture.
Cameron and Quinn (2006) wrote “As competition, change, and pressure intensify for organizations, organizational culture is given more prominence and emphasis…Organizational culture assessment is increasingly important, therefore, because of the need to both change and maintain stability in the face of increasingly turbulent external environments.” This statement begs the question “what is organizational culture?”
Organizational culture is the ambience of a given enterprise created by a shared set of values, underlying assumptions, and beliefs within a company that provides guidance to every aspect of their shared endeavor (Schein, 2004; de Kluyver & Pearce, 2006; Cameron & Quinn, 2006). It includes expectations, collective memories, and definitions that represent a sense of “how things are done around here” that convey to members a further sense of identity within the group (Cameron & Quinn). In short, organizational culture is the DNA by which an established group operates (Haque, 2009). Unfortunately, like DNA, a stable culture with its built-in “the-way-things-are-done-around-here” mentality can be difficult to alter and become an obstacle to changes in the culture that will be necessary to realize a newly formulated strategy (Hughes & Beatty, 2005). As in the case of Circuit City, doing things the way they have always been done or waiting too long to make necessary changes to culture and or strategy can ultimately lead to failure and extinction (Eames). How, then, can an organization assess whether its current culture is compatible with an established change in strategy? One way is through utilization of the Competing Values Framework. What is the Competing Values Framework and how is it applied?
The Competing Values Framework
Cameron (2004) commented: “The Competing Values Framework has proven to be a helpful framework for assessing and profiling the dominant cultures of organizations because it helps individuals identify the underlying cultural dynamics that exist in their organizations.” How was the framework developed?
The Development of the Competing Values Framework
The Competing Values Framework emerged as a result of empirical research on the question of what makes organizations effective (Quinn and Rohrbaugh, 1983; Ubius & Alas, 2009; ChangingMinds.org.) followed by studies of culture, leadership, structure, and information processing (Cameron). Those conducting the preliminary research asked certain key questions like:
1. What are the main criteria for determining if an organization is effective or not?
2. What key factors define organizational effectiveness?
3. When people judge an organization to be effective, what indicators do they have in mind? (Cameron & Quinn).
Through these questions, the research team recovered 39 indicators of effectiveness that Quinn and Rohrbaugh (1983) analyzed for patterns and clusters and boiled down to two major dimensions (Cameron & Quinn); (a) one that “differentiates a focus on flexibility, discretion, and dynamism from a focus on stability, order, and control”; and (b) a second that “differentiates a focus on an internal orientation, integration, and unity from a focus on an external orientation, differentiation, and rivalry” (Cameron). As Figures 1 & 2 show below, emerging from the two dimensions were four main clusters or culture archetypes including: (a) clan; (b) hierarchy; (c) market; and (d) adhocracy (ChangingMinds.org); each identified on a comparison of the degree to which an organization tended to be more internally or externally focused and more flexible or rigid in nature. Later, the four archetypes were re-labeled (as shown in Figure 2) as: (a) collaborate, (b) control, (c) compete, and (d) create (Competing Values.com).
What are the main characteristics of each archetype?
Defining Characteristics of the Four Culture Archetypes
Control (Hierarchy). The Control (or hierarchy) Culture (found in the lower left quadrant of Figures 1 & 2) tends to be less flexible and more internally focused, concentrating on internal processes. It is the earliest approach to organizing identified in the modern era and is characterized by a formalized structure. Changes in this culture type are most often made incrementally. Examples of control oriented cultures are McDonalds, Ford Motor Company, and government agencies which have tightly defined procedures for carrying out routine tasks (Cameron & Quinn).
Compete (Market). The Compete (or market) Culture (found in the lower right quadrant of Figures 1 & 2) tends to be less flexible like the Control Culture, but differs by being more externally focused. This style of organizing became popular in the 1960s as a response to new competitive challenges and operates by conducting transactions with its related network e.g. suppliers, customers, contractors, unions, etc. (Cameron & Quinn). Furthermore, the primary objectives of a Compete Culture company are “profitability, bottom-line results, strength in market niches, stretch targets, and secure customer bases.” General Electric is an example of an organization with a Compete Culture type. Faced with expanded competition in their diversified endeavors, CEO Jack Welch boldly declared that every division of the company had to be first or second in their respective industry or be sold or shut down.
Collaborate (or clan). The Collaborate (or clan) Culture (located in the upper right quadrant of Figures 1 & 2) is so-called because of its similarity to a family-type organization. This type of organizational culture was most prominently observed in Japanese firms which displayed marked differences with American hierarchy and market style companies. About this culture type, Changing Minds observed
The Clan organization has less focus on structure and control and a greater concern for flexibility. Rather than strict rules and procedures, people are driven through vision, shared goals, outputs and outcomes… It has an inward focus and a sense of family and people work well together, strongly driven by loyalty to one another and the shared cause. Rules, although not necessarily documented, do still exist and are often communicated and inculcated socially.
Create (or adhocracy). The Create (or adhocracy) Culture (located in the upper right hand quadrant of Figures 1 & 2) came about with the transition from the industrial age to the information age and tends to be more flexible like the Collaborate Culture and externally focused like the Compete Culture. Cameron & Quinn point out “[The Create (or adhocracy) Culture is an organizational form that is more responsive to hyperturbulent, ever-accelerating conditions that increasingly typify the organizational world of the 21st century.” It is characterized as a dynamic, entrepreneurial, and creative workplace with a high-risk orientation and a commitment to experimentation and innovation (Cameron; Changing Minds.com). NASA’s emergency response team organized to save Apollo 13 is an example of the Create Culture type (Cameron & Quinn).
With these four culture archetypes in mind, what instrument does the Competing Values Framework employ to assess an organization’s culture?
The Organizational Culture Assessment Instrument (OCAI)
In order to assess the internal culture of a given organization, the Competing Values Framework employs the Organizational Culture Assessment Instrument (OCAI) which is a questionnaire developed by Cameron and Quinn to capture the underlying structure of psychological archetypes present in the core dimensions of an organization (Koh & Low, 2008; Cameron & Quinn). Cameron & Quinn identified six content dimensions as the bases of the OCAI which include
1. The dominant characteristics of the organization.
2. The primary leadership style and approach used within the organization.
3. The management of employees (how the employees are treated).
4. The organizational bonding mechanisms that hold the organization together.
5. The strategic emphases of the organization (what drives the company).
6. The criteria of success that determine how victory is defined and what gets rewarded and celebrated.
A pertinent question would be does the OCAI accurately assess organizational culture, i.e. to what extent was it tested for reliability and validity?
The Reliability and Validity of the OCAI
In order to test the reliability and validity of the OCAI, the instrument was used by numerous researchers in studies of many different types of organization. Reliability refers to the extent to which the instrument measures culture types consistently (FCIT; Cameron & Quinn). Validity refers to the extent to which phenomena that are supposed to be measured are actually measured (FCIT); in this case “does the instrument really measure four types of organizational culture?” (Cameron & Quinn). Through independent tests Quinn and Spencer; Yeung, Brockbank, and Ulrich (1991); and Zammuto & Krakower (1991) confirmed the reliability of the instrument within an acceptable margin of error (Cameron & Quinn; Palthe & Kossek, 2004; Woodman & Pasmore, 1991). In the same manner, Cameron & Freeman (1991), Quinn & Spreitzer (1991), and Zammuto & Krakower (1991) produced evidence of validity of the OCAI; i.e. the instrument accurately measures four dominant culture types within organizations (Cameron & Quinn, Woodman & Passmore).
Knowing that the reliability and validity of the OCAI have been confirmed, how does an organization administer the OCAI in order to diagnose an organization’s culture and determine the culture for the future?
Administering the OCAI to Diagnose an Organization’s Culture and Assessing the Results
Briefly, the two main steps of the OCAI are administering the questionnaire and assessing the results.
Administering the instrument. The OCAI is taken as a questionnaire that asks participants to respond to six items correlated to the six dimensions mentioned above. First, each individual answers the questionnaire with the current culture in mind. To do so, each one divides 100 points between four alternatives in each of the six items. Next, each one repeats the exercise, but this time with the desired future culture in mind.
Assessing the results. In order to access the results scores are added transferred to a special worksheet where they are tallied and averaged in conjunction with the four archetype cultures. Finally, an organizational culture profile is constructed by plotting the results of both the current and desired cultures on a special graph (See Figure 3; www.perceptyx.com).
Perhaps, one last question related to this section describing Competing Values Framework and its companion OCAI is: what steps should an organization follow to design an organizational change process?
Steps for Designing an Organizational Culture Change Process (Cameron & Quinn)
In order to make relevant changes in its respective culture, Cameron & Quinn suggest that an organization begin by designing an organizational culture change process. Furthermore, they outline six steps including:
1. Reach consensus on the current culture.
2. Reach consensus on the desired future culture.
3. Determine what the changes will and will not mean.
4. Identify illustrative stories.
5. Develop a strategic action plan.
6. Develop an implementation plan.
Realizing how the OCAI is assessed and administered and what steps could be involved in designing a process for organizational change, the paper now turns to discuss how to apply the Competing Values Framework and the OCAI to make relevant changes to its organizational culture. Each step will be briefly described in the hypothetical context of Circuit City Stores highlighted at the beginning of this paper.
Application of the Competing Values Framework with the OCAI
At the outset of this paper, Circuit City Stores, Inc. (CCS) was highlighted as an organization that outperformed the general market for nearly two decades, but was suddenly forced to liquidate and close its doors. Furthermore, under close scrutiny, it has been determined that the sudden collapse of the once shining star of Wall Street was due in large part to not making relevant and timely changes to its strategy and organizational culture (Eames, 2009). Hypothetically, how could CCS executives have applied the six steps outlined by Cameron and Quinn to make the appropriate shifts in organizational culture and perhaps continue its operations in the global marketplace?
Step 1: Reach Consensus on the Current Culture
The first step to making changes of any kind as an organization or individual is to assess the current situation (Cameron & Quinn; Hughes & Beatty; de Kluyver & Pearce; Collins, 2001). Under the guidelines of the Competing Values Framework, an organization like CCS would begin this process by choosing a group of key personnel within the organization who have a proficient understanding of the overall organizational culture (Cameron & Quinn) and have them complete the OCAI, thinking only of the current culture of the company as a whole. Then, the group of participants would discuss the results and come to a consensus of the current organizational culture.
Step 2: Reach Consensus on the Desired Future Culture
The second step would be to repeat the exercise in step one, but this time the participants fill out the questionnaire thinking about the desired future culture. Like step one, after each member has completed the questionnaire, they should gather as a group and come to consensual agreement about the desired future culture.
Step 3: Determine What the Changes Will and Will Not Mean
After consensus has been reached on the current and desired future cultures, the next step is to plot each profile overlapping each other in order to find and highlight discrepancies between the two. On the plotting form, the areas where the profiles do not match up mark the changes that need to be made in the organizational culture to be compatible with a new strategy or direction. Upon looking at the resulting picture, each member of the team now examines the results and completes a form about what the results mean as related to the four culture types (See Figure 4) (for while each organization may be characterized by one or two dominate culture types; to a lesser degree they also show traces of the remaining culture types). After each one has identified what the results mean for each culture type, then they come back together again for open and frank discussion in order to reach consensus on the key factors listed in each section in order to figure out (a) what the desired future will be; (b) what the critical elements of the organization will be; (c) what will and won’t change; and (d) what will be preserved that is so valuable in the current organizational culture (Cameron & Quinn).
Step 4: Identify Illustrative Stories
When attempting to instigate change in organizational culture, one effective means of gaining trust in a new idea or practice is through the use of storytelling (Salmons, 2009; Bregman, 2009; Denning, 2009; Cameron & Quinn). Thus, in this step the team identifies two or three events from within the organization that demonstrate the key values they want to filter through the new organizational culture (Cameron & Quinn). Indeed, an appropriate story can “spark thoughts among the managers and employees about a different kind of future both for the organization and themselves as individuals” (Denning, 2009).
Step 5: Develop a Strategic Action Plan
Once the special team has come to a mutual understanding of what it means or doesn’t mean to change the organization’s culture, the fifth step is to develop a strategic plan of action to make the necessary changes. Cameron & Quinn suggest that when devising the plan of action, the team should decide on a few key actions related to each culture type and then reach consensus on (a) what should be started, (b) what should be stopped, and (c) what should be continued in each culture type arena.
Step 6: Develop an Implementation Plan
The final step in the process of organizational culture change is to create an implementation plan to carry out the action plan. Any well-planned strategic action plan is only as good as its implementation. A few key elements for implementation are: (a) focus on one step at a time (Collins, 2001); (b) start thinking about implementation at the beginning of the strategy formulation process (Bill Birnbaum, 2006); (c) communicate objectives clearly and creatively (McKinsey, 2006), and (d) train the implementation team for their various tasks (McCullen). Establishing metrics (short-term objectives) and target dates are also key features of a well-devised implementation scheme.
By following the steps outlined above, an organization like Circuit City Stores could have employed the Competing Values Framework to assess its respective organizational culture and identify necessary changes that would be compatible with a new business concept or environment. In this way, perhaps, Circuit City could have (a) enhanced its effectiveness in managing changes in organizational culture, (b) staved off extinction, and (c) regained its status as a stellar Wall Street performer.
The rapid rate of change in the global marketplace continues to increase, causing a growing sense of uncertainty and ambiguity, and making it difficult for individual managers and leadership teams “to stay current, accurately predict the future, and maintain constancy of direction” (Hughes & Beatty; Cameron & Quinn). For this reason, “…organizational culture is given more prominence and emphasis [and] organizational culture assessment has become increasingly important” (Cameron & Quinn). This paper has discussed the Competing Values Framework and its assessment instrument (the OCAI) and how it can be applied to enhance the effectiveness in changing organizational cultures.
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