When a Strong Culture Becomes a Liability
We often hear that a strong organizational culture leads to high performance, happy employees, and lasting success. While this is true in many cases, strong cultures can also become rigid, toxic, or outdated. When leaders fail to adapt or question the status quo, even the strongest culture can become a problem (Schein, 2010).
In this article, we’ll explore the dark side of organizational culture, how it can limit change, encourage bad behavior, and cause major business failures. We’ll use real-life examples like Kodak and Uber, and introduce key ideas like cultural inertia and groupthink to explain why even a strong culture needs to evolve.
What Is a “Strong” Organizational Culture?
A strong culture means that values, beliefs, and behaviors are widely shared and deeply embedded in the company (Deal & Kennedy, 1982). Employees know what is expected, and decisions are often guided by unwritten rules and norms (Schein, 2010).
While this creates unity and stability, it also comes with risks, especially when:
- The business environment changes
- Diversity of thought is discouraged
- Leadership resists feedback
- Ethics are sacrificed for results
When Culture Resists Change
Cultural inertia refers to the resistance to change that comes from a deeply embedded culture (Zucker, 1977). Even when the outside world is changing fast, some companies cling to old ways of working.
Example: Kodak had a strong internal culture focused on film photography. Despite inventing the first digital camera in 1975, Kodak refused to embrace digital because it threatened their existing business model and values. By the time they tried to adapt, it was too late, Kodak filed for bankruptcy in 2012 (Lucas & Goh, 2009).
When Everyone Thinks the Same
Groupthink happens when people avoid conflict and critical thinking in order to preserve harmony. This is common in strong cultures where employees fear challenging the status quo (Janis, 1972).
Example: At Volkswagen, engineers and managers were aware of software that cheated emissions tests. But because of the company’s pressure to “not fail” and meet aggressive goals, no one spoke up—leading to the “Dieselgate” scandal in 2015 (Hotten, 2015).
When Strong Becomes Harmful
A strong culture can become toxic when it encourages unhealthy competition, ignores employee well-being, or tolerates unethical behavior.
Example: Uber, under CEO Travis Kalanick, developed a culture that celebrated aggression, speed, and breaking rules. Employees were expected to push boundaries, which led to cases of sexual harassment, discrimination, and a lack of accountability. The company’s reputation and internal trust suffered greatly until leadership changes were made in 2017 (Isaac, 2017).
The Cost of a Toxic or Rigid Culture
The consequences of not addressing a negative culture can include:
- High employee turnover (Khan, 2021)
- Damaged brand and public image
- Legal trouble and financial losses
- Missed opportunities for innovation
- Loss of customer trust
In fact, a report by MIT Sloan (2022) found that toxic culture is 10 times more powerful than compensation in predicting employee resignations.
Conclusion
A strong organizational culture can be a powerful force, but it must be carefully managed. When culture becomes rigid, toxic, or blind to change, it can do more harm than good.
The best companies regularly examine their culture, listen to their people, and stay open to change. Culture should be a living part of the organization, not a trap that keeps it stuck in the past.
References
- Cameron, K.S. & Quinn, R.E. (2011). Diagnosing and Changing Organizational Culture: Based on the Competing Values Framework. 3rd edition. San Francisco: Jossey-Bass.
- Deal, T.E. & Kennedy, A.A. (1982). Corporate Cultures: The Rites and Rituals of Corporate Life. Reading, MA: Addison-Wesley.
- Edmondson, A.C. (1999). ‘Psychological safety and learning behavior in work teams’, Administrative Science Quarterly, 44(2), pp. 350–383.
- Hotten, R. (2015). 'Volkswagen: The scandal explained', BBC News, [online] Available at: https://www.bbc.com/news/business-34324772 [Accessed 28 Mar. 2025].
- Isaac, M. (2017). Uber’s CEO Resigns Amid Mounting Crises. The New York Times, [online] Available at: https://www.nytimes.com [Accessed 28 Mar. 2025].
- Isaac, M. (2019). Super Pumped: The Battle for Uber. New York: W. W. Norton & Company.
- Janis, I.L. (1972). Victims of Groupthink: A Psychological Study of Foreign-Policy Decisions and Fiascoes. Boston: Houghton Mifflin.
- Khan, M.A. (2021). ‘The cost of toxic culture’, Harvard Business Review, [online] Available at: https://hbr.org [Accessed 28 Mar. 2025].
- Kotter, J.P. (2012). Leading Change. Boston: Harvard Business Review Press.
- Lucas, H.C. & Goh, J.M. (2009). ‘Disruptive technology: How Kodak missed the digital photography revolution’, Journal of Strategic Information Systems, 18(1), pp. 46–55.
- MIT Sloan Management Review (2022). Toxic Culture Is Driving the Great Resignation. [online] Available at: https://sloanreview.mit.edu [Accessed 28 Mar. 2025].
- Schein, E.H. (2010). Organizational Culture and Leadership. 4th edition. San Francisco: Jossey-Bass.
- Zucker, L.G. (1977). ‘The role of institutionalization in cultural persistence’, American Sociological Review, 42(5), pp. 726–743.
This good article, in my point of view strong organizational culture can be a powerful asset, but it requires careful management. When culture becomes inflexible or resistant to change, it can hinder growth and innovation. The best companies continuously assess their culture, gather feedback from employees, and remain open to evolving. A healthy culture should be dynamic, adaptable, and reflective of the organization’s growth, rather than a static element that prevents progress.
ReplyDeleteI once worked at a company with a tight-knit community, which came with both benefits and drawbacks. The real challenge was transforming that culture effectively. Unfortunately, a strategist attempted a purely theoretical "process improvement" approach, which ultimately failed. Looking back, and with everything I’ve learned since, I now understand exactly why that transformation didn’t succeed. May be I'll write about it in a future article.
DeleteYou’ve highlighted an important point in this articel by showing that a strong organizational culture can become a double-edged sword if it resists change or tolerates unethical behavior. The real-world examples of Kodak, Volkswagen, and Uber that you've used show how even the most established cultures can lead to failure if they don’t evolve with the times.
ReplyDeleteIn most of my articles, I’ve used international examples to ensure they’re easily understood; especially if someone from our UK university reviews them. However, I’ve seen plenty of similar situations in Sri Lankan companies, including ones I’ve worked for in the past. With the knowledge I’ve gained since, I now have a much clearer understanding of what went wrong and how to handle such challenges more effectively in the future.
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