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Cultural Touchstones

How some companies get journalistic benefit through becoming touchstones and how this can lead to their downfall

~ David Straker ~

 

I used to work at Hewlett Packard, which was (and still is) of surprisingly wide social benefit. Just dropping the name into conversation continues to do wonders for my status. Having worked for such an icon implies both that I am particularly clever to have been admitted to its hallowed halls, and also that some of its greatness has rubbed off on me.

Companies such as HP are 'cultural touchstones', whose names bring value to any conversation. But how do they get that way? As with more traditional human celebrities, much hangs on the power of the press and a developed symbiotic relationship.

Media synergy

A typical beginning occurs where a journalist wants to write a story or a researcher wants to write a paper. They look around for a successful company, wheedle their way in for an interview and try to find something different about the company that can be used to explain the success. This is a win-win arrangement as it not only helps the author but also makes the company look good to customers and investors.

 

 

Fig. 1. Journalist-Company synergy

 

The spiral of success

Synergies also extend outside this relationship as success stories act as a beacon for other business writers who want either to write about the same topic or who are looking for more interesting stories and explanations of success. And so more journalists, researchers and authors flock to the company's door.

In time, with different articles attributing its success in different ways, the company develops a reputation of being good all round. A reversal of journalistic purpose now occurs, as authors who are seeking to prove a point or pet theory go to the company to see if they do this thing. If they do, then writer can claim victory: if the company, now widely recognized as being a fount of good practice, uses what the writer is promoting, then the point or theory is proven.

 

 

Fig. 2. The virtuous circle of media-powered success

 

The company thus becomes a cultural touchstone. It is not only deemed successful, but anything  associated with it gains an equivalent credibility. The company's name can thus be dropped willy-nilly into articles for the shine to rub off onto the author's purpose.

The need for touchstones

Business writers need such touchstones to lend credibility. They also need the company to stay successful and will avoid writing negative articles in an attempt to journalistically support their darlings. This does not always work, for example where many of the companies quoted in Peters and Waterman's seminal 'In Search of Excellence' (1982) later failed, causing the authors much embarrassment, not to mention a significant drop in earnings potential. Peters recovered smartly with 'A Passion for Excellence' (1985), written with Tracy Austin who had worked at HP and which referenced more solid examples of success, HP of course included.

This becomes a even more powerful virtuous circle where people working at the touchstone companies bask in the praise and feel obliged to deliver on the implied expectation. When friends enviously asked about HP I parroted the stories of excellence and then worked extra hard to make sure they came true. The social credibility also extends to recruitment as

 

 

Fig. 3. The full virtuous circle of media-powered success

 

Dysfunctional distortion

One of the effects of such narcissistic cycles is that the gap between what is reported and what is actually happen can widen. When a journalist asks an executive about the things done at the company, then of course the executive is going to put a positive spin on it. Distorting further, the journalist will simplify what they find in order to ensure their readers get the point. Likewise, academic researchers will focus on their narrow research topic rather than try to explain the holistic and messy complexity whereby things often get done.

 

 

Fig. 4. Distortion in the reporting process

 

A further distortion and potential failure occurs when company employees believe the simplified press and subsequently upset the balance of successful behaviour by focusing more on reported reasons for success and less on unreported, but essential actions. Now the tail wags the dog as journalistic fiction becomes a primary driver of business behaviour.

 

 

Fig. 5. The media-powered route to failure

 

Tales of woe

A classic tale of such hazard occurs where a company provides a pleasant working environment and uses considerate management practices. The intended result of this is that employees appreciate this and consequently work harder and longer. The 'nice employer' story is written up, including in 'best company to work for' lists. This has a benefit to the company of applicants flocking to their door -- but how many of these really want to join so they can work all hours? Recruitment procedures are notoriously limited and, despite best efforts, many will get through the doors whose first goal is a nice place to work and the social credibility of working at a touchstone company. Managers also are affected by the 'nice place' press, along with increasing expectations of their subordinates.

The decline of Digital (DEC) in the 1980s was attributed to this effect, where terminal niceness led to problems being avoided and consensual decisions taking forever. HP also suffered to some extent from this effect in the 1990s, as the buoyant market meant that it could get away with bluntened performance management as managers sought to keep employees happy and live up to now-externally-imposed cultural expectations. The fact that Dave Packard could be a very tough cookie when his high expectations were not met was steadily being forgotten in the post-founder nostalgia. With the appointment of Carly Fiorina as CEO, this spiral stopped, though arguably the benefits were also lost as the cultural baby was thrown out with the bathwater. She increased power distance and pushed for a more aggressive culture. The momentum of being a touchstone has carried it through, however, and now, under Mark Hurd it still has a fascination for journalists and authors. Whether it will remain so, only time will tell.

The bottom line

Sterman (2000) describes the use of Causal Loop Diagrams as an effective method of describing how feedback loops lead to amplification, reduction and oscillation. In these diagrams, arrows point between cause and effect. The '+' sign between A and B means 'If A increases then B increases, and vice versa'. The '-' sign means 'If A increases then B decreases, and vice versa'. From examining these increasing and decreasing forces, it can be seen that some loops lead to amplification (marked with 'R' for 'reinforcement') whilst others lead to decrease (marked with 'B' for 'Balancing').

Causal loops tell a story, and this is the simple story in Fig. 6. Effective methods, by definition lead to success which, as described above leads to the amplification of media interest, good press and motivation amongst the three key stakeholder groups of customers, investors and employees. However, this is offset by misunderstandings that lead to a decrease in the use of those methods that led to the initial success.

 

 

Fig. 6. Media-driven success and failure

 

The bottom line: don't believe your press. Understand how things really work, including the complex culture, messy reality and multiple other factors that lead to sustained success. Be nice to people, but also be tough. Make it a great place to work, but always motivate towards effective performance.

 

References

Peters, T.J. and Waterman, R.H. (1982). In Search of Excellence: Lessons from America's Best-run Companies, NY: Harper-Row

Peters, T.J. and Austin, N.  (1985). A Passion for Excellence: The Leadership Difference, NY: Harper-Row

Sterman, J. (2000). Business Dynamics: Systems Thinking and Modeling for a Complex World, McGraw-Hill

 

 

 

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