The Importance of Organizational Culture

Professor Gerard Seijts of the Richard Ivey School of Business teaches his students that organizational culture is often a significant indicator of success in the business world. Companies that lack progressive, action-driven operational philosophies are those that more often than not fail to adapt appropriately to changes in the business environment by allowing profitable opportunities to pass them by as they become imobalized by indiferrance and apathy. It was not until only recently that I experienced first hand what professor Seijts was speaking of.

I recently completed a consulting contract for an establishment in the hospitality industry in Toronto. It was there that I encountered many of the institutional barriers I had learned about at Ivey. Despite my best efforts to foster real change within the work environment at the firm, however, I was ultimately unsuccessful in trying to convince the establishment's managers that cultural change ought to be a top priority. While my inability to bring about this transformation ultimately ended in failure, I had the opportunity to experience much of what I learned in class.

The firm - a successful staple of Toronto's Entertainment District for the better part of 15 years - had not been generating enough revenue the last 6 months to cover its fixed expenses: the classic business problem. To increase revenue the firm would need to bring in more patrons, yet do so without any substantial marketing budget. After careful analysis, I recommended to management that in the absence of a marketing budget that we maximize the operational efficiency of the firm by reducing spoilage and optimizing the restaurant's offerings using menu engineering. The analysis, based on historical sales, customer feedback, and profitability analyses, produced some very clear results that would have, in my opinion, substantially contributed to the firm's bottom line by reducing food waste and allowing the firm to better leverage economies of scale to attain better raw material costs. Customers would surely have been happier too, which would have made word-of-mouth advertising a free and useful ally. Despite making a compelling case backed with significant analytic analysis, however, the idea was put on the back-burner because management felt the costs of designing and printing new menus to be too prohibitive. The goal was, they claimed, not to reduce costs, or incur expenses to bring in possible revenue, but to bring in more revenue without explicitly requiring a marketing budget. Additionally, incurring small expenses only made sense if it could be known, without doubt, the exact revenue to be expected. Naturally, there are no guarantees in business and I refused to make promises about specifics, confident that I was performing my job by informing management as to the range of possibilities.

Frustrated, I thought back to Professor Seijt's course on Leadership. I felt very confident in the quality of work I had completed and in my recommendations. Yet, I could not, despite my best efforts, implore management to put those plans into action. While in hindsight I view my inability to persuade the firm's management team as a bit of a failure, I am highly cognizant that such organizational issues persist within companies in all sorts of industries, and are, quite often, a prime symptom of future success or failure. While before Ivey and this recent experience I had been less inclined to consider organizational culture as an important factor in evaluating future employment opportunities, I am now much more cognizant of how this qualitative element of business structure can make the difference between a progressive organization that takes calculated risks and achieves business success, and one that may inadvertently allow profitable initiatives pass by and it continues to operate under archaic business philosophies.