Interplay between corporate culture and organizational leadership

Many years ago, when Atari was preeminent in designing computerized games, they brought in a new CEO whose background was in marketing. His cultural background told him that the way to run a company was to get a good individual incentive and career system going. Imagine his chagrin when he discovered a loosely organized bunch of engineers and programmers whose work was so seemingly disorganized that you could not even tell whom to reward for what. The CEO was sure he knew how to clean up that kind of mess! He instituted clear personal accountabilities and an individualistic, competitive reward system symbolized by identifying the “ engineer of the month ” — only to discover that the organization became demoralized and some of the best engineers left the company.

This well-meaning CEO had not realized that in its evolution the company had learned that the essence of the creative process in designing good games was the unstructured collaborative climate that enabled designers to trigger each other’s creativity. The successful game was a group product. The individual engineers shared an assumption that only through extensive informal interaction could an idea come to fruition. No one could recall who had actually contributed what. The new individualized reward system gave too much credit to the “ engineer of the month ” named by the CEO, and the competitive climate reduced the fun and creativity. This leader did not understand a crucial element of the culture he was entering, so he made some decisions that changed a key element of the culture in a dysfunctional way. (Case study by Edgar Schein as given in his book: "The Corporate Culture Survival Guide.")