When
Larry Bossidy took over the reigns of Allied signal
in 1991 as CEO, the company was in mess. He was expected
to salvage the company from extinction. He did this
superbly. When he left Allied signal in 1999, after
its merger with Honeywell, the operating margins were
nearly triple that of 1991 levels. Return on equity
jumped from nearly 10% in 1991 to 28%. There was a ninefold
return to shareholders. Earnings-per-share was 13% or
more for 31 consecutive quarters. Allied signal was
transformed from a decaying organization into one of
the world's most admired companies.
Just
two years after he left the organization the merged
entity was again deep in trouble. Honeywell, the merged
entity, was not delivering the results as expected.
Stock price was gravitating down. Most of the bright
people left the organization or were looking forward
to leave. Discipline of Execution, the pride of Allied
signal during Bossidy's tenure, were nothing more than
lip service.
According
to Edgar H Schein of MIT, Organizational Culture is
the pattern of basic assumptions that a given group
has invented, discovered, or developed in learning to
cope with its problems of external adaptation and internal
integration, and that have worked well enough to be
considered valid, and, therefore, to be taught to new
members as the correct way to perceive, think, and feel
in relation to these problems.
Culture
is influenced by unconscious assumptions. These assumptions
determine how a group perceives, thinks, and feels.
Assumptions which are taken for granted were actually
learned responses. Members of the group learned to react
this way according to need of the situation. These learned
responses were in turn espoused values1 at
some point of time in the past. |