Culture is one of these concepts that has a lot of definitions. We'll define it in this way. Culture is the core values, beliefs, and traditions within the organization. And these beliefs have worked well in the past, and are considered valid for resolving external or internal problems. As you see, our definition, and just like most definitions of culture actually, says that culture is about values and beliefs. Some of these values and beliefs are conscious, others are subconscious. And there are several ways to think about values. First values can be easier or harder to observe for an outsider. And second, whether values that a company says it lives by, are the same as the values that it actually lives by. Let's start with observability. Most companies these days have some sort of our culture or our value statement. In fact, a recent study of large companies in the S&P 500 Index showed that 85% of these companies had a section on their website that described their corporate culture. Some companies even had two sections. Out of those 80% of companies had innovation as one of their values. And 70% had integrity and respect. But that S&P 500 list contains companies as diverse as Coca-Cola, Harley Davidson, and Apple. When we think about these companies, it's pretty clear that the way they operate and cope with external and internal problems are different. This means that maybe not all companies live up to the values that they shown in their website. And there's probably something else going on with organizational culture. These corporate culture statements and company websites are what is called artifacts of culture. This is something that an outsider can see and feel. When you come to company's campus, you'll notice other artifacts. For example, the way employees talk to each other, the way they dress, open door policies, the physical layout of the place. Cubicles or open areas, for example. Friday all hands employee meetings and so on. And to another level of culture are values and assumptions. They determine what in this particular organization is considered good and what is considered bad. What kinds of behavior are encouraged, or tolerated, or what issues managers and employees consider worth pursuing. There are two types of values. Espoused values and practiced values. Sometimes they're also called values in use. Espoused values are similar to artifacts. These are values that the organization, and in particular stock mangers typically have decided that employees should follow. For example, treat colleagues and customers with respect. They're typically posted in the website and are told to newly hired employees at their orientation. Practiced values are revealed by how employees actually behave. For example, the manager is always right. It's probably not going to be written anywhere on the corporate website. But at meetings, no one would disagree with the opinion of their manager. As Jim Barksdale, who was the CEO of Netscape says, if we have data let's look at data. If all we have our opinions, let's go with mine. Espoused and practiced values might be different from each other. In other words, the organization says it stands for one thing, but it actually does another. Or they may even contradict each other. One of corporate values can be innovation. And innovation involves taking risks and sometimes failing. But in fact, the organization might promote employees only based on successes they achieved. Or give out bonuses depending on how much profit they generated in the past year. So as you see, values that are espoused by the organization, may not tell you much about how it actually works. So, to sum up what we just talked about, culture is a set of values and beliefs within the organization that are accepted as valid by employees. To an outsider, cultural artifacts are the most visible manifestations of culture. For example, how employees treat each other. In addition to artifacts, culture also consists of values and assumptions. They're harder to see, and to observe them, you would need to spend time with that organization. Values can be espoused, that is what the organization proclaims its values are, and practiced, or values that the organization actually lives by. And in some organizations, espoused and practiced values are different.
