Boye-Dohle, Passion and Neuroentrepreneurship

Today I’m juggling some notes from last week’s Summer School in Entrepreneurship at the Max Planck Institute of Economics. Among the interesting presentations, Melissa Cardon was speaking about entrepreneurial passion, Arvids Ziedonis held an in-depth discussion about the development of University-Industry relationships in the United States and in particular the role of innovations and patents following the Baye-Dohle act in 1980. Norris Krueger talked about the emerging research strand of “neuroeconomics” and “neuroentrepreneurship” (is it the future or simply a fad? – I remain undecided). In all, it was a splendid week with lots of interesting conversations, good food, and inspiring speakers.

The demography of organizational culture and organizational (un)innovativeness

I have been reading Harrisson and Carroll’s excellent book “Demography and culture of organizations“.  There are many accounts of roganizational culture (see for example the works of O´Reilly, Schein,  or Alvesson) but Harrisson and Carroll’s perspective is unique in that they emphasise how the demographics of organizational members affects culture.  The book’s perspective highlights the composition, turnover, and socialization of an organization’s workforce as the predominant factors shaping organizational culture.  The  surprising durability of organizations’ culture across members and time is incorporated in this model through the socialization of new organizational members into the existing culture, examplified by a quote from Alphonse Karr (1849): “the more things change the more the remain the same”. In other words: Culture is not easily malleable by leaders through new slogans, training sessions, or other “quick fixes”.

The rigorous yet simple models in Harrisson and Carroll should be seen in the light that “Organizational culture” is often deemed a “mushy” area for organizational research and consulting work. In a summer issue of Sweden’s chief business tabloid Dagens Industry (June 21st), the CEO of the merging Swedish and Danish postal services dismissed the need for “cultural integration” of the two former monopolies with the comments “We have the right experiences and competencies on both side”. From an organizational demographic perspective, this statement could not be more misstaken: it is not the formal competencies among organizational members, nor their nationality as in Hofstedes’ work on national culture, but precisely their systematic differences in experiences that are explanations for the divergent organizational cultures between two distinct organizations such as those of the Swedish and Danish postal services. Yet, Olsson is probably right in his conclusions: deep-rooted systematic differences in experiences are unlikely to be bridged by consulting-type workshops or training sessions.

A constrasting case was given to me by a friend working for a massive public organization that has decreased numerically and geographically during latter years: the Swedish Armed Forces. Today, this organization employees the equivalent of 17,000 middle managers (senior officers) but only 2000 low-level managers (junior officers). It is often depicted as an organization in crisis. In addition, the military training systems with its recruitment of young officers after graduation from conscription ensures strong pressures for socialization . And since officers commonly socialize with each other off-duty, the internal networks and trust fostered during their training (intended, indeed, to maintain order and save lives during times of crisis) turns increasingly to what the social network literature characterize as “closed” networks with strong intra-organizational ties and “full closure” .  In such an organization, it is easy to understand that external pressure for increases in efficency and decreases in personell makes organizational members wary of outsiders and resistent to change. Adding to this picture of a conservative and very internally oriented organizational culture in the armed forces, from an demographic perspective the Swedish tenure-based employment system makes average age in organizations high, increasingly so during times of personnel cutbacks when the strict labor laws strongly favors keeping long-tenured employees and prohibits the sacking of excess personnel instead of rotating them from one part of the organization to another. The officers’ union is one of the strongest labor unions in Sweden, meaning that if a division is suspended, senior officers will almost always be transferred to some other duties at the military headquarters in Stockholm, regardless of the value that the organization puts on their skills and experience.

The goverment new strategy ro rewamp this infested system is to simply disband the current legal unit that comprise the armed forces and setting up a new one, necessitating military personnel to apply for new positions in a quasi-new organization. This would ensure that applicants can be selected based on merits rather than tenure. I wonder how the union will respond to that one?

In stark contrast is the story Sweden’s “super-telecom-company” Ericsson, internationally a quite ordinary blue-chip tech firm but historically the home to a multitude of innovations and parent of numerous spin-off firms. After its near-bankruptcy and turnaround in 2002 Ericsson shrank in size from about 110,000 employees world-wide to less than 60,000. A hiring freeze in 2001-2003, dismissal of consultants and many of the younger employees (due to the  tenure-based employment system) meant that the mean age and company tenure of employees in the surviving organization was very high. It was apparent that the firm needed to reinvent itself to continue to develop innovativions and to attract talented employees.

What happened is pretty straightforward from an HRM perspective but quite remarkably compared to the prior case of the military forces: Ericsson issued a generous retirement scheme that allowed all employees above the age of 40 (!) to retire with 12-18 months of salary and benefits. The firm thereby reinvented themselves by loosing many 50+ and hiring young graduates after prior years of severe financial cutbacks.

It is interesting that among all of these 3 organizational events, a cross-country merger of two recently deregulated public monopolies (the postal services of Sweden-Denmark), an increasingly aging and resource-stripped organization (the military forces), and a rapidly changing high-tech corporation operating globally, the demographic composition and types of internal socialization seems like a key strategic issue for their future sucess. This lends credibility to the book by Carroll and Harrisson. Highly recommended reading.