Organizational Culture That Shapes Leadership

Can you imagine an organization without a culture? Perhaps. But it is unlikely to survive. Culture is the invisible “foundation” that holds everything together: from employee behavior to strategic decision-making. And the Seventh Episode of the “Leadership Podcast” – a joint project of the Center for Leadership of UCU and “Radio SKOVORODA” – is dedicated precisely to this topic by the Center’s Executive Director, Andrew Rozhdestvensky.

What exactly does the concept of “organizational culture” include? Why is it so important? And how can understanding it influence your success and even financial well-being? All of this – in today’s breakdown! So enjoy your reading!

What Is Organizational Culture – and Why Does Everyone Talk About It, Yet Few Understand It?

Organizational (or corporate) culture is a concept often heard in business environments, but not everyone can explain it. In fact, this is the very issue the podcast begins with: we’ve all heard about company culture, but do we really understand what it is?

“Why do I prefer to use the term “organizational culture” rather than “corporate culture”? Simply because not all structures are corporations. But every corporation is still an organization”,

explains the podcast host.

Andrew Rozhdestvensky offers two vivid metaphors:

1. The experiment with monkeys and a ladder, first described in 1994 by Gary Hamel and C. K. Prahalad. A group of chimpanzees was placed by researchers in a room. They could reach bananas using a ladder that led to them. But every attempt to do so was punished with a cold shower. As a result – an unwillingness to repeat the experience, even when some chimps were replaced with “newcomers”. Eventually, rational behavior was replaced with repeated actions whose causes were no longer understood. In a group composed entirely of new monkeys, none climbed the ladder – simply because “that’s how it’s done”. This is the essence of organizational culture.

2. Brine and pickles. In this metaphor, people are like cucumbers, organizations are the barrels, and the brine represents the culture prevailing within them. And it is the composition of this brine that determines what kind of “flavor” the people in the organization will have.

The Academic Foundation: What Edgar H. Schein Says

Let’s now move from metaphorical language to a more academic approach. Edgar H. Schein and his work “Organizational Culture and Leadership” help us do that. His definition of organizational culture is as follows:

“Organizational culture is a pattern of basic assumptions that a group has invented, discovered, or developed in learning to cope with its problems of external adaptation and internal integration, that has worked well enough to be considered valid, and therefore, is to be taught to new members as the correct way to perceive, think, and feel in relation to those problems”.

This complex sentence actually describes a vital mechanism: the experience of a group that becomes embedded in practices and passed on to newcomers.

Model of culture by Edgar H. Schein resembles an iceberg and consists of three levels:

1. Artifacts – visible external manifestations: behavior, language, symbols, rituals.
2. Values – conscious beliefs about what is considered “right”.
3. Basic assumptions – deeply rooted, unconscious perceptions about the world and the organization.

Each of these exists at a certain “depth” of the iceberg: artifacts above the waterline, values and assumptions beneath it. And as our colleague warns, changing only artifacts (such as renaming streets or replacing monuments) is not enough to implement deep transformations.

Leaders and Culture: Who Shapes Whom?

One of the key theses of the aforementioned business theorist and psychologist is that it is leaders who create culture. However, over time, this very culture shapes new leaders – turning the process into a closed loop.

A classic example of this dynamic follows the sequence:

• Founders of a business form the initial culture.
• Subsequent generations of leaders grow up within this culture.
• And then, they either reinforce it or… attempt to change it (which is not easy).

Typology of Cultures: The Four Worlds of Kim Cameron and Robert Quinn

According to the Cameron-Quinn model, first described in 1999 in their book “Diagnosing and Changing Organizational Culture: Based on the Competing Values Framework”, a successful organization must strike a balance between different – and often opposing – values. All organizational cultures can be positioned along two axes:

• Flexibility vs. Stability – how much the organization adapts versus how much it adheres to structure and control.
• Internal Orientation vs. External Orientation – whether the organization focuses more on internal processes and people, or on the external environment and outcomes.

These two axes form four quadrants, corresponding to four types of organizational culture:

1. Clan Culture:

• Orientation: internal + flexibility.
• Core values: collaboration, employee development, trust, “family-like” atmosphere.
• Leadership style: mentor, facilitator, team builder.
• Example: small innovative teams, startups.
• Drawbacks: risk of favoritism and “too much friendliness”.

2. Hierarchical (Bureaucratic) Culture:

• Orientation: internal + stability.
• Core values: control, standards, efficiency, structure.
• Leadership style: coordinator, monitor, organizer.
• Example: government institutions, large corporations with strict regulations.
• Drawbacks: inability to demonstrate flexibility.

3. Market Culture:

• Orientation: external + stability.
• Core values: competition, results, goal achievement, productivity.
• Leadership style: competitor, producer, achiever.
• Example: commercial companies focused on KPIs.
• Drawbacks: human relationships often take a back seat.

4. Adhocracy Culture:

• Orientation: external + flexibility.
• Core values: innovation, experimentation, entrepreneurship, risk.
• Leadership style: innovator, entrepreneur, visionary.
• Example: tech companies, R&D departments.
• Drawbacks: constant risk of losing focus and becoming overly “academic”.

“What conclusion can we draw from this model? That the listed types of organizational cultures are extremely different. And often, different departments within the same company may operate under very different cultures: the finance department may be more bureaucratic, while the sales department may lean toward adhocracy. [And the talent of a leader lies precisely in the ability to harness the strengths of each such unit]”,

concludes our colleague with an interim summary.

Culture vs. Change: Why Resistance Is Inevitable

Organizational culture is the biggest opponent of reform. It is inert, while change is painful. That’s why it is crucial to implement only those changes whose effectiveness outweighs the potential risks to the system’s viability.

Andrew Rozhdestvensky points to two key approaches commonly used by reformers:

• Radical approach: In Georgia, the entire Ministry of Internal Affairs was dismissed in a single day and replaced with new staff. This allowed (at least temporarily) for a break from the previous corrupt culture.
• Evolutionary approach: At “Oschadbank”, ineffective employees were gradually dismissed while the remaining staff were integrated with professionals from other banks. This helped shift the culture from within to a more viable model – without endangering organizational stability.

Why Culture Is Also Your Competitive Advantage

“Your product line can be copied. Your employees can be headhunted. But your [organizational] culture? That can’t be stolen!”,

opens the Executive Director of the Center for Leadership of UCU, immediately capturing the audience’s attention.

Authentic culture cannot be copied. It can only be created – over time, with persistence, through daily practices and inevitable mistakes.

A powerful example of such cultural practice is “Lexus”, the American luxury division of Japan’s “Toyota Motor Corporation”. “Lexus” clearly embodies the Japanese principle of omotenashi – a high level of hospitality that is embedded in the brand’s cultural DNA.

But the practical importance of organizational culture doesn’t stop there. In our exploration, we turn to the book “The Character Triangle – Build Character, Have an Impact, and Inspire Others” by Canadian business theorist and Harvard University lecturer Lorne Rubis.

According to him, a “genuine” culture fulfills three strategic functions:

• Creates value – for both customers and employees.
• Reduces risk – by fostering predictable behavior and trust.
• Increases adaptability – enabling faster response to change.

Moreover, research by Jessica Chatman of the University of California, Berkeley, shows that organizations with a strong adaptive culture tend to perform better financially. Companies where employees share a strong agreement on cultural norms and actively support adaptability achieve significantly higher revenue growth, profit margins, and return on investment – sometimes by as much as 15% compared to their less agile competitors.

How Do Leaders Shape Culture in Real Life?

When discussing how corporate cultures are actually formed, our colleague suggests several key tools leaders can use:

• Mission, vision, and values – integrated into HR practices.
• Ongoing communication – the foundation of any transformation.
• Horizontal collaboration – often more important than formal hierarchy.
• The leader’s personal example – living the values they seek to instill.

“[When it comes to that last point, I’ve been especially inspired by] Lorne Rubis’ approach of “great, but not perfect Leadership”. It had a strong personal impact on me… Because it’s about the idea that leaders don’t have to be perfectionists. Just be great. That’s enough to start building a non-toxic culture in your team”,

shares the academic from personal experience.

Organizational Culture as a Brand

To close, the podcast host brings the audience to one final idea: the intangible – but deeply felt – effects of building an organizational culture.

The values of an organization directly influence:

• Its employer brand.
• Its corporate reputation.
• Decisions regarding partnerships and collaboration.

An organization that lives by its values will, in just a few years, reap the rewards: the trust of partners, the loyalty of customers, and a strong team. These things cost you nothing – but their value is priceless.

The Challenge of Succession: Breeder Leaders vs. Blocker Leaders

A much-loved tradition in the “Leadership Podcast” is its final segment, where the host answers audience questions. One such question – “How do you develop leaders within your team?” – received special attention in this episode.

The reason is simple: no organization can truly grow without leadership succession. This means not only passing down values and culture, but also cultivating the very people who carry them. In this light, our host distinguishes between two types of team leaders: “breeder leaders” and “blocker leaders”. Let’s follow his lead and take a closer look at both.

Breeder Leaders:

• Actively identify and support talent.
• Provide constructive feedback.
• Mentor and challenge team members to grow.
• Learn from mistakes.

Blocker Leaders:

• Ignore potential.
• Withhold feedback.
• Keep employees in their comfort zones.
• Punish mistakes rather than learning from them.

“Sometimes we block others from stepping up as leaders without even realizing it. Other times it’s intentional – like when we’re afraid someone might replace us. In toxic organizations, the easiest way to maintain power is to push out the smart ones and surround yourself with fools. That way, the blocker leader shines – but only in comparison. And that “shine” is painfully superficial…”,

explains Andrew Rozhdestvensky.

Final Thoughts

So what are the takeaways from Episode 7? Organizational culture is not just a buzzword. It is the core of Leadership. It’s not about formal rules – but about the invisible forces that guide people and decisions every day. And leaders in this system are not only the creators of culture. They are also its carriers – and sometimes, its hostages.

Want to build a culture that inspires? Start with yourself. Start with your Leadership. And let the iceberg of your culture be not a cold threat – but the solid foundation of a great organization!