Ask any big question about an organization, its talent or leadership, and as soon as people run out of any original, precise, or data-driven answers, they will inevitable invoke “culture”.
The great Peter Drucker is alleged to have said that “it eats strategy for breakfast” (one of the most in/famous misquotes). And many of the world’s most successful leaders and entrepreneurs seem rather obsessed with culture… Jeff Bezos stated that “Amazon’s “Day 1” philosophy is mostly a cultural mechanism to prevent bureaucratic decay. Sheryl Sandberg famously linked scale and performance to building a culture of resilience and feedback. Perhaps most famously (if not grandiosely), in The Protestant Ethic and the Spirit of Capitalism, Weber famously argued that religious culture shaped the development of capitalism.
But, how much does culture, particularly organizational or corporate culture, actually matter, and is it feasible to attempt to change it, let alone improve it, via deliberate interventions?
Luckily, there is a rich research tradition within Industrial-Organizational Psychology and the wider behavioral science to examine, measure, and manipulate culture at a systemic level, as well as decoding its causes and consequences over tangible individual and group-level outcomes.
To be sure, this literature or body of evidence is not necessarily widely known or publicized, which is why you may not be familiar with these key findings about organizational or corporate culture:
(1) What is the best way to define “culture”: Despite the mystique, culture is not vibes, slogans, or artfully branded value statements, nor is it sharing kombucha with your hoodie-wearing boss in a glass-walled breakout space. In the scientific literature, culture is typically defined as a system of shared norms and assumptions that shape behavior. As Edgar Schein argued, culture is the pattern of shared basic assumptions a group learns as it solves problems of adaptation and integration, operating at three levels: visible artifacts, espoused values, and underlying assumptions. Similarly, Geert Hofstede described culture as the “collective programming of the mind,” while empirical work by Kotter & Heskett linked adaptive cultures to long-term financial performance. From a behavioral science perspective, however, the most operational definition is simpler and more diagnostic: culture is the distribution of behaviors that are systematically rewarded, tolerated, or punished within a system. In other words, culture is what gets people promoted, and what gets employees to do X rather than Y even when nobody is watching. Employees infer it less from mission statements than from observing who advances, whose mistakes are forgiven, and which norms carry reputational capital. This aligns with decades of research in industrial-organizational psychology showing that incentives, selection, and leadership modeling shape behavioral norms far more reliably than symbolic interventions. Under this lens, culture is not an ethereal force; it is the residue of incentives and power structures, which is precisely why it is both consequential and resistant to cosmetic change.
(2) How culture shapes innovation: A meta-analysis of 43 studies covering more than 6,000 organizations shows that innovation is not randomly distributed across firms, it clusters in specific cultural environments. Organizations that emphasize flexibility, learning, risk tolerance, and openness to the outside world are consistently more innovative. These so-called “developmental” cultures encourage experimentation, tolerate failure, and reward growth, making them fertile ground for new ideas. Cultures that prioritize teamwork and people development, or that emphasize performance and clear goals, can also support innovation, though less strongly. By contrast, cultures built around stability, strict procedures, centralized control, and internal order tend to suppress innovation. In practical terms, if people are punished for deviating from the script, innovation declines; if they are encouraged to explore, scan externally, and challenge existing practices, innovation rises. In short, culture is not just background atmosphere, it systematically shapes whether new ideas are generated, adopted, and successfully implemented.
(3) Culture is shaped by the leaders: Although culture can feel organic or historical, decades of research suggest that leaders play a disproportionate role in creating, reinforcing, and reshaping it. As Edgar Schein famously argued, leaders embed culture through what they systematically reward, measure, tolerate, and role-model. In control theory terms, culture functions as “clan control”, meaning that shared values become a form of self-regulation when repeatedly reinforced by authority figures. Leaders shape culture less through speeches and more through talent decisions: who gets promoted, who gets resources, who is protected after failure, and who exits. Over time, these signals accumulate into norms. Longitudinal research on organizational control systems also shows that culture evolves path-dependently around leadership choices, particularly in periods of growth or crisis. In short, culture does not materialize spontaneously; it is the accumulated imprint of repeated leadership behaviors that, over time, harden into shared expectations. Nowhere is this clearer than in young organizations, where culture is little more than the founders’ values made operational. As firms mature and scale, that imprint does not disappear. It settles. What we call culture in established organizations is often the sediment of earlier leadership decisions, the enduring residue of founders and other pivotal figures whose assumptions became institutionalized long after their direct influence faded.
(4) Beware the “culture change” reflex: When strategy stalls, execution falters, or a transformation disappoints, the diagnosis often defaults to culture. It is the most convenient culprit because it is expansive, intangible, and safely unmeasurable. Once invoked, organizations tumble down the culture-change rabbit hole: workshops, values refreshes, rebranding exercises, leadership roadshows. Yet if culture is “how we do things around here,” then attempting to change culture means attempting to change everything. That is neither realistic nor necessary. There is a deeper risk. Culture does not only contain your frictions; it also contains your strengths. The same norms that slow change may be the ones that built trust, operational discipline, customer loyalty, or brand identity. A bank that prides itself on prudence may struggle with rapid experimentation, but that prudence is also why customers trust it with their money. A tech firm that celebrates autonomy may struggle with coordination, but that same autonomy fuels creativity. To wage war on culture wholesale is to risk dismantling the very system that made the organization successful.
A more pragmatic view is to treat culture like climate rather than machinery. There is a Norwegian saying: “there is no such thing as bad weather, only bad clothing”. You do not try to change the climate; you prepare for it. Likewise, instead of trying to re-engineer the entire cultural ecosystem, leaders can design incentives, structures, and processes that channel behavior differently within the existing norms. You may not change a risk-averse culture into a risk-loving one, but you can create protected “sandboxes” where experimentation is explicitly rewarded and failure is insulated. Pharmaceutical firms, for example, often maintain highly regulated, compliance-heavy cores while creating semi-autonomous R&D units that operate under different performance metrics. The broader culture remains intact; targeted behaviors shift.