The Different Types of Company Culture

Ron Westrum studied how different organisations process information and he identified three types of company culture: pathological, bureaucratic, and generative. Each culture impacts the flow of information, decision-making, and overall organisational performance in distinct ways.

Pathological

Pathological organisations are driven by fear and blame which leads to bad information being suppressed or withheld for political reasons. Competition is rampant, and collaboration is scarce, with individuals and departments prioritising their own success over the organisation’s.

At PowerBuy, a well-established e-commerce brand, a major system redesign project is delayed due to an underlying design flaw that impacts scalability. During an internal IT steering meeting, the delivery team decides to withhold this critical scaling issue from the external steering committee, fearing blame and the potential fallout. Instead, they deflect attention to changing requirements as the primary issue. This dishonesty secures additional funding but further increases tension between the IT and marketing teams, who now accuse each other of the project’s setbacks.

This style of management can be very useful in crisis management situations where the important thing is to act fast, regardless of whether it is the most optimal approach.

Bureaucratic

Bureaucratic organisations operate with rigid structures, prioritising adherence to rules and procedures over outcomes. Departments protect their own interests by following the processes that have always governed their work, even when it results in inefficiencies.

At GovBuy, a government procurement platform, a scaling issue with the new system’s design is identified by the development team. Instead of immediately addressing the problem, the issue is passed through formal channels. The project manager raises a change request with the steering committee, but they request further analysis. Two weeks later, the findings are presented, and the change is approved, but still subject to finance sign-off. The finance team takes another week to review and approve the change. Meanwhile, the delivery team continues working on the old design, knowing the work will likely be scrapped. While the time to get approval led to a lot of inefficiency, the project is still considered "on time and on budget" because the change request increased the budget and timelines.

This type of management is useful in highly regulated industries such as financial services, pharmaceuticals or government where paper trails are required.

Generative

Generative organisations focus on a shared mission and empower employees to take ownership of achieving it. Information is shared proactively, and collaboration is the norm, allowing the organisation to quickly adapt to challenges and opportunities.

At RapidBuy, a fast-moving e-commerce brand, the delivery team identifies a potential scaling issue with the new system design. Instead of withholding information, the team immediately raises the concern with the product manager and collaboratively focuses on creating a new design to resolve the problem. The team openly updates their status report to indicate the delay but emphasises that they’ve developed a more robust solution. With everyone focused on the mission, they’re able to solve the issue efficiently, ensuring that the final system will scale properly and meet the company’s goals.

This type of management is useful in highly competitive industries where you need to ensure that you are actually solving customer problems.

Conclusion

Companies are complex so there will likely be a mix of different types of culture within a company. Whether you are looking at a company as a whole or a team within it, understanding Westrum’s three types of organisational culture can help you to identify why you are facing the challenges you are facing and how to address them.

However, knowing the problems and fixing them are two different things. The good news is that while culture eats strategy, KPIs eat culture. What I mean by this is that people respond to incentives. So if you want to make your company culture more generative you need to incentivise the behaviours that you want to see. This encompasses small actions like rewarding people for sharing information to changing the criteria for promotions and bonuses.