Corporate Culture works on human logic, not business logic


If you don’t understand your culture, you don’t understand your business.

Early humans had a pretty tough life as hunters and gatherers and to survive, belonging to a tribe and being accepted usually meant the difference between survival and death.  Being part of the tribe also came with learning the skills of the tribe, working well with others and learning to do things that the group, and the leader, agreed with. Og here is a good example.

og      mammoth-hunting

We evolved as social creatures and fitting into the group is hard-wired into our human DNA and reinforced through social networks. Belonging to a group or tribe was necessary for survival.

Fast forward to the 21st Century and Og, now named Oliver, has a family, mouths to feed, a mortgage and has just been hired for a new job in a new company. The most important thing for Oliver is to fit it, get along with his new teammates and boss, and learn “how things are done around here”.

It’s the same social and peer pressure process that drives fashion trends; the need to fit in and be part of the group. In the 60’s there was no official declaration that acid-rock music, bell bottoms, long hair and tie-dye t-shirts were cool, yet within a few short months kids the world over were now belonging to a distinct tribe, Hippies. Even if you didn’t follow the Hippie beliefs, many of us dressed to fit in. It was a social trend turned into fashion.


When people are alone, their behaviour tends to be a product of numerous personal beliefs, attitudes, morals and habitual approaches to rules and regulations. We each follow our own internal code of conduct and ethics.  However, when becoming part of a group, especially one where your pay check and future depends on fitting in and doing well, many people adopt the behavioural norms of the group, even if they tend to be different from their personal beliefs and behaviour.


Peer pressure and social groups are key in how corporate culture is formed and sustained.

Culture works on human logic, not business logic.

Research by academics and behavioural scientists has shown that individual behaviour at work is determined more by peer pressure than employer proclamations, decrees, controls, rules or regulations. Banks in particular are composed of numerous sub-cultures, each of which have strong unwritten ground rules for how members should behave in order to “fit in” and remain a “part of the group”.

Experiments in group behaviour have consistently proven that even when individuals know what is right and know what should be done, many will not take the important step of speaking up or going against the “collective group” to which they belong.

Most people think of an organization as a hierarchical structure, with a boss at the top and various people with different skills and responsibilities cascading downward. Information and influence flows from top to bottom. The fact is, most organizations don’t work in a top-down hierarchical fashion, but as a social network with a few key individuals seen as key informal leaders with a great deal of influence in how things are done.

The following diagrams are of an Oil Exploration and Production company structure, showing the “official” organization chart on the left, with Sr. VP Jones leading the organization.  But a social network analysis (on the right) reveals that Mr. Cole, seven levels down in the organization, has the largest number of social connections and a strong influence on a great number of people.  This is the “unofficial” organization chart and shows how things really get done around here! Cole is the informal, trusted leader and key influencer.


As a good example, think about who really has the strongest influence on how a hospital runs. The CEO of the hospital? The Hospital Administrator? The senior doctor?  We all know who really calls the shots; the Head Nurses. It’s the same in the military, where the Master Sargent tends to be the trusted key influencer.

Here is a picture of a real social network map.  It’s pretty easy to spot the subcultures and key influencers.


These informal and highly influential individuals determine the real culture, not the official values statements, risk guidelines or Codes of Conduct!

If you don’t understand your culture, you don’t understand your business.

 Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid


Twitter @bizjrchildress

Read John’s blog,

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

About johnrchildress

John Childress is a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at or
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