Lesson from practice: It is early morning at Tampere in the office of a medium-sized IT company in the early 1980s. The agreement on the purchase of a new ERP system was signed last week and now the project groups of both supplier and customer should meet and start the project. Two groups of people are sitting opposite each other at the table. The customer assumes that they are waiting for someone but whom? There are no more empty places around the table. Suddenly the door opens and a huge dark-haired man enters carrying jugs of coffee and tea.
“ Good morning to you all” he says. “I am the CEO of this firm and because I know nothing about information technology or the software we just have sold to you I came here to make and serve you some coffee and tea.” As he served the drinks, he presented each person involved in the project as well as the company’s background and products, as well as the good and bad habits and routines they usually followed during projects. And he did all this with good humor.
After that we presented ourselves and told the suppliers about our background, company, products. We said much more than we would have without the good atmosphere which that bear of a man had created in the room. The results of that meeting were much better than we had expected. And most important of all, we saw that even if we were operating in quite different branches, we had something in common: namely the same type of leadership style and the same attitude to work and people.
It is difficult to imagine that such results would have been achieved if before the meeting someone had run through the corridors shouting and looking for a female clerk whose turn it was to make coffee, as happened some years later in another project.
A company has many sides. Legally, it is a juridical person with its own duties and rights, privileges and responsibilities. A company also has its own rules that it should follow as far as they do not break the law. Financially, it can be seen as a joint venture of those who have money and those who have a business idea. Sometimes these two participants might be one and the same person or persons. But in addition to these bureaucratic sides of the company, it has an image, a façade that conveys messages to people both inside and outside the firm about the values and customs of the organization. The image of the company might be given by one strong and powerful person, as it was in the example above, but in most cases it is a collage of key persons, their beliefs and traditions, bravery and fears, ambitions and frustrations combined with tacit knowledge, written and
unwritten rules and traditions of the organization and surrounding society. This jigsaw puzzle forms the way in which the company works. One definition for business culture according to the book ”Exploring corporate strategy” (Johnson & Scholes, 1988, p. 38) is
“the way we do things around here.”
We meet concrete examples of these business cultures all the time in our daily life. If we are taken blindfold to some supermarket we know immediately after opening our eyes where we are or at least to which chain this supermarket belongs. We might know that in certain boutiques we must wear a certain style to get service at all, and in others we need to chase away the sales persons if we want just to have a look around. And of course there are shops where we have to hunt for personnel if we would like to buy something.
Lesson from practice: In 1989 I was involved in the search for an IT system for a new company formed around a very special branch. We had found a technology supplier whose solution matched our needs, we had also found an ERP solution we believed to be suitable for the new company, and the only question was who would be the contractor with total responsibility for the project. We visited the references with and without the candidates, and on one of these visits, arranged by one of the biggest IT vendors in Finland, we were taken to a machinery company where they had supplied both the infrastructure and programs. The presentation given by the technology manager and project manager of that company was quite unique among the long list of references. They started by praising the software and machines but the supplier and especially its project manager (who was with us) and the project team did not get a good word. They were said to be lazy, incapable and not at the level of knowledge required for that kind of task. On the return back to our office our hosts were very quiet.
In business-to-business marketing, the features of the culture that are most easily seen are the quality of products and services, the punctuality of deliveries and payments, the
handling of claims and requests, and the dress code. It is very easy to understand that if we receive components under all quality standards or if we receive some important spare part two weeks later than agreed and claims are never answered, the cost caused by the
supplier’s unacceptable business culture might be very high, even if some compensation is received. And if we as a supplier have to wait for settlement for months after the due date or if the money does not come at all, we have lost not only computational costs but also real money. These examples are as well known in the business world as the other extreme:
Goods with high quality are delivered as agreed, claims are handled accurately, and settlements made on time. But sometimes, even if both the customer and supplier represent the latter type of business culture, they do not necessarily understand each other; the language and terminology may be strange or critical parts of the business logic are not understood in the same way. Although quality and punctuality are desirable virtues in all cultures, their interpretation may vary in different cultures and an agreement may be interpreted in different ways or the common project may not be as high a priority on both sides. The consequences in such cases may be extra work, claims, trials, and a break in co-operation. All these results have significant cost effects to both parties.
Lessons from practice: In bank statements in other European countries, accounts are normally presented as seen from the bank’s side. The money on the account is presented as
a debt to the customer (-); the negative balance on bank account is presented as a receivable from the customer (+). In Finland, however, the statements are normally presented from the customer’s point of view: the money on the account is the customer’s money (+) and the negative balance is the customer’s debt to the bank (-). When a foreign bank implemented their own system in their new Finnish subsidiary some years ago, they forgot this among the many other things. Naturally, the bank’s customers were shocked.
The lack of a common language has proved to be one of the biggest cultural problems in IT projects, beginning from the tendering/offering process and continuing through the whole project life cycle (Lilja, et al., 2011b). This is mostly due to the fact that both customer and supplier are specialists of their branches but have not necessarily any or only little
knowledge of the opposite partner’s business. The same problem arises with strange terminology. Both the customer and supplier may use in its operational communication terminology that is common in their branch but is not used at all or is used in different meanings in other branches (Lilja, et al., 2011b). And furthermore, some of participants may use terminology that is used only by them. The understanding of the customer’s business logic is important for everyone who engineers, manufactures or delivers
instruments, tools or other equipments to be used in the customer’s business. IT products like programs, computers, or communication services also belong to this category. Bigger systems are commonly implemented on a project basis. The success of the project requires that each participant has the same opinion on what has actually been agreed or what is the priority of this project.
So, if these questions have a key role in every IT project, why has there been such little discussion of them? In every company each person sees the problem through the context of his/her knowledge, education and experience. Lawyers see the question in two parts:
What has been agreed and who has not fulfilled the agreement. The financial department for its part might ask the lawyers: Who pays? The engineer asks: What is the problem?
Then he checks the requirements and answers: It was not in your specifications. An alternative answer might be: It was described in that way in the requirements and that is how we did it…
Heard in the practice: “I hate that damn firm. I will never again have any co-operation with them. I am completely tired of their way of doing things, as if they were forbidden to use their own brains… “
The impact of the business culture is always bidirectional both inside and outside the organizational border. Not only do people inside the border give small parts of their personal values and attitudes to the common organization culture but they also adapt those habits and ways of doing things they believe to be good for them. Unfortunately these habits are not necessarily the official ones but part of the tacit knowledge and subculture. The subcultures whose impact on business culture is significant are, for example occupational and labor union cultures. On the other hand, people outside the
organization might see certain features of the organization as either so attractive that they begin to behave in the same way themselves or so disgusting that they become aggressive when meeting such features. The way the customer’s or supplier’s personnel feels the visible or otherwise perceptible features of a partner’s business culture has an impact on their attitudes to the partner and the common project.
There are also various organizational and cultural features that are associated with
structures rather than directly with human behavior. These are the size, structure, height, and width of an organization. It is easy to imagine that if we put a huge worldwide
corporation and a small firm with ten employees on opposite sides of the table in a project, there will be one who dominates and the other who squeaks. It is safe to assume that organizations with different structures will have difficulties understanding each other’s decision making and leadership. A company with a low hierarchical organization structure with short and direct command paths may find it very hard to understand why a
corporation with several divisions and multiple command paths needs weeks to handle a case that took a mere five minutes for them.
Lesson from practice
In one project we found it very difficult at the moment problems arose to get in touch with the support staff nominated to be responsible for our case. At first we thought that they must be busy, later we imagined that they just did not care about us and became more and more angry and skeptical, which in turn did not enable a good conversation atmosphere between us and them. The truth was, however, that at this supplier one person might belong to three different organizations: To the project organization with projects they were responsible for, to the process organization where they might have duties for product development, supporting and testing teams, and also to the hierarchical base organization where their primary superior tried to employ them in sales. Three positions, three superiors, but just one employee!
There are organizational structures and features that impact direct on the capability of a company’s own personnel to take care of the projects they are responsible for. One of these is the hybrid organization structure, which means that the same organization is structured in two or more different ways. This poses several challenges to an individual member of staff who might have two or more superiors, many responsibilities, all with high priority and no one to delegate the tasks to. In such organizations there might be a bigger turnover of employees, more sick leave, trouble when recruiting new people, and so on. In projects it means that the opposite party very soon notices that there is something wrong with the project but they are not necessarily aware of the reason. In such a case, it is very easy to think that some individual person does not care about our project and insist on changing him/her.
After having encountered various situations like those described above, I began to see some relationships between the situations and the companies behind them. What if the reason for success and failure, delight and trouble in certain projects lies not in the individuals but in the organization? What if certain organizational cultures or features in them just do not match each other?
There has been research on international and ethnic cultural differences and their impacts on international co-operation, as well between different companies in terms of companies, divisions, and departments belonging to the same corporation. This research has been motivated by export and import, manufacturing in countries with lower costs and later by trends like outsourcing manufacturing to subcontractors. However, there have been only a few studies concerning cultural differences in companies operating in the same cultural area and the impacts of these differences on co-operation, particularly between the customer and supplier of an IT project.
The present research was inspired by 25 years of experiences, some of them described above, and motivated by a desire to understand better the complicated ecosystem formed by a customer and supplier involved in the same project, with employees of both
organizations, owners, leaders, managers, financial partners and other stakeholders.
This chapter described some of the observations and experiences that were the prime movers behind the questions this thesis is trying to find an answer to. The next chapter will present the questions and give a brief description of the methods used and assumptions and decisions made during the process.
2 HYPOTHESIS, RESEARCH QUESTIONS AND LOCATION OF THE RESEARCH IN THE FIELD OF DISCIPLINES
This chapter presents the hypothesis behind the research, the research questions, and the location of the research in the field of disciplines. There will also be a short description of the limitations and assumptions that occurred and/or were made before and during the research as well as those caused by the selected methods and decisions made. Also, the reasons for the decisions and selections will be discussed although the methods will be presented in later chapters.