As much as our own biological DNA defines who we are and what can do as human beings, also organizations have a DNA that defines who they are and what they can do. This DNA resides everywhere in the organization; in its people, competences, structure, processes, and so on and so forth. And like DNA, it cannot be changed easily.
With DNA I don’t just mean culture. Yes, culture is important. But it is also an excessively vague concept. And, more importantly, it doesn’t really tell anything about the essence of an organization – how it creates value. Take a widely used typology of organizational cultures: the Organizational Culture Assessment Instrument (OCAI). Based on Quinn & Rohrbaugh’s ‘competing values approach’ OCAI identifies four main cultures: hierarchy, market, clan and adhocracy. These cultures basically describe how an organization works and what drives it. As such, culture is primarily an inward looking concept. It hardly says anything, however, about the value an organization creates for its customers. Value creation is outward looking and this is exactly what an organization’s DNA is about.
As introduced in an earlier post, an organization’s DNA consists of four basic elements: price, quality, delivery and flexibility (PQDF). Each of these four elements consists of a pair of subelements. Price standard – Price custom, Quality tangible – Quality intangible, Delivery speed – Delivery accuracy, Flexibility volume – Flexibility variety. This DNA is illustrated in the picture below.
Like with plants and animals, there are different species of organizations with a different DNA. Some organizations, such as Ryanair and Aldi, are primarily price-oriented. Up to the smallest details, everything they do is focused on delivering the best price to their customers. Other organizations, such as Coca Cola and Apple, are quality-oriented. They aim at offering the highest tangible and intangible quality and go at length to make that happen. Still other organizations are delivery-oriented. Amazon and McDonald’s are good examples, since they are completely oriented on getting a product as fast and predictable to you. And finally, there are companies such as Google and Salesforce that are flexibility-oriented, giving you a broad range of offerings to pick from.
These orientations are really in the DNA of these companies. Even if they wanted too, they cannot simply change their orientation. Imagine Ryanair changing to a quality-orientation, or Apple to a price-orientation? There is no way in which this is going to happen in any realistic timeframe, and if it would happen it will take extreme measures. But they also probably don’t want to change because their DNA is given them their success. And it is not only the internal organization which is completely based on their DNA. Also the external relationships and their position in the market is based on this DNA. Their current customers match their DNA and their image as price-oriented and quality-oriented companies is almost impossible to alter.
This shows us that the DNA metaphor can be taken even further. Our biological DNA is a result of an evolutionary process in which we adapt to our environment. The same applies to organizations’ DNA. This DNA is the result of a matching process between internal qualities and external demands and opportunities. In successful organizations, all of that is well-aligned and taken as fundamental starting point for doing business. This means successful companies know their DNA and stick to it. Do you?