These advantages may make the mercenary culture sound compelling, but there exist perhaps more business situations where it is not appropriate. Obviously, where the value chain is complex and business challenges require discussion, analysis, thoughtful consideration, and ultimately consensus, the mercenary form is ill advised. The same can be said about companies
that must endure periods of ambiguity or chaos, such as times of organizational or industry transformation. (Telecommunications right now is a good example of an industry in the midst of confusion and change.) Because of solidarity's focus on decisive movement and results, the mercenary culture can backfire in these kinds of contexts.
In fact, when the mercenary culture is dominant in times of high ambiguity, we often see what we have come to call "quick suicide." A wrong decision is quickly reached, and because of the assumption of high solidarity, everyone marches off the cliff together in perfect step.
In addition, in periods of high uncertainty mercenary cultures, with their relentless focus on the bottom line—concentrate on cost control, delayering, downsizing and reengineering— they do not look at new business opportunities and the longer term reshaping of their markets. The Xerox experience is instructive. Facing stiff competition, mainly from Japanese companies like Canon and Sharp, they benchmarked, reengineered processes, and reduced costs. They were good at this, but they failed to regain significant market share or to create new businesses away from their core copier business. All the more surprising, since they had considerable underexploited R and D capability in laptops, laser printing, and user-friendly computing. But they didn't give themselves time to exploit what they knew. 6
Not too different from this archetypal mercenary practice of oversimplifying complex or ambiguous situations—and just as damaging—is what happens when mercenary companies make their focus cost-cutting. They approach the task ruthlessly, slashing activities and services, removing layers of people, stripping the company down to its core. In the process, they also tend to strip away any opportunities for learning and the exchange of tacit knowledge. They pour away their accumulated experiences, and with it the continuity of processes and people that make trust or meaningful action possible. When the good times
return, they may have lost their critical capabilities. They're not lean, they're emaciated.
Of the mercenary culture, it also makes sense to ask: Can creativity exist in this environment—much less thrive? Sometimes mercenary managers are so restless, ruthless, and task-oriented that they don't understand the business advantages of out-of- the-box thinking. It's just that this kind of thinking has its place and limits. When we started working with a highly mercenary beverage distributor, the first advice we gave the CEO was that the company's culture was killing its creativity. The CEO dutifully gathered his senior executives and gave a speech on the topic. He completed his remarks by saying: "It's OK in this company to fail. It's OK to make mistakes—" We sat beaming at the back of the room until the CEO added a final word—"ONCE." We reminded him later of the well-established axiom that you can't have creativity without an authentic tolerance of uncertain outcomes, and even failure. (By contrast, at the music company Polygram, CEO Alain Levy rewarded people with money for trying new ideas. Sometimes, of course, they didn't work, although he obviously preferred it when they did. You can't have high levels of creativity and expect everything to go right.)
Likewise, the mercenary culture is no ally of complex learning. After all, complex learning takes time. It takes sharing of information and knowledge, and not all of it will end up to be meaningful in the short run. 7 Learning also involves a tolerance of underperformance and even failure. After all, few people hit home runs while they are learning to play baseball. They hit foul balls and strike out. The mercenary culture will allow those, as the CEO said, "ONCE." On the other hand, the mercenary culture is perfectly acceptable at incremental learning and becoming more efficient at what it already knows.
Sharing information and knowledge is also critical to fostering synergies between departments and functions. Of course, there is some of this in mercenary organizations, especially
when it is expressly measured and rewarded. But mercenary cultures often don't know—because of their focus on the task at hand—where to even look for synergies. How can you exploit something if you're not sure what it is or where it is located? By contrast, networked and communal cultures, due to their high levels of sociability, often have a much better time with synergies because synergies often make themselves known only through informal conversation. "You have that client—we do too! What if we designed a new product for them that combined our services ... ?"
Or take the case of a communal R and D group at Glaxo-Well- come, a giant of the world's pharmaceutical industry. Several breakthrough concepts for new drugs actually emerged during after-work beer parties when chemists got to chat with biologists. On a day-to-day basis, these scientists never worked together. In fact, they were presently working on different drugs. But they "exploited" the synergies of their knowledge rather accidentally. (These conversations, incidentally, have led to highly successful medications, which are in use today.)
Mercenary cultures, with their low sociability, can miss these opportunities. This is one reason they are particularly ill suited for alliance or agreed merger situations, when companies are being brought together with the express purpose of creating a whole greater than the sum of its parts. 8 Similarly, they may have a dampening effect in takeover situations, when avenues of communication and learning are best left as wide open as possible.