Changing Corporate Culture: What Documented Cases Show

Why so many culture projects end in a mission statement

Almost every owner knows the moment: a mistake was concealed for weeks, a good idea never reached management, or a new process is stubbornly bypassed. The diagnosis is often that it is down to the culture. The response is frequently a workshop, a new mission statement, and a poster in the hallway. Six months later, everything is as before.

This article therefore asks: Can corporate culture be changed deliberately, and what do documented cases show about how this succeeds and why it fails? To answer it, we first clarify the term and Edgar Schein's level model, then look at publicly documented cases and studies, weigh two views on the role of leadership, and finally derive an approach for small businesses.

The thinking model: Schein's three levels of culture

The organizational psychologist Edgar Schein describes corporate culture as the shared basic assumptions that a group has learned while solving problems and that have worked well enough to be passed on to new members as the correct way to think and act. He distinguishes three levels.

The decisive idea: when espoused values and basic assumptions diverge, the basic assumptions prevail. A business can write “quality before speed” on every poster. If employees have experienced that the deadline always mattered more in the end, they act accordingly. Basic assumptions arise from experience, so they can only change through new experience. This matches the finding of Guiso, Sapienza, and Zingales (2015) described in Company values that hold in everyday work: proclaimed values alone are not associated with success, but whether employees perceive their leadership as trustworthy and ethical is.

An everyday analogy: culture is like a footpath worn across a meadow. It forms because many people take the same route, and it remains even when a paved path with a sign is laid next to it. Only when the paved path is actually shorter and the worn path becomes less convenient does it slowly grow over.

A mission statement describes the path people should take. Culture is the path everyone actually takes.

When culture tips over: what failed cases show

Many of the best-known cases in which culture became visible are cases of failure. They show how basic assumptions arise that nobody decided on.

• Volkswagen. In the diesel scandal described in The diesel scandal, there was a target that was barely achievable technically. According to the stretch-goal model, such a target is either missed or its achievement is faked. The basic assumption that missed targets cannot be reported had a stronger effect than any rule.
• Boeing. For the 737 MAX, a 2020 report by the US House of Representatives concluded that time and cost pressure and a lack of transparency toward regulators and customers were among the causes. Boeing 737 MAX discusses how a quality culture changes under cost pressure.
• Nokia. The former market leader missed the shift to the smartphone. Nokia describes how structures and expectations within the company contributed to this.

What all three cases have in common is that the espoused values sounded good. The basic assumptions that actually steered behavior lay one level deeper: that targets matter more than truth, that deadlines matter more than concerns, that bad news traveling upward is dangerous. For the companies and persons named, the presumption of innocence applies in ongoing proceedings.

When change succeeds: two documented examples

Microsoft is a frequently cited example of successful culture change. Satya Nadella took over as CEO on February 4, 2014. As early as 2013, the company had abolished its forced-ranking system for performance reviews, which had required managers to place employees on a curve and weed out the weakest. Nadella put the idea of a learning mindset at the center, drawing on the research of the psychologist Carol Dweck, and a leadership approach that combines modeling, coaching, and caring. According to chief people officer Kathleen Hogan, performance reviews were changed to focus on collaboration and impact on others.

The example shows Schein's model in action: a basic assumption, namely that colleagues are competitors, was not attacked with a mission statement, but by changing a system that had confirmed it every day. Whether the later economic success is due to culture or to strategy and market cannot be separated from publicly available sources.

Lego stands for change out of crisis. According to Lego 2004, the company had spread itself across too many lines of business. The turnaround began with divestments, a color palette cut in half, and far less variety in parts; only then did growth return. Here too, visible rules and structures changed first, and attitudes followed.

What studies show about leadership and employees in change

Li, Chen, and Shen (2024) examined how much a new chief can change culture, using employee reviews from companies in the US S&P 1500 stock index. Their result is sobering and at the same time revealing: the influence of CEOs on culture change is measurable but modest. It is larger than the influence of the industry, but smaller than that of the company itself, meaning its history and established structures. A strong influence of the predecessor and a turnaround situation further weakened change after a succession.

A study by Tasoulis, Pappas, Vlachos, and a further author (2024) at the British retailer John Lewis Partnership shows how employees react to planned change. The company is owned by its employees, who are called partners there. After several years of falling profits in the early 1990s and a strategy called Compete to Win from 2003, a culture described internally as civil-service-like was to become performance-oriented. An example of the old inertia: when Sunday trading was permitted in Britain, the company needed a year to switch over, while competitors needed three months.

The researchers found no single cause for acceptance or rejection, but combinations. Perceived organizational support, participation in the change, room for initiative, and length of tenure worked together. Employees with long tenure expected the company to keep its promises on fairness and secure employment; newer or part-time staff paid less attention to this. Where the impression arose that old commitments were being broken, the path led to disillusionment and inner withdrawal. The study is based on two stores of a single company and cannot simply be generalized.

Two views: culture from the top or culture from within?

The first view says: culture is shaped from the top. The owner or management sets the framework through example, decisions, and hiring. This is supported by cases such as Microsoft and by the finding of Guiso and colleagues that the perceived integrity of leadership matters.

The second view says: culture arises from within, from employees' experiences, and can only be steered from above to a limited extent. This is supported by the modest influence of new CEOs found by Li and colleagues and by the varied reaction patterns at John Lewis.

I consider both views compatible if Schein's levels are taken seriously. Leadership can change the artifacts and rules, meaning what generates experiences. Basic assumptions only change when employees have the new experience often enough. For small businesses, this is good news: the owner is closer to every single experience there than a corporate CEO, and their influence is therefore likely to be greater than the modest effect the study measures for large companies. Whether this is so, however, cannot be derived from the available data. Building a sales culture describes how the owner's example works in sales.

The culture trail: change in four steps

From Schein's model I derive an approach that I call the culture trail. It does not start with the mission statement but with a single basic assumption, and it takes 90 days.

1. Name the basic assumption

   Describe in one sentence which unspoken belief creates the problem, for example “Anyone who reports mistakes gets into trouble.” Test it in conversation with two or three employees, not only in management.

2. Change one visible signal

   Choose an action with which you yourself contradict the basic assumption, for example openly raising one of your own mistakes in the team meeting and explaining what you are changing as a result.

3. Adjust one rule

   Change the rule, incentive, or process that confirms the old basic assumption, for example a fixed slot for reported mistakes in the weekly meeting in which nobody asks who is to blame.

4. Check after 90 days

   Count whether behavior has changed, for example the number of reported mistakes or improvement suggestions, and ask employees whether they notice the difference.

It is important to tackle only one basic assumption at a time. Anyone who wants to change ten values at once ends up changing nothing, because no single new experience is repeated often enough. Learning from wrong decisions describes how to learn from mistakes without looking for culprits.

Conclusion: culture changes through new experiences, not new words

To the guiding question: corporate culture can be changed deliberately, but not directly. According to Schein's model, unspoken basic assumptions steer behavior, and they change only through new experiences. Documented cases show that successful change starts where systems and incentives confirm the old assumption every day, and that failed change often goes hand in hand with fine values and unchanged incentives. Studies also show that the influence of new leadership is modest and that employees react very differently depending on whether they experience support and whether old commitments are kept.

For a small business, the sober conclusion is not to begin culture change as a project with a mission statement, but as a sequence of small, repeated decisions. One basic assumption, one signal, one rule, and then patience. The rest is repetition.

• Name one basic assumption that creates a concrete problem.
• Define one behavior of your own with which you visibly contradict it.
• Change the rule or incentive that confirms it.
• After 90 days, check with a figure and in conversation whether everyday work has changed.