Can You Change a Company's DNA or Culture?

(MoneyWatch)  We hear a lot about the role that founders play in startup companies. And we read a lot about the importance of corporate culture in developing institutions that survive and thrive for decades. But there's a critical link between the two that's not as well documented -- or understood.

There's an unusual parallel between people and companies. People are a combination of DNA - from their parents - and what they become through experience. Likewise, companies are a blend of DNA - from their founders - and what they become through experience.

But like people, companies can lose their way, going far afield from the DNA their founders imprinted on them. That certainly happend with Apple, HP, and Sony. It may also have happened with Yahoo, Dell, and Starbucks. What happens then? Can you change a company's DNA? Can you just "create" corporate culture, out of the blue? Or must you bring back the old one? Let's see.

The early Bill Gates was an unusually focused individual. Some say he has Asperger's Syndrome. Who knows? Anyway, he focused on software, but I think it could have been anything. He wrote programming languages, but told IBM he could deliver an operating system. He'd never even worked on an operating system before.

Then he did something even more unconventional, negotiating for a nonexclusive licensing structure instead of the usual development fee. So here was a unique combination of whatever brains and/or condition he was born with, an aggressive competitive nature, and an unparalleled instinct for business - a prophetic vision of what the personal computer could become.

To this day, Microsoft carries Gates' DNA in the form of a ruthless focus on growth and market share, whatever it takes. It should come as no surprise that the company Gates built has so frequently tested the muddy waters between innovation and monopoly, leaving mostly destroyed competitors in its wake.

And how about Andy Grove's uniquely paranoid view of competition, not to mention his confrontational management style? To this day, those traits live on through Intel's corporate culture. And while Grove wasn't an Intel founder, he came early enough to transfer his DNA to the fledgling company.

I could go on and on: Wal-Mart, UPS, even Whole Foods. When a founder or other dominant executive possesses a unique and successful set of business DNA, it's imprinted on the company and lives on through its culture. The two go hand in hand. But what happens when a company loses its way? Then what?

Well, companies can reinvent themselves. And if the executive in charge of the turnaround is remarkably capable and implements a flawless process, he can possibly imprint a new set of DNA on the company. That was the case with Lou Gerstner's turnaround of IBM, perhaps less so with Mark Hurd's turnaround of HP. You might even say that Steve Jobs did it twice: with Pixar and Apple, the sequel.

But that takes a unique set of circumstances, perhaps just as unique as what made the founder special or the original company great to begin with. Maybe more so, because of the added task and risk of "changing direction." After all, just like people, companies in mid-life don't come with a clean slate.

The point is this. Changing a company's DNA and its corporate culture can be done. But to say that it's a difficult and risky venture is a gross understatement. Experience tells us that the odds of success are extremely low. Executives, boards, investors, entrepreneurs, and consultants involved in corporate change, should keep that in mind. Just doing that - keeping it in mind - will improve the odds of success in a turnaround.