There are a lot of interesting aspects of a company’s culture. Malcolm Gladwell talks a lot about culture in his latest book, "Outliers: The Story of Success". Recently I have heard the phrase “company DNA” and I like that one a lot.
Companies rarely do well when they venture beyond their DNA.
In technology, we see this most readily in hardware/software comparisons.
Sony is a hardware company. They make good hardware but they totally struggle with software. The PS3 is a good example of a great hardware product that is totally hampered by software.
Conversely, we have Microsoft. Although Microsoft has made hardware for many years, they are essentially a software company. The Xbox has strong software, especially its networking code, but the hardware has struggled so much, they are a billion dollars or more in the red. So much money, that any other company would have long gone out of business.
Amazon is another tech company that is stretching their DNA. Amazon is great at supply chain management and good at web software. Hardware? Not so much which makes it is interesting to watch them struggle with the Kindle, their first hardware device.
Apple is one of the few companies that excels at hardware and software but even they have had some failures.
The idea of company DNA argues against the success of large conglomerates, companies that are really a collection of completely different businesses. Whether or not that is a hard rule, I think companies that stray beyond their DNA can expect to struggle and they will probably fail without a serious investment. The third Xbox will probably be a killer system but Microsoft clearly invested and struggled to get there.
The idea of company DNA can be applied to other cultural aspects too, not just the skills and discipline it takes to build different products, like hardware or software.
One can also look at the people and personality types that are rewarded and encouraged. Some companies have a culture of growing people and developing good managers. Other companies have “manage up” cultures where the most aggressive and self-centered leave others (the weak and the meek) behind.
Whether you are looking to invest, get a job or do a deal with a company, investigating their company DNA is a prudent thing to do.
