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Falcon Computer

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A small group of managers at Falcon Computer met regularly on Wednesday mornings to develop a statement capturing what they considered to be a “Falcon culture”. Their discussions were wide-ranging, covering what they thought their firm’s culture was, what it should be, and how to create it. They were probably influenced by other firms in their environment, since they were located in the Silicon Valley are of California. Falcon Computer was a new firm, having been created just eight months earlier. Since the corporation was still in the start-up phase, managers decided it would be timely to create and instill the type of culture they thought would be most appropriate for their organization. After several weeks of brainstorming, writing, debating, and rewriting, the management group eventually produced a document called “Falcon Values”, which described the culture of the company as they saw it.

The organizational culture statement covered such topics as treatment of customers, relations among work colleagues, preferred style of social communication, the decision-making process, and the nature of the working environment. Peter Richards read over the Falcon Values statement shortly after he was hired as software trainer. After observing managerial and employee behaviors at Falcon for a few weeks, he was struck by the wide discrepancy between the values expressed in the document and what he observed as actual practice within the organization. For example, the Falcon values document contained statement such as this: “Quality: Attention to detail is our trademark; our goal is to do it right the first time. We intend to deliver defect-free products and services to our customers on the date promised”. However, Richards had already seen shipping reports showing that a number of defective computers were being shipped to customers. And his personal experience supported his worst fears. When he borrowed four brand-new Falcon computers from the shipping room for use in a training class, he found that only two of them started up correctly without additional technical work on his part.

Another example of the difference between the Falcon values document and actual practice concerned this statement on communication. “Managing by personal communication is part of the Falcon way. We value and encourage open, direct, person-to-person communication as part of our daily routine”. Executives bragged about how they arranged their chairs in a circle to show equality and to facilitate open communications whenever they met to discuss the Falcon rules document. Richards had heard the “open communication” buzzword a lot since coming to Falcon, but he hadn’t seen much evidence of such communication. As a matter of fact, all other meetings were used a more traditional layout, with top executives at the front of the room. Richards believed that the real organizational culture that was developing at Falcon was characterized by secrecy and communication that followed the formal chain of command.

Even the Falcon values document, Richards was told, had been created secret. Richard soon became disillusioned. He confided in a co-worker one afternoon that “the Falcon values document was so at variance with what people saw every day that very few of them took it seriously”. Employees quickly learned what was truly emphasized in the organization-hierarchy, secrecy, and expediency- and focused on those realities instead, ignoring many of the concepts incorporated in the values document. Despite his frustration, Richards stayed with Falcon until it filed for bankruptcy two years later. “Next time”, he thought to himself as he cleaned out his desk, I’ll pay more attention to what is actually going on, and less to what top management says is true. Furthermore, “he thought to himself, “I guess you just can’t create values”.

Question: Why did the Falcon executives act as they did?

Corporate values are the operating philosophies or principles that guide an organization’s internal conduct as well as its relationship with its customers, partners, and shareholders. Core values are usually summarized in the mission statement or in the company’s statement of core values. This will serve a guide to the Management and its employees on how they will behave internally and externally. These statements of values and policies should be revisited from time to time if those are being implemented. What happened in Falcon Computer is an example of failure to implement its corporate values and it remained just statements rather actual implementation. The Falcon executives should have acted in accordance with what was written in their values statement.

However, the Falcon executives acted as they did because they wanted to maintain their supremacy in the organization by virtue of the positions held but at the same time also wanted to create and maintain such an organizational culture that every employee in the organization could identify with. Through the “Falcon Values” document, the executives did want to develop their own organization – specific culture but they also wanted to make sure that their positions in the organization hierarchy were maintained. While the executives wanted to create and thereby project a common culture in the organization, the reality was that hierarchy, secrecy and expediency was truly emphasized in the organization ignoring many of the concepts incorporated in the values document.

This particular case of Falcon computer is an example of Corporate failure due to behaviour of the executives. This could be avoided if they only follow the company’s values statement. One of these is the regular meetings that they should have done. Issues and problems could have been solved if the executives are regularly having their meetings as well as asking feedbacks from their staff. After all, all issues can be resolved in a proper place, time and by having discussions for the benefit of both the company and its people. Implementation of the policies and values should be consistent with the company’s goals.

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