Culture is defined by what a group has learned in solving its problems of external adaptation and internal integration. In the previous chapter I reviewed how founders begin their organization and what socio-psychological group issues they have to deal with whether or not they are aware of them. In this chapter we now turn to what founders have to be explicitly aware of in building an organization. Their purpose may or may not be to “create a culture,” but in building the organization or business, they have to attend explicitly to certain issues that become eventually part of the culture. Why differentiate “external” from “internal”?

Groups and organizations of various sorts have been studied intensely since the 1940s, in part to better understand the events of World War II and partly to understand some of the anomalies of U.S. history such as slavery and racism. Parallel studies were going on in the U.K. in the Tavistock Institute and Clinic as that country reconstructed its ravaged industry after the world war. Both sets of studies reach the same basic conclusion, that all groups, whether small decision-making units or entire nations, have the same two fundamental problems: (1) how to organize themselves to deal with the environments in which they exist (what I have called the external problems of survival) and (2) how to organize themselves internally to deal with the inevitable human problems that arise in ...

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