Problem Statement: Organizational culture is a complex, self-perpetuating system that often degrades over time due to ineffective knowledge transmission, misguided competitive incentives, and policies that inadvertently erode shared identity and cohesion.
Solution Statement: By intentionally reinforcing institutional memory through robust onboarding and mentorship, fostering healthy competition centered on mastery, and periodically refactoring cultural practices to eliminate dysfunction, organizations can cultivate a resilient and thriving culture.
Organizational culture, like all culture, is a delicate and weirdly self-perpetuating thing. You can’t just mandate "good culture" by fiat, any more than you can pass a law requiring people to be nice to each other on Twitter and expect that to work. Culture emerges from an iterative process of norms, expectations, and enforcement mechanisms, often with the most important parts being totally invisible to the people inside the system. But if we can’t just summon excellent culture into being, what can we do?
1. Understand That Culture Is a High-Fidelity Transmission System
Culture isn’t just a set of rules or a list of company values on a plaque in the break room. It’s a system of knowledge transmission. The anthropologist Joseph Henrich argues that humans aren’t just individually smart; we’re collectively smart because we accumulate and transmit cultural knowledge across generations. A great organization is one where the knowledge of “how to do things well” doesn’t get lost with every new hire or every minor management reshuffle.
So, the first principle of a great organizational culture is: make sure important knowledge actually gets passed on. This means good onboarding, good mentorship, and institutional memory that lasts longer than the tenure of your average middle manager. (If the guy who understands how your software deployment system works gets hit by a bus, does the company collapse? If yes, you don’t have an excellent culture—you have a cult of personality with one very unfortunate protagonist.)
2. Use Competition, but Use It Wisely
One striking example of a culture that churned out excellence was early 20th-century Hungary, particularly its school system. This system produced a freakish number of scientific geniuses (von Neumann, Erdős, Polanyi, Gábor—the list goes on). Was it because the teachers were unusually brilliant? Maybe. But more likely, it was because the system was designed around a combination of elite-level instruction and constant competition, including national math contests that turned learning into a battle royale of intellectual dominance.
This suggests that excellence thrives when people are incentivized to push themselves, but in a way that doesn’t become a soul-crushing zero-sum game. The key here is that competition was framed around mastery, not just arbitrary performance metrics. If your company turns every project into a Hunger Games-style fight for survival, you’re going to get backstabbing and burnout, not creativity and innovation.
3. Cohesion and Shared Identity Matter More Than You Think
It turns out that people function better in cohesive, well-defined groups. Social science research shows that when communities share strong bonds, they have higher trust, more cooperation, and are generally happier. The opposite is also true: the more “diverse” a group is in terms of values and worldviews, the lower the trust and cooperation levels. This doesn’t mean that diverse groups can’t function well—it means they need stronger common narratives to hold them together.
Companies that cultivate a strong shared identity—whether that’s a clear mission, strong internal traditions, or just a really well-executed inside joke—are more likely to have durable, high-performing cultures. This is why Apple and Tesla, for all their flaws, have been able to maintain an engineering culture that produces relentless innovation, while more generic tech companies drown in bureaucratic malaise.
The wrong way to do this is to force conformity or create some kind of weird corporate monoculture where everyone has to like the same music and wear the same Patagonia vest. The right way is to build a sense of identity that is inclusive enough for people to see themselves in it but exclusive enough to feel meaningful.
4. Cultural Decay Is a Thing—Plan for It
One of the most depressing but important insights about culture is that it degrades over time unless there’s a mechanism to reinforce it. Culture, like software, accumulates bugs and inefficiencies. A well-functioning system will slowly accumulate bureaucratic inertia, misaligned incentives, and a kind of moral hazard where bad actors face fewer and fewer consequences.
One way to prevent this is what I’d call cultural refactoring: every so often, an organization needs to look at itself critically and cut away the accumulated dysfunctions. This is why successful startups have to "fire fast" and why old institutions sometimes need to metaphorically burn themselves down every few decades to stay relevant.
If you’ve ever worked at a place where everyone knows some process is useless but no one changes it because “that’s how we’ve always done it,” congratulations—you have personally experienced cultural decay.
5. If You Find Yourself in a Hole, Stop Digging
The most obvious way to improve a culture is to not deliberately sabotage it. A lot of organizations actively make their culture worse through ill-conceived policies, meaningless virtue signaling, and incentivizing the wrong things. For example, let’s say you want to encourage innovation. You set up an awards program where employees can submit new ideas. But then it turns out that the awards always go to middle managers who know how to play the system, and actual innovators get ignored. You’ve just created an anti-innovation culture under the guise of promoting innovation.
Or let’s say you want an inclusive culture. So you tell employees they need to attend mandatory workshops on diversity, which mostly serve to make people resentful and paranoid rather than actually more inclusive. These are self-inflicted wounds, and the first step to a better culture is often just to stop making things worse.