The Competing Values Framework
The Competing Values Framework (CVF) is a way to look at how organizations operate. It is useful in understanding our structure, culture, strategy, leadership and effectiveness. It connects the dots between leadership behaviors, how those behaviors create specific types of organizational cultures and competencies, and how the different cultures/competencies produce specific types of value. It can also help explain frictions between different teams of different cultures.
The CVF, identifies two major dimensions: (1) flexibility vs. focus* and (2) internal vs. external orientation**. Mapping the two dimensions of “competing values” creates a model with four quadrants, each reflecting a different organizational culture. Every organization, and every person within an organization, can be thought of as falling somewhere within these quadrants.
There is no one “best” organizational culture that it prescribes. Rather, by understanding where an organization falls in the quadrants, the CVF model helps us understand what the underlying culture is, what kinds of outcomes are likely, and what leadership qualities will be most effective.
The Collaborate quadrant (flexible, inward looking) is marked by an emphasis on human relations and people development. Organizations in this quadrant may feel like a large family. Leaders are mentors and team builders, and the organization values loyalty and tradition. Teamwork, participation, and consensus are promoted. These organizations may be more focused on and interested in their internal outcomes, such as engagement, than in external outcomes, such as customer results. They are typically found in sectors like health care, education, and non-profit.
The Create quadrant (flexible, outward looking) values innovation and agility. The work environment is dynamic and creative, and the organizational structure is flat. Goals are often focused on doing things first. Leaders are innovators and visionaries. Thoughtful experimentation, breaking unnecessary rules, and failing fast are essential, as is a tolerance of uncertainty and risk. While these organizations may grow and develop quickly, they may have less control over their operations and provide less nurturing environments than other organizations. This type of culture is often found in tech start-ups and disruptors.
The Compete quadrant (focused, outward looking) puts profit and the bottom line first. Organizations in this quadrant are customer-focused, act quickly and decisively, set goals based on KPIs such as profit and market share, and relentlessly pursue competitive advantages. The culture of such organizations is often competitive, and leaders are often hard-driving. People bond through their desire to get things done and to win in the current marketplace. As a result, these organizations may be less forward-looking and less nurturing than others organizations. Consulting, accounting, manufacturing, and sales organizations often are in this quadrant.
The Control quadrant (focused, inward looking) focuses on stability and control. Organizations in this quadrant are typically hierarchical, with structured, formalized workplaces and leaders who coordinate and monitor. Risk minimization, attention to detail, and problem-solving are valued. Through structure and process, the organization performs in a consistent, efficient, safe, and timely manner. However, such organizations are often unwilling or unable to change quickly and can become static bureaucracies. Examples of organizations in this quadrant can be found in the military, government agencies, banking, and medicine.
Where on the four quadrants does SumUp fall? Your answer may be different for different teams or tribes? We regularly ask where should it be? How could we adjust the balance between flexibility and focus or between inward and outward orientation? What would we gain and lose by doing so?
These are the types of questions the CVF model invites us to ask. There are no “right” answers, but many people would probably put SumUp somewhere in the Create quadrant.
On the flexibility vs. focus dimension, we are clearly toward the “flexible” end of the spectrum. We see autonomy and agility as keys to our past, present, and future success, and we pride ourselves on being a flat organization with minimal bureaucracy and a focus on innovation. However, as a regulated financial services company--and especially as we move toward being licensed as a bank--there is also a need for a degree of order and control.
On the internal vs. external orientation dimension, we are probably more externally focused, in that we set and adjust our strategies and goals largely based on what we see in the market. But we also have core values and a clear mission that drives how we operate, and there is a recognition that our success as an organization depends not only on innovation but on nurturing our people.
The original source of the four competing values framework is the book Diagnosing and Changing Organizational Culture by Robert E. Quinn and Kim S. Cameron. The book was published in 1983, and it introduced the framework as a way to understand and characterize organizational cultures.
* Some organisations and managers are most effective if they are fast-changing, adaptable, and transformational. Others are most effective if they are stable, predictable, and consistent.
** An internally oriented organization sets goals and takes actions through collaboration, coordination, and integration within the organization. An externally oriented organization bases its goals and actions on outside factors, such as what the market wants, what competitors are doing, or what the latest technology makes possible.