When Good Cultures Go Bad: Stanford’s Charles O’Reilly

Why do successful companies with strong cultures fail to adapt? In this video, Stanford professor Charles O’Reilly explains the paradox that traps market leaders, and he shares five levers for building cultures that can evolve with changing markets.

Stanford University’s Charles O’Reilly has spent over 50 years studying organizational behavior. In his research on why companies fail, he’s observed something troubling: The same strong cultures that drive success often become the very thing that kills companies when markets shift. Adaption is key.

In a conversation with MIT Sloan’s Donald Sull, O’Reilly breaks down culture change into five specific levers: harnessing senior leaders’ commitment and modeling behaviors, getting employees involved, using recognition and promotion (not money) as rewards, aligning stories and symbols, and fixing HR systems that undermine change by rewarding the wrong things. Miss any one piece, and it’s harder to get traction on culture efforts.