In May of 1979, at the start of a busy Memorial Day weekend, a terrible air tragedy riveted the world's attention. An American Airlines DC-10 lost its right wing engine on takeoff from Chicago's O'Hare Airport and crashed seconds later in a fireball, killing all 271 people aboard. This accident, which eventually led to the grounding of all DC-10 aircraft for over a month, was later traced to problems with an engine maintenance procedure developed by American's own mechanics.

Nearly a generation later, on May 11, 1996, another air tragedy again dominated the media. ValuJet flight 592, a jetliner carrying 110 people, plunged nose first into the Florida Everglades after a fire broke out in its cargo hold, killing all aboard. This time, an investigation discovered that mislabeled oxygen canisters loaded by a third-party maintenance contractor had ignited, causing the crash.

The aftermath of these two incidents could not have been more different for the business fortunes of these carriers. American, rated at the time as the number one airline for customer satisfaction, did not experience any long-term drop in revenue after its accident. On the other hand, ValuJet, a startup low-fare carrier which had long been under fire for its labor practices and maintenance procedures, found itself grounded - and shortly afterwards changed its name by acquiring low-fare rival AirTran Airways. The telling lesson here is that one carrier with a strong service culture survived a tragedy that was its fault, and while another carrier that lacked one was quickly forced out of the skies following an incident that was not its fault.

So what does the fate of two major airlines have to do with your own business, workplace or other organization? Plenty. For them, success or failure hinged upon underlying core values, which in turn drove their daily business decisions. The same is true for you and your business, and many people in business today never realize what a dramatic impact these values can have upon their own success in the marketplace. Let's look at one example that shows how even the smallest businesses need the right values to survive and flourish:

Situations like the ones above underscore that in business, as with life itself, the deeper values of who you are become vastly more important than what happens to you. But in daily work life, most businesses focus on the latter and pay scant attention to the former. They worry about their production schedules, their deadlines, their competition, and their financing, but rarely look inward at themselves. That's why, when you ask most people what their workplace culture is like, they will look at you quizzically and say, "well, we're here to work, aren't we?" But this intangible thing that most people never talk about, this gestalt that we call "business culture," may perhaps be the most important factor in the growth and survival of any business. Understand this fact, and you can reach levels of success that are unimaginable for most people.

The dictionary defines culture as "the customary beliefs, social forms, and material traits of a racial, religious, or social group." It is derived from the same linguistic roots as the word cult, itself taken from the Latin term "to adore." In an organizational setting, the meaning of culture extends to the core beliefs, behaviors and actions behind its daily business life.

Every workplace has a culture all its own, one that may be good, bad or indifferent. As often as not, its values are unspoken. But they form a powerful influence on the behavior of those who choose to be part of that organization. Their tenets help people self-select the groups they want to be associated with - the hipsters who start a media firm, the suit-clad accountant who goes to Wall Street, and the deeply spiritual person who joins a non-profit social agency are all influenced by this tacit sense of culture. And while rarely discussed openly, it is nonetheless extraordinarily powerful. Its core values are a conforming influence that change only with great effort and consensus, and self-perpetuate themselves even as companies grow to include thousands of people spread across the globe. It is nothing less than the soul of an organization.

So, what exactly is a business culture? Let's take a look at some of the things that it is - and more importantly, is not:

Your products and services

Promoted externally

Your policies and procedures

Your recruiting process

What behaviors you say you want

Your values and beliefs

Generally unspoken

Your style

The types of people you hire

What behaviors you reward

Much of what forms your business culture is neither good nor bad. It simply defines the context of who you are, and that context then drives your day-to-day actions in the marketplace. One company may be a casual environment with loud rock music blaring, and another may be buttoned-down and professional - and both may be successful companies. One may have a generous refund policy, another may pinch every penny - and again, both may be successful within their own niche. It is when the values of a business culture conflict with larger values in life, such as respect for employees, fair treatment of customers, or business ethics, that problems can arise. Conversely, the development of strong business culture values can often lead people to transcend both their competition and their marketplace. For example, one restaurateur in a small upstate New York town has proved repeatedly that when you create the right system of values, crowds naturally follow you:

Understanding your core values, and putting them into practice, is truly a hidden profit margin. The Boatyard Grill doesn't just do a little better than other restaurants in the area - it completely blows them away. Is it because of their food? Mark Campagnolo is the first to admit that the Boatyard isn't what you would call a fine dining establishment. "We even have kid's meals and fishermen's platters on our menu, not exactly what you'd find with haute cuisine." How about having a brand new facility? Mark previously led an old, brick family restaurant built in 1932 to become one of the top restaurants in the country. Most diners at the Boatyard Grill will tell you that it simply feels different at his restaurant. They feel special there, people take good care of them, and they have a great time - and return over and over. It is a formula based around best practices that you'll never see on their menu.

Very few firms have a business culture department. For all of its importance to your business, you can’t simply look in a specific place and find it. Look critically at each of the workplaces you have been involved with in your own career. It is likely that they all had deep, ingrained values that governed their way of doing business. They might have been good values such as diversity, respect, hard work, and front-line authority, to name a few. They might also have been counterproductive values such as parochialism, mistrust of employees, and command-and-control decision making. But either way, they undoubtedly had strong values - and in all likelihood, these values were not only unwritten, but unspoken as well. In most workplaces, you rarely hear these values discussed openly. People simply demonstrate them in the way they do jobs every day.

While the values behind a business culture may not be well documented, they are certainly well understood. It is a tradition that is maintained by example in most cases. These values are passed along with unmistakable certainty from co-worker to co-worker, and manager to employee, in the form of each of the many daily worklife decisions that form our jobs. At a more global level, these values are transmitted by the decisions made at the top of an organization. And compared with formal pronouncements such as mission or vision statements, it is within these exchanges that the real culture is passed along.

The simple fact is that you already have a business culture, even if you are a small family business – and this culture may be much more important to your success than the factors you normally think about. Businesses with poor cultures have failed despite great products and balance sheets, and ones with great cultures have prevailed under much more difficult circumstances. By understanding and managing your own culture, you have a better chance to play to your strengths – or change your weaknesses.

So, in a world where there are few "business culture departments," how do you get your arms around the concept of this culture? And more importantly, how do you put it to work to improve the success and morale of your own workplace? Perhaps the best place to start lies in examining how much organizational behavior has in common with human behavior in general. In many ways, business culture parallels human culture:

• It is a badge of identity for the members of a group
• It serves a greater good
• It supports long-term goals
• It can change as a result of major life events
• It transcends the individual

Above all, both business and human cultures are part of humanity's lifelong efforts to create systems that predictably influence human behavior. If you look critically at firms who enjoy lasting success in the marketplace, you will often find core values that, in turn, drive their day-to-day operations. They may be intangible, but you can practically sense them as you walk around the workplaces of these firms. And when you consciously understand and manage the core values of your own workplace, you gain the ability to succeed at a level far beyond the majority of organizations who do not.

One afternoon, more than two decades ago, the author and his wife went apartment hunting in suburban Seattle. We happened to tour one complex alongside a polite young man who had just moved to the area, and we asked him what he did for a living. He smiled and said sheepishly, "I work for a startup company that you've probably never heard of. It's called Microsoft. We have a handful of employees nowadays, and I helped write a product of theirs called Microsoft Basic." A generation later, Microsoft - which had its roots as a small company known as Traf-o-Data, writing software to control traffic signals - has now become one of the world's largest corporations. And our friend probably no longer lives in a $400 per month apartment in Bellevue, Washington.

The majority of today's large businesses were once small businesses, but ones with a very clear vision of who they were and where they were headed. While not every small business grows as big as Microsoft, and many would not want to, this is a common denominator across nearly every successful firm that started small. Their values as small businesses had a major influence on whether they had the opportunity to become larger. Now, let's turn the situation around, and look at the attitudes behind a computer firm that failed despite the hottest personal computer market in history, and the backing of a large multinational corporation. A chance encounter a few years ago gave the author a rare chance to see the impact of this organization's corporate culture for himself:

I have no idea what things were like inside the walls of that company. But taking a look at my own service experiences, and then holding them up against the looks on the employees' faces, my perception was that both employees and service were unwanted costs, to be reduced wherever possible. And indeed, this company succeeded in reducing these costs to zero, because they exited the computer business shortly afterwards.

If there is one common denominator in both of these stories, it is that business practices matter, but business culture matters even more. The computer firm above had a reasonably good product, a state-of-the-art call center, and the backing of one of the world's largest companies. But it went down in flames because it couldn't engage the hearts and minds of the people who worked there - and customers noticed. I personally will never again buy any product made by this corporation, because their computer division consistently violated my trust. Conversely, Microsoft has long been recognized as a strong investor in customer service infrastructure, from on-line knowledgebases to state-of-the-art ergonomics in its workplaces. Values like these are part of the real secret behind how a small group of people created a multi-billion dollar empire from scratch.

As important as your culture is, it remains one of the most misunderstood concepts in business today. People often confuse it with more specific things like internal policies and procedures, or dismiss it altogether as a "soft science." For this reason, strong cultures may be common among leading firms, but remain rare among businesses as a whole. Let's take a look at some of the most frequent misperceptions that surround the subject of your business culture.

Try an experiment some time. Make a list of the companies who have given you terrible customer service over the past year, and then look up their mission statements. In all likelihood, most of them will express values that are directly in conflict with the experience you received from these firms. In fact, you may have a similar experience to what one university president experienced several years ago, when his board of trustees asked him to develop a mission statement for his school. He surveyed the mission statements of dozens of other universities, and made an amazing discovery - they were almost all exactly the same. But the schools behind them certainly were not! Very often, judging the culture of an organization from its mission statement is similar to judging a product's quality by its advertising slogans.

When author Stephen Covey proposed the concept of a mission statement in his groundbreaking book Seven Habits of Highly Successful People, they were intended to help organizations develop a purpose and scope for their daily actions. For some organizations that sincerely practiced what he preached, the development of a mission statement accomplished its goals. But as the concept became elevated to rock-star status during the 1990s, every business soon had to have a mission statement. And if you compare many of these mission statements to actual behavior, it often became an egregious case of management-by-slogan that had little or no effect on business reality in the trenches.

Strong cultures don't necessarily need a mission statement - but they need a mission. An idea that inspires people to be part of something greater than themselves. For example, when man first started to explore space, it captivated the public - and motivated thousands of scientists and engineers to join workplaces that accomplished what had never been done before. Or, on a smaller scale, imagine a well-liked and trusted local dentist who has been in practice for 25 years. He has no mission statement - and in a sense, no need of one. His core values involve being honest, straightforward, and not practicing "sales dentistry." Putting these values into a public statement would probably sound hollow and self-serving, sort of like saying "I don't beat my wife." But he has no misconceptions about what these values are, and lives them in his daily work. As a result, he has a thriving practice built on word-of-mouth clients. Both these scientists, and this dentist, have missions.

Is it important for you, and your employees, to understand the core values behind your culture? Absolutely. Is it a good idea to write them down? Sure, if that helps everyone understand these values. But don't confuse this very important need with crafting a mission statement, which is a public statement that defines your business purpose. And most importantly, don't ever make the mistake of thinking that a mission statement alone will define or change your culture.

By virtue of its very name, the term "business culture" often implies the environment of a large corporation. Perhaps as a result of this, many small businesses often don't stop to realize that they have a business culture, and the effect that this culture has on their bottom line. Let's take a look at one successful marketing agency, and how their values of being technically savvy and responsive defined their success in the marketplace:

Pam and her company work in an environment that is dominated by large ad agencies and public relations firms. However, she manages to use this to her advantage, by being responsive and tapping a niche market where clients need her expertise in thinking like them. Instead of trying unsuccessfully to be another national ad agency, she succeeds by knowing clearly who she is - a strong marketing partner for the technology community - and doing it better than anyone else.

Sadly, culture works against small businesses more often than it works for them. Large corporations, particularly in service businesses such as retail and food service, often invest in training people to reinforce a common sense of who they are. So, for example, while the proprietor of a small business may hesitate to give a customer a refund when there is a problem, an entry-level person at McDonalds or Best Buy would probably take care of the same problem without a moment's hesitation. Small businesses must often understand that the humblest front-line employees of many national chains know more, and often a lot more, about service than they do.

The same is true of the working environment of smaller organizations. For example, a young relative of the author recently took a job at the dining hall of a small, private college, and left after less than one week. During that week, she saw cooks constantly yelling at everyone, people refusing to help each other, and even a mass walkout by the dishwashers after one of them was spit on by a student, and managers did nothing about it. Of three new employees hired that week, only one was still there by the end of the week. I later asked a colleague in the food service business how things could get this bad, and expected to hear about issues such as lack of management training, limited career options or low pay. Instead, he said simply, "We have a system behind what we do. Our system would never allow things like this to happen. They don't have a system." More accurately, they don't have a sense of what is wrong with their own culture.

We tend to think of most businesses as monolithic entities. In reality, they often involve groups of individual cultures and sub-cultures, which may or may not behave according to larger principles. On a day-to-day basis, what people perceive about your business can vary from person to person, from workgroup to workgroup, or as the example below shows, from location to location:

Does this chain have a culture? I don't know. It has a menu. But each of these individual restaurants certainly has its own culture. And if you ask practically anyone I know, they will tell you that they generally avoid the first restaurant and like the second one - and in general, there is an amazingly consistent "group think" that develops from individual experiences. As a result, consistent success often depends upon how well you can maintain consistent values, in every corner of your organization.

You can make a good case that a strong business culture is one of the most important factors in your success. At the same time, it is one of many other factors that drive your business. If you decide to open a restaurant that specializes in serving fried possum, perhaps no amount of business culture will guarantee your success. Conversely, if you have a product or service that sets the market on fire, you may succeed even without the best values in the world - at least in the short term. Here are some of the factors that mitigate the impact of your business culture:

Sometimes the bad guys win. While many - if not most - market leaders have strong cultures, most of us can also point to firms who succeed despite poor service or labor problems. When it seems like some companies flourish despite the feelings of their customers and their employees, there are often other factors at work. These may include better products, better services, a more competitive price point, or market leadership in a new technology area.

Perhaps most telling is that as companies like these succeed in the marketplace, their cultures often improve with the growth of the company. In perhaps the same way that some political insurgents become statesmen as their causes prevail, some firms do whatever it takes to succeed at first, and then build upon their successes by developing a more sustainable, lasting culture.

Being a good guy isn't enough. The landmark 1980s book In Search of Excellence profiled numerous firms who succeeded in the marketplace by getting close to their customers, and their employees. A decade later, a significant number of these firms faced financial troubles as competition or changing market conditions disrupted their business models. In a similar vein, some companies who have won the Malcolm Baldridge Award, America's highest honor for delivering quality, have found that the award was no guarantee of market success in future years. And unfortunately, the same is true for some firms who were once lauded for their business cultures.

Firms with great cultures and poor products, or weak marketing, or insufficient capital, can still fail in the harsh glare of the marketplace. What is telling, however, is how much more latitude organizations have when they have good cultures. Studies show that they retain customers and employees longer, spend less on marketing, and even have higher market values compared with similar firms. To succeed in the long term, these advantages must be paired with the right products, services and business model. No business can ultimately defy the laws of supply and demand.

Cultures can change. Life is change, and these changes frequently affect the culture of an organization. Trends in society evolve, markets shift, and key people come and go. Moreover, what worked for a company in the past may no longer fit the present reality.

Organizations make choices every day that affect their culture, and these changes knowingly or unknowingly guide their business fortunes in the future. For example, a small local vegetarian restaurant in upstate New York decided early on to seek a national soapbox for its recipes and workplace philosophy, and eventually the Moosewood Collective became one of the world's most recognized names in vegetarian cookbooks. Conversely, another local restaurant with dreams of expansion let their food and service quality slip as they grew, and went quickly from having lines out the door to closing for good. In both cases, these businesses started with a specific culture at a particular point in time, and moved on from it as circumstances changed.

Each of these issues underscores the fact that businesses are not driven by their culture alone. Success in today's marketplace is, and always was, driven by a complex web of competitive factors. To prevail in the long term, an organization needs to keep on top of their overall business environment, and have the flexibility to react to changes in the market. At the same time, your culture combines with the other success factors that drive your business - and in many cases, ultimately transcends them.

There are still leaders today who believe that corporate culture is one of those "soft" concepts that has little bearing on their bottom line. As a result, some businesses would sooner send their employees on a spiritual enlightenment retreat than look critically at their corporate culture. As a result, they give scant attention to what is often one of the most powerful forces shaping their business destiny. Conversely, for many leading organizations, culture is the place where they start - including one of the world's elite military units.

While there are many myths that surround business culture, some of its stereotypes are also accurate. Firms who pay attention to their cultures tend to be much more employee and customer oriented. Cultures that are actively promoted tend to become guiding principles for their parent organizations. And above all, firms who lead their market for a long time - in almost any market - generally have strong cultures. By separating myth from reality, you can begin to take steps to understand and manage the culture of your own workplace. More importantly, you can start building this culture as a key asset of your long-term business capital.