The implications of this kind of leap to a company’s economic model can be devastating. In IBM’s case it meant the collapse of gross profit margins and the attendant changes we had to engineer to lower our cost structure without compromising our effectiveness.

Yet the hardest part of these decisions was neither the technological nor economic transformations required. It was changing the culture—the mindset and instincts of hundreds of thousands of people who had grown up in an undeniably successful company, but one that had for decades been immune to normal competitive and economic forces.

I came to see, in my time at IBM, that culture isn’t just one aspect of the game—it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value. Vision, strategy, marketing, financial management—any management system, in fact—can set you on the right path and can carry you for a while. But no enterprise—whether in business, government, education, health care, or any area of human endeavor—will succeed over the long haul if those elements aren’t part of its DNA.

Successful institutions almost always develop strong cultures that reinforce those elements that make the institution great. They reflect the environment from which they emerged. When that environment shifts,it is very hard for the culture to change. In fact, it becomes an enormous impediment to the institution’s ability to adapt.

This is doubly true when a company is the creation of a visionary leader. A company’s initial culture is usually determined by its founder’s mindset—that person’s values, beliefs, preferences, and also idiosyncrasies. It’s been said that every institution is nothing but the extended shadow of one person.

An identity crisis knocks a company’s compass off kilter. It clouds its people’s ability to make clear decisions, to choose which route to take, and to allocate the proper resources. How can you hire the right people if you don’t know what you’re hiring them to do? How do you know which projects and products to support if you don’t know how they will ultimately fit into the whole?

Almost every leader will say that their lodestar is defining their business focus, which comes down to what you can do to build long-term value. “If anything, what the last few years have taught us is that building long-term value is critical for any company,” says Dave Peterschmidt. “If the company is going to be in there for the long haul, it has to understand the core value it brings to the market and the reason for its existence in a crowded marketplace. Then you can do an assessment to get the company tracking toward long-term values.”

Think of that assessment as conducting a reality check of the operating environment. If you want to get the company tracking toward long-term value, consider what conditions pertain that will help or hinder you. The answers will shape your short-term agenda.

As Lou Gerstner says, “Changing the attitude and behavior of hundreds of thousands of people is very, very hard to accomplish. You can’t simply give a couple of speeches or write a new credo for the company and declare that the new culture has taken hold. You can’t mandate it, can’t engineer it.

“What you can do is create the conditions for transformation. You can provide incentives. You can define the marketplace realities and goals. But at some point you have to trust. In fact, in the end, management doesn’t change culture. Management invites the workforce itself to change the culture.