When Worlds Collide: Culture and Strategy

Is culture an excuse for not getting anything done in your organization?
I once worked on a CEO succession planning project for a medium sized company in the Southeast. There were five internal candidates, all of whom were on the Executive Leadership Team and played key roles in formulating the company’s five year strategic plan.

Four were long-term employees and the fifth had joined the company 16 months earlier. At the end of the first year only one of the candidates delivered on his strategic targets, and he happened to be the outside hire. Company culture was a common excuse among the non-performers.

This episode got me thinking about the relationships between organizational strategy, culture, and performance.

One would think that the four long-term employees would have found it easier to achieve their strategic goals, as they knew the technology, processes, and people better than the outside hire. Yet despite these home field advantages the long-term employees blamed the situation (i.e., company culture) for their non-performance.

The company was founded by a serial entrepreneur obsessed with winning, yet over time the culture had transformed into believing getting along was more important than achieving results. A company’s culture is often a reflection of those at the top of the house, so in reality the members of the Executive Leadership Team only had themselves to blame.
Rumelt (2011) defined strategy as a set of coordinated actions needed to overcome critical organizational challenges.

Strategy in the private sector usually revolves around two major themes: top line growth and margin enhancement (or cost control).  In essence strategy informs employees what needs to be done for the organization to win.  

Culture can be defined as a set of beliefs, norms, values, rituals, and stories shared by members of an organization (Schein, 1985).

Culture helps define how tasks should be prioritized, what behaviors get rewarded or punished, how decisions get made, and how employees should be treated. Although strategy specifies what needs to be done, culture prescribes how tasks should be accomplished.

Drucker argued that culture trumps strategy, but as described in Fiasco (Ricks, 2006), organizations with flawed strategies are doomed to fail more quickly than those with dysfunctional cultures.

Many times company strategies are misaligned with their cultures. This could recently be observed at Target Corporation, where the previous CEO set aggressive revenue targets yet created a bureaucratic, indecisive, siloed, CYA culture that interfered with local decision-making, merchandizing flexibility, and operational excellence. So what should leaders to do if they think there is organizational strategy and culture misalignment? Here are some suggestions:

  1. Determine the company’s ideal culture. What degree of centralization vs. decentralization, innovation, customer intimacy, etc. is needed for successful strategy execution?

    This is a critical but often overlooked step, as many top leaders simply shrug their heads or have different ideas about culture. These differences are rarely made explicit, and getting top team alignment on a company’s ideal culture will help strategy execution if done properly.
  2. Determine the company’s current culture. Culture is easy for outsiders to see but difficult for insiders to recognize.

    Top leadership usually finds it helpful to review organizational culture survey feedback to get a handle on their current culture. Work Effects’ Culture & Health Survey or the Dennison Culture Survey can fill this niche.
  3. Close major gaps between ideal and actual company culture.

    Kotter (2012) rightly points out that changing organizational culture often takes concerted energy, focus, and time. Unfortunately, many top teams suffer from corporate ADHD and cannot stay focused on the changes needed to create the ideal culture. Should they decide to go down this path then the first place to start is the top team’s operational rhythm.

    The CEO needs to align how often his top team meets, who gets invited, what gets discussed, who is held accountable, etc. with the company’s ideal culture. If he or she sticks to the new operating rhythm norms they will begin to cascade throughout the organization.

    CEOs and their top leadership teams then need to tackle the technology, people, and process issues needed to drive the company’s ideal culture.