“Culture eats strategy for breakfast.”
This snappy little quote has been tossed around a lot. (It’s usually attributed to Peter Drucker, but in fact he never wrote that line.)
Whoever really coined it, it’s often interpreted as meaning that a bad culture can kill a good strategy.
Which makes culture out to be some big, malicious obstacle that blocks new thinking or a new direction.
Or, sometimes the quote is debunked by people saying it over-emphasizes the importance of culture, and undervalues the importance of developing really good strategy. (Not surprisingly, strategy consultants are usually doing the debunking).
But despite the quote’s murky and controversial origins, we think there’s a reason it has persisted: it’s because there is some truth in there.
We just happen to believe in a different interpretation.
We might rewrite it as follows: “Culture and strategy need to split the breakfast bill.” Or, “Culture and strategy are a power duo: neither should sing backup.”
OK, obviously not as catchy. But it’s about balance, not competition.
You can’t rely on strategy alone to shape culture. And you shouldn’t assume by reshaping culture you can compensate for a weak strategy.
In fact, when you overlook one in favour of the other, you are leaving a lot on the table.
In our experience, you need to make sure that strategy and culture are in lock-step. If you don’t, you’re at risk of:
Lack of coherent direction
Resistance to change
Inefficient decision-making
Poor engagement and morale
And, of course, you’ll have challenges implementing your strategy.
Why can’t strategy go it alone?
You need a clear and compelling strategy, for sure - but you also need to be explicit about the culture you’re trying to build. And how both are critical to your organization’s success.
One organization we worked with a while back had done a significant strategic reset two years prior.
It was an exciting strategy.
It called for shifting to higher-growth market segments and taking some more risks. It called for innovation and exploration. And it called for being more customer focused and responsive.
Now, the organization had traditionally been fairly hierarchical, with decisions held - or often deferred - to those higher up. It also had a tendency to strive for the highest quality work, and have a low tolerance for failure.
This made switching to innovation and exploration difficult - you need to have a tolerance for failure to push boundaries, and you need to be able to make decisions closer to the action so you can pivot quickly.
It was also a culture that had emphasized policy and process, and people placed a high value on individual expertise.
That made it hard for people to put customer needs ahead of policy, and made it challenging for them to deliver things quickly and in an integrated way because processes weren’t adaptable and knowledge wasn’t easily shared.
After about a year or two, it became clear that something was missing the mark. Any big ship is slow to turn, but real progress against the strategy had only been made in pockets of the organization.
So they started to be more explicit about what they needed to change about their culture.
They took a hard look at their values, identified key behaviours to shift, and invested in leadership programs designed to support the new mindsets. This became a major topic for the senior leadership team and a significant focus for the next years.
But by not acting sooner on the culture shift that was needed, delivery against their strategy initially suffered.
But wait: I did talk about culture in my strategy!?
We’re not saying there aren’t big believers in the importance of culture.
Leaders might be aware of what great culture looks like. They might even know how their organization’s culture has to shift to change direction.
But if they do think about culture when they are launching a new strategy, they often run into another problem: underclubbing the culture change.
It’s often based on a belief that culture is something you communicate and people will follow it, the same way they should follow any work goal you give them.
The trouble is you can’t just declare culture.
In our experience (and with a fair bit of support from decades of research nicely articulated by Boris Groysberg and others), there are 4 key factors you need to pay attention to:
Assess your culture and articulate an aspiration. You need to look deeply at what your existing culture is like, and what your strategy will need (who you need to be and how you need to work in order to achieve the ‘what’ of your strategy). And then, you need to talk about the culture often, but more: you have to talk about WHY your aspirational culture is so important. Relate it to real business challenges and market pressures.
Make leadership choices that align with the culture. This is often overlooked, because performance usually trumps values and behaviours when it comes to promotions. But you need to make tough calls and send real signals - maybe removing some old guard, and shining the light on those who are living the new culture and can champion it. Leaders - and employees - who don’t see themselves as part of the future may self-select out. But nothing stops culture shift in its tracks as much as when employees see the wrong person get promoted.
Reinforce the culture with real changes to systems and processes. If you are trying to drive more collaboration, are you changing your performance systems to reward team achievements or still just giving individual bonuses? If you are trying to be less hierarchical - are you making organization design changes to reflect that? Mixed signals can derail your efforts to make the culture you want.
Create dialogue and engage employees in co-creating the culture. You have to create opportunities for people to talk to each other about what the culture means to them and to their teams. And then, you need to let them get their hands dirty: let them find ways to work differently so they can demonstrate the culture. Let them experiment with work processes and translate what the culture means to them into tangible change.
The bottom line is that culture IS tough to change and can be a barrier to changing the direction of your organization.
But when you put the same amount of effort into addressing your culture as you do driving your strategy - there are significant benefits.
Strategy and Culture: Better together
When an organization's culture and strategy are aligned, a lot of magic happens.
You’ll get clearer direction and focus for the whole organization, because what needs to be done and how you need to go about doing it are in sync.
It means you get improved decision-making because it’s easy for people to see the connection between the strategic priorities and the organizational values that guide them.
Morale and engagement are stronger when there is a clear connection between what the organization is trying to do, how it’s trying to do it, and how that translates into each person’s work and purpose. And, of course, there is less unwanted attrition and better talent attraction.
Your people will be more willing to embrace change, adapt to new processes, and proactively contribute to achieving strategic outcomes because there is greater buy-in and commitment from your people.
The strategy and culture consistency will also be apparent to your customers, investors and market analysts, which will strengthen your identity and brand.
When working with our clients, we believe strongly that strategy and culture are inextricable - and demonstrate that in our approach.
During one of our strategy sales pitches a while back, we asked the simple question: “Is your culture where it needs to be?”
This gave the leadership team pause - and took the conversation to a much deeper level about the challenges they were facing.
We’re pretty sure it was an important reason we got the gig.
And loved the work.
If you enjoyed this issue, feel free to subscribe and/or reach out to us.
Thanks for reading. See you again next week!
We hope you enjoyed this newsletter. Whenever you're ready, there are more ways we can help you:
Run a Strategy Sprint with your leadership team to define your next innovative and winning strategy.
Help you define your target culture and build a plan to shift it.
Comments