Understanding how company culture affects strategy implementation, and developing a plan to align them, can be the key to unprecedented success, writes Dave Hanna
A global enterprise once surveyed its managers to get their perspectives on success factors in the company. This survey polled managers on what they though it should take to success in the company, versus what is actually took to succeed based on personal experience (see box below).
Managers and perspectives of success
|Based on personal experience, what does it|
take to succeed in this company?
|What should it take to succeed in this company?|
What caught my eye when I first saw these answers was that the words in the right column often are found in corporate strategy and mission statements. Similarly, the words in the left column are used by many to describe the culture of their company. There are some obvious conflicts between the two lists (for example, “be innovative” and “don’t make mistakes”).
Experience teaches that whenever such conflicts exist, culture almost always wins out over strategy. Aligning these two elements is a crucial leadership challenge. Culture develops slowly and does not change easily; strategy, on the other hand, may require immediate changes in response to market conditions.
Aligning the case for change
For example, one CEO, noting his organisation’s steady decrease in market share, called for an all-out effort to become the industry’s high performer and recoup its losses. As people scrambled in their all-out effort, the annual performance appraisal system was not modified. Research showed this system did not produce any measurable performance improvement, and the entrenched ways of doing things remained undisturbed.
Similarly, in a survey of the Fortune 500 CEOs, 85 per cent of them reported their company had a mission statement. However, only 15 per cent of those who had a mission statement actually referred to it when making critical business decisions. Presumably, the others relied on their traditional beliefs and work habits for guidance.
Where strategy meets culture
But there are some leaders who invest enough time to understand how culture is affecting their strategy implementation and then develop a plan to bring them together. For instance, one pharmaceutical development division learned that some common informal beliefs were defeating its purpose. The leadership team decided to substitute a positive value statement for each of the informal, dysfunctional beliefs. For example:
- “This is the way we’ve always done it” was replaced by “always look for a better way”.
- “I can’t do anything without permission” became “whoever sees a problem owns it”.
Leadership team members shared their personal commitment to the new values and asked everyone in the division to join them. Employees actually began working per the new values and the division had unprecedented successes in the next two years.
As this example and those in the boxes illustrate, leaders can align culture and strategy through carefully chosen, committed actions that demonstrate they will sacrifice their own personal comfort for the survival of the organisation.
Ways to align strategy and culture
- Analyse how the current culture affects your results. Identify the common beliefs and behaviours in your culture. Then explain how these beliefs and behaviours are driving today’s results.
- Determine what must change and what the new values and standards (code) must be. As in the pharma division example, convert the old, dysfunctional elements into a new code of conduct.
- Consider the personal stake you have in living by the new code. One CEO was disturbed by talk of the new code of conduct’s conflict with “life in the real world”. Assembling his key leaders, he stated, “I’ve heard your comments like ‘this code is great, but the real world isn’t like that’. I want to make one thing perfectly clear. In this division, this code is the real world. And I’m staking my career on it!” From that point on, behaviours shifted and his division increased profitability in real terms by 16 per cent in each of the following three years.
- Communicate the new code frequently and follow up by aligning organisational systems. Survival requires subordinating everything else for it. You must align work processes, structures, rewards and people systems with the new code to sustain it over time.