Strategy Versus Culture

For some reason, whenever a leader wants to affect a big shift in the organization, it’s culture that gets picked on. But is culture the problem or the answer?

Some time ago, a lottery company asked for my help in changing their culture. I listened to what they had in mind. Most of the changes they described were tactical, about business strategy.  So I took a time out and asked them to tell me about their culture, and then about their values. They were able to describe that culture and list those values quickly. After they’d finished, I asked them if they still believed in respect, honesty, customer service, and execution. They said that they did. There was a pause as this sunk in. I suggested to the group that they weren’t really interested in changing their culture, they were looking to change their business plan. This insight completely rearranged how they were looking to solve their problems.

In fact, the lottery company, like any organization, would be more successful implementing change if they did so from the foundation of their unchanging culture. In the last section of my book Inside the Box, the final chapter is subtitled “Culture trumps strategy every time.”  The reason is simple. Deeply rooted behaviours define the values, which are the bedrock of the culture. These elements are the basis for success in the organization. Their taught or passed on from one generation of employees to the next.

When a leader announces wholesale culture change, he or she is launching an assault on the belief system of the organization. That leader is saying, in effect, what made employees successful before was faulty or wrong.  This is especially problematic when the leader is new and comes from outside the organization. No wonder employees are reluctant to get on board.

It’s a truism to say that no one likes change. And that truism is used as a blunt object to beat employees who don’t respond well to changes in culture. But most people – and certainly most employees – are fine with change when it makes sense. Nobody who works in business today is immune to the reality that challenges are extraordinary and strategy must adopt to secure a competitive advantage. Changing business strategy, then, may be a no-brainer, especially when it occurs via the through-line of the organization’s unchanging culture. That’s the kind of change that can occur very quickly.

To see the opposite, think of Home Depot or Hewlet Packard. New CEOs walked in, announced wholesale culture changes, and watched great organizations turn mediocre and lose value. Changing business strategy – which is what those CEOs really wanted to do – wouldn’t have been so problematic.

To understand the kind of change that really drives success, here are some do’s and don’t’s:

1.   Culture is not the root cause of your problems. The problem is trying to change the culture. Start by living the behaviours that define the authentic values of the organization and evolve those behaviours, over time. Use the culture as the foundation for change in the business strategy or risk upsetting employees and losing support.

2.   If you try and create a new culture or import one through a merger, you will find that the old culture will eventually re-emerge.

3.    When engaging in an acquisition recognize that there is no such thing as a merger. The culture of the company that is leading the new organization will be and should be the new culture. State that honestly and up front. Don’t try to draw the ‘best’ from each culture. That only drives each side into their corners to dig in and protect what they once had.

4.   Culture is the domain of the CEO and her or his team. Don’t make the ‘culture thing’ a human resources or organizational development thing.  This is the ‘hard’ side of the business not the ‘soft touchy feely stuff’. It is the stuff that will differentiate a successful CEO from a less successful CEO.  Ensure that all leaders are held accountable for living the behaviours of the culture at all times. Don’t expect HR to drive up the engagement scores if leaders are not leading with the behaviours that define the values.

5.    Board members must be accountable for understanding that values are the underpinning of the culture and need to be the basis for selecting new leaders. Too many Board members don’t know or understand the authentic culture of the company. 

6.    Leaders have to hold people accountable for their behaviours. If a person has achieved the desired business results, but violated the values in arriving at those results, the CEO has to deal with the problems that are caused, directly and immediately. They need to withhold positive recognition of this person as successful. Celebrating mavericks who violate the culture will corrupt it.