Why Company Culture And Strategy Is Key to Success

For years, there has been a common saying that “culture eats strategy for breakfast.” As a business leader, I’ve always found this phrase frustrating. It not only misleads but also perpetuates a harmful misconception. Strategy and culture are interdependent, and more than 90% of C-suite executives often fail to realize why and how these two aspects need to be combined effectively to drive sustainable outcomes.

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The Essentials of Business Strategy and Company Culture

A business strategy is crucial for achieving profitable growth. It encompasses the vision, plan, choices, and decisions that define a company’s “what, where, why, and how much.”

On the other hand, company culture consists of the values, behaviors, attitudes, and standards that unite a workforce. It answers the “who and how” questions about a company. Culture extends beyond the formal aspects of strategy. Saying that one is more important than the other overlooks the fact that integrating strategy and culture is vital for a company to execute its vision successfully in a sustainable manner.

Inextricable Link between Strategy and Culture

Action without vision is wasteful, while vision without action is merely a dream. Surprisingly, only 56% of executives adopt an integrated approach to strategy and culture, and 30% prioritize strategy alone. Both elements should be developed simultaneously, but they are often kept separate. A strong strategy guides a company, but for comprehensive growth, the organization must clearly outline how its culture will support this growth.

Effective integration involves three enablers of change: tone from the top, communications, and incentives or compensation. When properly understood and implemented, a company’s informal cultural norms can drive change and enable proper strategy execution. Resources should be allocated based on key behaviors crucial for company success. Following the 80/20 rule, 80% of resources should target activities aligned with the overall strategy.

However, when HR handles culture separately from marketing and leadership’s strategy efforts, vital aspects like collaboration and communication suffer. Leadership should unite strategy and culture and steer the change process.

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Aligning Strategy with Core Cultural Strengths

A company’s unique culture lays the groundwork for a viable strategy. Culture serves as the raw material, but its value is realized only when the strategy capitalizes on its strengths. Microsoft exemplified this approach after Steve Ballmer’s departure in 2014. Satya Nadella harnessed the workforce’s potential by fostering a growth mindset, shifting from a competitive to a collaborative culture. This laid the foundation for substantial profit growth.

To identify core strengths, leaders must diagnose the culture, alleviate limitations, and prioritize productivity and innovation sources. A shared language is crucial for honing key mindsets and concepts, including values, traits, and capabilities, nurturing cultural strengths into strategic advantages. Identifying key change drivers, such as pride builders, exemplars, networkers, and early adopters, is vital to spotlighting and honing the company-wide culture’s strengths.

Adapting Culture to Accommodate Strategy

Both culture and strategy must be adaptable. While they should grow together, there are times when the culture needs adjustment to align with the new strategy. Netflix’s shift to streaming is a prime example. CEO Reed Hastings cultivated an environment of “freedom with responsibility.” Netflix’s policy of “Act in Netflix’s best interest” fostered trust, loyalty, curiosity, and enthusiasm among employees.

Microsoft, Netflix, and Best Buy’s transformations underscore the equal importance of strategy and culture. Their market capitalizations significantly increased due to effective integration.

Leaders must identify behaviors driving the best work, assess hindrances, eliminate unproductive behaviors, and determine necessary changes. An intertwined approach to strategy and culture is essential for achieving long-term success.

Embracing the Symbiosis of Strategy and Culture for Lasting Success

In conclusion, the notion that culture supersedes strategy is misleading. Strategy and culture are intertwined, each playing a critical role in a company’s success. Effective integration involves aligning company culture with strategic goals, utilizing shared language, identifying change drivers, and adapting culture to complement strategy shifts. Successful companies like Microsoft and Netflix exemplify how the proper fusion of strategy and culture leads to significant growth. Business leaders must recognize the importance of both elements and their symbiotic relationship to achieve lasting success in today’s dynamic business landscape.

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