In these VUCA times, many companies are taking a critical look at their business strategy and determining what changes are necessary – some for survival, some for continued growth with new conditions.
But are they linking strategy with the company culture?
There’s no question that there is a very strong connection between culture and the successful implementation of strategy as many studies from organisations such as Harvard University (which publishes Harvard Business Review) and McKinsey have shown.
Strategy is about providing a way to achieve the company’s goals and aligning people with this, while culture is centred around a set of values and beliefs that speak to group norms and shared assumptions, and the two need to be aligned for success. For example, If the strategy is a hard-driving one and the culture is people-focused, it’s almost certain the strategy will fail and/or people will look to leave.
Harvard Business Review determined eight different types of company culture in this study, and plotted these along the two axes of how people interact and how they respond to change, as the following diagram shows.
When looking at your strategy and any changes, think about how they relate to these axes. If you’re looking to make big changes to your strategy, as opposed to refining an existing one, but your culture is strong on the stability axis, so more of an authority or safety one, this could be tough to implement with your team. Similarly, a highly results-based company that now seeks to implement a strategy focused on high levels of teamwork and internal communication might find it difficult.
The question then becomes one of determining the extent to which you would modify your desired strategy to better fit the culture in the short term, and how you would change your culture to move it towards the desired strategy over time, for culture can be changed – it just takes time.
An example given in the study was of an industrial services organisation in Europe with a strategy focused on cost-leadership. Changes in the market and regulatory environment necessitated a change to increasingly using service as a differentiator, rather than cost, but the culture of focus on pricing presented a problem for the business in implementing this move. Over time, utilising a mixture of leadership and team development programs and, as people left, selecting replacements more aligned with a more caring and purpose-driven culture, the cultural shift was made, enabling an increasing number of service offerings and resultant growth.
In these rapidly moving times, companies need to look closely at their cultures. Learning and purpose might need to play more significant roles, for example, in a typical results-focused culture (the most common type, historically) so as to better facilitate change and teamwork.
Think about your business culture and how it aligns to the types shown here. Does it fit well with your envisaged strategy or do you need to adapt your strategy in the short term while you move your culture towards one more suited to your longer-term goals?
Ensuring a high degree of fit between strategy and culture will enhance the success of strategy implementation.
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P.S. If you’d like to discuss business strategy and culture further, book a free, no obligation 30-minute call with me here. I’d be delighted to speak with you and see if I can help.