Culture or Strategy…Which Comes First?

Photo of an intact egg as the chicken emerges...the strategy or the culture?

Does organizational culture precede business strategy or is it the other way around? The age-old question of which comes first…the chicken or the egg…forms the basis of an ongoing debate in the business and organizational development worlds.

Let’s start with some definitions.

What is Strategy?

We define business strategy as the clear and compelling choices about where to play and what actions to take. Done right, a successful strategic plan sets a company up to perform beyond just the sum of its parts by answering the fundamental strategic questions of “why, what, where and who.”  First, think of strategy as the big problem you are solving or the big question you are answering.  Then decide how to ruthlessly prioritize your time, money, people and energy to make it happen.

Remember strategy is as much about saying “no” as it is about saying “yes.”  And, as we all know from following successful companies like Amazon or struggling companies like Mylan (the expensive EpiPen makers) or even failed companies like Blockbuster – there are definitely good and bad strategies.

What is Culture?

We define corporate culture as the way work truly gets done in an organization on a day-to-day basis. In general, strategy must go through culture to get results.  Your culture answers the fundamental question of “how.”  Think of it as the collective attitude, assumptions, purpose and behaviors of a company’s workforce. It exists in every company whether by design or default.

We do not believe that culture can be measured on the same “good to bad” scale as business strategy.  We believe that it is either “aligned or unaligned” with the strategic intent.  For example, consider Oracle and the 2013 America’s cup.  After learning Oracle spent the most money, hired an elite crew, cheated and won, it is pretty clear to us that their strategy and culture were perfectly aligned to win at all costs.  While that type of business environment is not for everyone, it sure seems aligned with the strategy of winning no matter what the cost.

Which Has a Greater Influence?

Our organizational alignment research at 410 companies across eight industries learned that strategic clarity accounts for 31% of the difference between high and low performing companies. We also found that cultural factors account for 40% of the difference.  With a 71% combined impact, strategy and culture are critical to short- and long-term success.

Additionally, a Harvard Business School research report described how an effective culture can account for up to half of the differential in performance between organizations in the same business. Harvard also found that up to 75% of organizations struggle to implement their strategies because of cultural roadblocks.

So, based upon the data, one could certainly argue that starting with culture may make sense.

What If You Put Culture First?
Like the America’s Cup example, organizational culture can support a strategy if both are aligned.  Or like VW with their recent emissions scandal, it can weaken or destroy a strategy if they are in conflict.

From our perspective, there are two ways to put culture first.

  1. Current Culture: The first way would be to clearly understand and articulate your current cultural reality and then build a strategy to leverage it.
  2. Aspired Culture: The second way would be to clearly understand and articulate your desired corporate attitudes and behaviors and then build a strategy to leverage it.

While putting culture first (especially your current one) may seem like an enticing approach because cultural change is slow and difficult, most clients find it frustrating on a practical level to put it first in terms of strategic planning.  Without a clear and compelling strategic destination, many find it difficult to agree on the best way to get there.  With that being said, building a strategy that hinges on direct contradictions with the way your employees currently think and act is a sure path to failure.

If, for instance, your winning strategy requires decentralized decision-making to succeed, you had better make sure that your company cultural provides individuals with enough freedom and incentive to make decisions across all levels of the organization.  If employees are unwilling or unable to make decisions on their own, the best strategic plan will struggle to meet expectations. Some analysts believe that Apple is facing this exact challenge after the death of Steve Jobs.  The thinking is that employees who were previously well versed in implementing Steve’s detailed vision are now struggling with being asked to do more.

What If You Put Strategy First?
Executives can certainly select directions and make plans for the future regardless of the company’s cultural environment. They can set goals and timelines and communicate that information to their constituency. There can be related metrics, incentives and progress reports. The strategy can even be just what the organization needs to survive and thrive in the future. But if the strategy is counter to the way employees think and behave, it is doomed to failure.

And, because cultural change is slow, long before the culture shifts to accommodate a misaligned strategy, the business plan will have failed. A prevailing cultural environment can be changed…but only with time and a concerted effort by all involved.  In a sense, culture is a major resource to be utilized as you execute a strategy.

Our Conclusion

Strategy and culture are inextricably intertwined. They are interdependent and, for a strategy to succeed, must be mutually reinforcing. The most successful business plans leverage the company’s existing culture as much as possible. When a new strategy involves a change in culture, that change must be either relatively small and in sync with other fundamental tenets of the behavioral environment or the strategy implementation plan must include the definition and shaping of the desired culture and everything it entails.

Whichever you believe comes first, you can’t have one without the other. And when you leverage strategy with your underlying culture, you are bound for higher performance.

To learn more about defining an aligned and high performing culture, download How to Build a Purposeful and Aligned Corporate Culture.

Comments are closed.

LSA’s Employee Engagement Consulting and Survey work has provided critical visibility into: how well our people are holding up under the general economic environment, as well as, the specific challenges that face biotechnology companies in their efforts to discover and develop new medicines; their level of alignment and commitment to XOMA’s Vision and mission critical strategies; how leadership practices and management systems support an environment that engender commitment, and the specific actions that our leaders can take to improve on areas that are important to our people. I highly recommend LSA’s employee engagement solutions.

Chris Wells
Vice President, HR and IT

The Managing Virtual Teams program was extremely valuable. Your consultant/ facilitator’s fundamental knowledge of Synopsys as a company provided an incredible base to build upon while tackling the complications of managing and working with globally distributed teams. My team walked away walked away with highly useful practices and tools. It was an excellent use of our time.

Debra Martucci
Vice President, Information Technology

LSA Global’s consultant brought a fresh perspective to our behavioral based interviewing strategy for two key executive positions we needed to fill, and their consultant helped us develop questions that produced a much deeper understanding of candidates’ capabilities. I am confident that the two new executives joining our organization have the right skills to add significant value. Throughout the process LSA was also very responsive in dealing with short lead time requests.

Because of the unique nature of our business, Excel is a core application in our accounting organization. After three attempts to find an Excel consultant who is capable of helping our finance team integrate advanced applications into our work processes we found LSA and Alex. He was not only a “Real” Excel expert but was masterful in helping us identify where to use Excel applications in our processes to increase our group’s efficiency.

SPO Partners & Co
Kim Silva, CFO

We value our relationship with LSA Global. We came to LSA because we wanted to improve overall behavioral based interviewing capabilities of our managers to increase the probability of both hiring top talent and future leaders. LSA designed a highly customized solution for our business and culture. We are currently rolling out this solution to our leaders. I would highly recommend LSA Global as a top quality resource.

Rae Phillips
HR Project Manager - Training & Development, PHR

LSA has been a tremendous asset to my portfolio, both at my current company and my past company. As an HR leader, I am always looking for ways to find external resources that can provide a solution to our management training needs. LSA does that for me. Their solutions are presented in a much more leadership-oriented manner so as to be crisp, business relevant, and easy to apply right back on the job. I will continue to augment our programs using LSA solutions.

Ken Boehm
VP of Human Resources

In the Next Generation Management Development courses, I was trained with skills and tools that have made me and my team more productive, motivated, and successful at communicating with other departments.

 

Kevin Ashman
Firmware Engineering Supervisor

For our go to training outsourcing partner, LSA provides exactly what we want. As always, they deliver outstanding work!

Elizabeth Siebert
Director, Organizational Excellence & Development

Intuit

LSA has become the gold standard in team building and management training at Genomic Health! I have a hard time finding facilitators that come close to their level of customization, expertise and experience.

Emily Couey
Director of Human Resources

On behalf of Roche and my staff I would like to sincerely thank you for your help with this. The English as a Second Language (ESL) assessment and coaching that you provided for our team was a great success.

Cam Greig
Associate Director

Roche

Understanding and conforming to legal compliance was very important to our company. We turned to LSA Global to provide a quality and cost effective way to ensure that we were AB 1825 compliant. Their interactive eLearning program was top-notch. It allowed our managers to learn at their own pace, and on their own time. The program was tailored to include our logo and our internal harassment policies. It was interactive and met all federal and state legal requirements. I would highly recommend LSA Global to any company looking for an efficient and effective and top quality way to train their managers to be in compliance.

Kelly Warren, SPHR
Director, HR & Compliance

I continue to be impressed by the level of leadership development and management expertise and quality of advice and facilitation that LSA has to offer. What a smart and client-centric group of great people who really know how to help leaders attract, engage, develop and retain top talent.

Tracy Esposito
Director, HR Business Partner

LSA custom designed a Management Development program that is absolutely “on target” for our technical managers. Their facilitator has done a superb job delivering the material in a way that is fast paced, highly interactive, and fun. She presents practical solutions to the people situations that our managers face every day. I regard LSA as an excellent partner that understands our business needs and a virtual member of our HR department.

Judith Onton
Vice President Human Resources

I highly recommend LSA Global to anyone who is looking to improve individual or organizational effectiveness through their top quality programs and broad range of expertise.

Greg Pappas
VP of Human Resources

Each program is preceded by an assessment of the participants. The course is then designed to fit the specific parameters and needs of the group. The highly interactive delivery is provided by recognized experts in their fields. On the spot coaching is provided during the program and each participant receives individual follow-up after the course. Courses can be delivered in-person or virtually. Given the nature of Cisco’s business and the way we operate, these remote workshops are a must for anyone who joins our company. Their work is eye opening. Great content and fantastic delivery.

Frank J. Kuypers
Business Development Manager

We consider LSA Global our outsourced learning and development partner. We worked closely with LSA to customize a management development program to meet our growing business needs. I would highly recommend LSA to any company wanting to deliver quality learning solutions.

Terri Wright-Scheer
Vice President Human Resources

Evaluate your Performance

Toolkits

Toolkits

Download key published insights and tools from industry experts highlighting best practices in the areas of talent, strategy and culture.

More

Health Checks

Health Checks

Want to know how you stack up against leading organizations?  Receive a complimentary benchmarking analysis courtesy of an LSA Expert.

More

Whitepapers

Whitepapers

Get up to speed on timely solutions critical to your business. Published by LSA Experts based upon client feedback and key industry trends.

More

Methodology

Methodologies

First we identify the key metrics you want to improve. Then we assemble a dedicated team of elite experts who have successfully solved similar problems with similar clients.

More

Blogs

Stay up to do date with the latest information on how we help high growth companies align their culture and talent with strategy.

More

Case Studies

Client Case Studies

Real world consulting and training approaches from LSA projects, providing insights on how your company can outperform the competition.

More