Is Your Culture Helping or Hindering Your Strategy?

When Strategies Shift It Is Time to Assess and Rethink How Work Gets Done: Is Your Culture Helping or Hindering Your Strategy?

Corporate Culture Must Change When Strategies Change
When companies shift their strategic direction — whether through new markets, mergers, technologies, or leadership mandates — they often focus on structures, systems, and financial models. While important, often the most powerful determinant of success lies in an area too often treated as an afterthought: corporate culture.

Because strategies must go through your people and your culture to be successfully implemented, a company’s culture either accelerates or sabotages strategic change. When strategy evolves, culture must evolve with it. Otherwise, even the most sophisticated plans will stall under the weight of old mindsets and misaligned habits.

Culture Acts as the Operating System of an Organization
Think of corporate culture as how work gets done.  It is a company’s collective values, practices, beliefs, and behaviors.  It governs how decisions are made, how people collaborate, and how success is defined.

When a company changes its strategy, the existing culture may no longer support the new strategic imperatives.  For example,

• A growth strategy cannot thrive in a risk-averse culture.
• A digital transformation cannot succeed in a culture that prizes hierarchy, organizational silos, and slow decision-making.
• A customer-first strategy will crumble in a culture that rewards internal workplace politics more than client outcomes.

What the Latest Corporate Culture Research Says
Once considered the “soft” side of employee life, company culture is generally acknowledged to be a significant factor in long-term business success.

• McKinsey research found that 70% of strategic transformations fail, primarily because organizational culture resists the needed behavioral shifts.
• Duke University’s recent study of over 1,000 senior executives found that 92% reported that improving their company culture would increase their company’s value, but only 16% felt their culture was “where it needed to be.” Clearly, there is some cultural alignment work to be done.
• Research by Harvard Business School professor James Heskett shows that companies with performance-aligned cultures outperform those without by a factor of 3x in revenue growth and 7x in stock price appreciation.
• Our organizational alignment research found that corporate culture accounts for 40% of the difference between high and low performance in terms of revenue growth, profitability, leadership effectiveness, customer loyalty, and employee engagement.

Culture and Strategy Work Hand in Hand
We know from change management simulation data that as corporate strategies are redesigned to accommodate changes in the marketplace, organizational culture must adjust accordingly.  Any misalignment between your strategy and your culture will derail the best laid plans.  One cannot work without being highly aligned with the other. People need to adopt new behaviors and new ways of working that align with the desired changes.

How to Recognize When Strategy and Culture Are Misaligned
Is your current culture helping or hindering your strategy?  The first step toward cultural alignment is identifying the signs of misfit. Four common warning signs include:

• Resistance to new initiatives:  Employees cling to “the way we’ve always done it.”
• Inconsistent decision-making:  Teams interpret new strategic priorities differently due to lack of shared understanding.
• Leadership disconnects:  Executives espouse new strategies but model old behaviors.
• Low engagement or turnover spikes:  When the “new” culture isn’t clear or credible, people disengage or leave.

These are not simply “people” or “morale” issues.  Cultural misalignment is a major strategic barrier to success. Left unaddressed, misaligned cultures undermine strategy execution, erode leadership credibility, and create employee disengagement.

4 Ways to Achieve a Shift in Corporate Culture
When it comes to cultural transformations, there are four research-backed actions business leaders can take to prepare for the new normal.

1. Understand Your Current Workplace Culture
   Assess your current workplace culture. Where are the trouble spots? What aspects of your culture are most likely to help or hinder organizational health, high performance, or strategy execution?

   Some answers may lie in the lack of transparency, a disconnect between stated company values and how leaders actually behave, a lack of trust, too many layers required to make decisions, or misalignment across ten key strategic dimensions of culture.

2. Agree Upon Your Desired Workplace Culture
   Once you understand your current culture, your next step is to clearly articulate your desired organizational culture in terms of health, performance, and strategic alignment.

   While we believe that both leaders and employees should own the culture of their organization, we also believe that the same people responsible for designing the company strategy should be responsible for defining the desired culture to best execute that strategy.

3. Prioritize the Cultural Shifts that Matters Most
   Once you understand your current culture and have defined your desired culture, your next step is to prioritize the critical few cultural shifts required to better align your culture with your strategy.  Cultural shifts are not easy.  Pare down the list to the one or two big moves that will have the biggest impact.
4. Prepare People Leaders
   Once the culture shifts have been agreed upon, the next step is to prepare people leaders with the tools and practices to connect the What (Strategy) and How (Culture) for their teams.  The more you can actively involve employees affected by the changes in the design of the solution, the better.

The Bottom Line
We know from strategy retreat facilitation that strategic agility depends on cultural agility. When culture and strategy evolve together, organizations build the resilience to navigate uncertainty and the unity to execute with clarity.  Are you doing all you can to align your business practices and employee behaviors with your new strategic ambitions?

To learn more about whether your culture is helping or hindering your strategy, download The 3 Research-Backed Levels of Corporate Culture Leaders Must Get Right to Create Higher Performance