Strategy versus Culture Debate — Which Comes First?

Strategy Versus Culture — Which Comes First?
The long-debated question of whether strategy or culture should come first has divided executives and academics for decades. Some argue that strategy sets the direction while culture follows. Others insist that culture eats strategy for breakfast, as Peter Drucker famously stated. The truth of the strategy versus culture debate: Both matter deeply — but one consistently enables or undermines the other.

The Case for Strategy First
Our organizational alignment research found that strategic clarity accounts for 31% of the difference between high and low performing organizations in terms of revenue growth, profitability, customer satisfaction, leadership effectiveness, and employee engagement.

Without a clear, evidence-based strategy, even the strongest corporate culture can drift aimlessly. Research from McKinsey found that organizations with clearly articulated strategies are 70% more likely to outperform peers in market share. Strategy provides clarity of purpose, focus, and alignment around priorities — especially when markets shift or competition intensifies.

When organizations fail to prioritize strategic clarity, culture often compensates — but not always in the right way. Teams might reinforce legacy behaviors, perpetuate outdated norms, or resist change. In this sense, strategy acts as a compass that gives culture a direction.

The Case for Culture First
We define culture as the way things get done on a day-to-day basis.  Our organizational alignment research found that workplace culture accounts for 40% of the difference between high and low performance.

Culture determines whether your strategy ever get implemented. Harvard Business Review highlights that cultural alignment accounts for nearly half of the variance in successful strategy execution. A winning strategy on paper means little if your people don’t have the mindset, motivation, or trust to carry it out.

Culture determines how decisions get made, how risk is approached, and how accountability is shared. It shapes whether your employees embrace innovation or cling to the status quo. When culture and strategy conflict, culture always wins — because it governs behavior in ways strategy cannot control.

What We Have Learned in The Field
Because your strategy must go through your culture and your people to be successfully implemented, both alignment and sequence matter.  The most effective organizations balance:

• Designing strategies that fit their cultural realities with
• Shaping their cultures to enable strategic ambitions.

Think of strategy as the intent and culture as the means. A high-performance culture without a coherent strategy may work hard but go nowhere. Conversely, a brilliant strategy without cultural alignment creates resistance, disengagement, and underperformance.

How to Align Strategy and Culture to Perform at Your Peak

1. Start with Strategic Intent
   Based on years of strategy retreat facilitation experience, strategic clarity almost always comes first — before cultural alignment. Why? Because you must first define where you are going before you can determine how you’ll get there. A clear strategic intent provides the direction, focus, and purpose needed to guide decisions, priorities, and performance expectations across the organization.

   However, strategic clarity alone isn’t enough. It is nearly impossible to execute a strategy that conflicts with deeply rooted and long-standing cultural beliefs. When strategy challenges the very assumptions that define “how things get done,” change resistance is inevitable. That’s why the next step — testing for cultural readiness — is so essential. It ensures that your culture can support, rather than sabotage, the strategic journey ahead.

2. Test for Cultural Readiness
   A McKinsey study found that transformation efforts fail largely because of cultural resistance, not poor strategy.  Before fully committing to a new strategic direction, it’s critical to assess whether your existing culture can realistically drive and sustain it. Too often, leaders assume that defining a new strategy is enough — that people will automatically adapt.

   In reality, cultural and change readiness determines the difference between smooth adoption and painful resistance.  Before launching into strategic comms and cascading your strategy, evaluate how your current business practices, team norms, and corporate values align with the desired strategy. Ask tough questions:

   — Do current decision-making habits support where you are headed?
   — Are leaders able to consistently model the behaviors that the new direction demands?
   — Are reward systems reinforcing the right behaviors?
   — Does the way we manage risk help or hinder our strategy?
   — Is how we treat customers aligned with our growth plans?
   — Do we need high or low process variation to meet our targets?

   Done right, a cultural readiness assessment surfaces the hidden enablers and barriers that shape performance and helps leaders identify which parts of the culture can be leveraged to accelerate strategies and which must be intentionally reshaped.

   When organizations skip this step, they risk launching strategies that look bold on paper but collapse under the weight of misaligned beliefs and behaviors.

3. Prioritize the Strategy-Culture the Gaps
   Not every misalignment needs immediate attention. Focus on the strategy-culture gaps with the greatest impact on strategic success. For instance, if your new growth strategy depends on collaboration across functions, cultural silos and internal competition become high-priority barriers.

   Define what “good” looks like in behavioral terms — specific, observable actions that reinforce the desired strategy. Then, align leadership expectations, performance management systems, and rewards accordingly.

4. Create a Practical Action Plan
   Closing strategy-culture gaps requires more than communication campaigns or workshops. Develop a targeted action plan that links cultural shifts to measurable outcomes. Include:

   — Clear ownership: Assign accountable leaders for each cultural shift.
   — Defined milestones: Establish short- and long-term indicators of progress.
   — Reinforcement mechanisms: Align hiring, promotions, and recognition systems to reward behaviors that advance both strategy and culture.
   — Visible leadership modeling: Ensure leaders consistently demonstrate the new ways of working.

5. Monitor, Measure, and Adjust
   Treat organizational alignment as a living system. Regularly assess progress using both qualitative and quantitative data — engagement surveys, turnover trends, performance metrics, and stakeholder feedback. When results plateau, revisit the plan. Continuous reinforcement and visible commitment from leadership keep momentum alive and prevent regression into old habits.

The Bottom Line
Culture and strategy alignment account for 71% of the performance difference between companies. Strategy sets the course, but culture determines whether the organization can travel that road successfully. The smartest leaders don’t choose one over the other — they align both so that purpose, people, and performance move in sync. A winning organization crafts strategy and aligns culture — by design, not by accident..

To learn more about aligning your culture to create higher performance, download 3 Research-Backed Levels of a High Performance Culture You Must Get Right