Strategy versus Culture Debate — Which Comes First?

Strategy Versus Culture — Which Comes First?
Is the strategy versus culture debate relevant?  Most of our clients have a high growth strategy to increase revenues and profits quickly before their market shifts.

But unless leaders are careful, they risk sacrificing the corporate culture that helped them succeed up until now.

Do You Have to Make A Choice?
Do you have to make a choice between your corporate strategy and your corporate culture? The short answer is no.  Both strategy and culture are critical to your overall success.

The timing however matters a great deal.

• The Importance of Strategy: 31% of the Difference
  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.
• The Importance of Culture: 40% of the Difference
  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.

Getting Aligned — Strategy Must Go Through Culture and People
The key is organizational alignment. When your workplace culture and your business strategy are misaligned or at odds (often in the pursuit of high growth or due to organizational silos), you are headed for trouble.

It is your business strategy (the What) that provides the true north to wisely prioritize investments and to make tough decisions.  It is your corporate culture (the How) that guides your business practices and keeps behaviors, beliefs, and assumptions on the right path to execute your strategy in a way that makes sense.

Without Organizational Alignment
If your business strategy is unclear, not up to the challenge you face, or too difficult to implement, it is almost impossible to create an aligned and high performance culture.

So, while we also believe that “culture eats strategy for breakfast,” you cannot create an aligned and high performance culture without first developing a clear and compelling strategy.

Strategy Comes First
So, from our perspective, Strategic Clarity almost always comes first — before cultural change.  Why?  Because you need to know where you are headed to provide the context for “How” you will get there.

But, once your strategy is clear, believable, and implementable enough, you must take the time to

1. Assess your corporate culture to see where you stand.
2. Purposefully align your corporate culture to your specific strategy for it to have a chance to succeed.

What Happens When Strategy and Culture are Unaligned?
The pressure to grow without an aligned and healthy culture can lead companies, leaders, and employees astray. Just look at Wells Fargo’s cultural issues.

The leadership at Wells Fargo seemed to emphasize growth at all costs.  Between 2011 and 2015 employees who were feeling the performance pressure opened over 1.5 million deposit accounts and 565,000 credit-card accounts that may not have been authorized.

Some customers were charged fees on accounts they didn’t know they had. The focus on growth without true alignment with a culture of transparency and integrity led to unprecedented fraud in the banking industry.

The Risks of Misaligned Strategy and Culture
In addition to the recent culture horror stories at Wells Fargo, Uber and VW, if you lose the “great place to work” culture that got you started on the path to success, you will begin to lose your top talent, experience a decline in employee engagement, and be less attractive to the high performers you need to succeed.

It is very much worth it to ensure that your culture remains healthy and positive. Otherwise you will lose the competitive edge required to grow.

Strategy and Culture Starts at the Top
While we recommend actively involving the entire organization in the strategy design and cultural alignment process, your leaders are the ones who must first fully commit to the desired strategy and culture.  Then they must “live” it in both their actions and words. The Board, the CEO, the senior managers — all have to buy into and model the strategic direction, behaviors, and values that you seek.

Then every employee needs to understand what is expected and that every employee will be held accountable — as will every leader.

The Bottom Line
When your corporate values and behaviors are aligned with a clear and compelling strategy, your employees are set up to think and act as one.  This creates true alignment and the pathway to high performance.

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