A Dose of REALITY - Strategy vs Culture: A False Argument
I usually don’t have to wait long for someone to post about how “Culture Eats Strategy” on LinkedIn (or see it in a presentation about how to run a business). This usually comes along with an attempt to give it legitimacy by crediting it to Peter Drucker. The clear implication from the folks who purport this to be fact is that this ethereal thing called ‘culture’ should be the focus of any leader who wishes to succeed.
There is so much wrong with this that it is hard to find the place to start.
First, there are no written citations or speeches with this quote from Drucker. Furthermore, he was a careful practitioner of the practice of management, so this simply is not the type of sound bite that seems plausible. The quote itself is most often credited to Mark Fields, an executive at Ford Motor when the company was in free-fall, losing billions of dollars every year. Fields claims that Drucker told him this, so let’s take out any potential legitimacy that would be garnered from crediting such a statement to one of the critical thinkers in the field.
Second, although many variations of this ‘quote’ have been floating around for decades, it is usually taken out of context and stated as some kind of fact (drop the mike). Culture (such as it is) and Strategy (such as it is) are intertwined in the success of an organization. They do not compete and the value of each is entirely dependent upon whether each (and both together) is REAL!
Strategy in a business encompasses the analysis, design, and implementation within the organization such that customers will go past your competitors and purchase from you! Culture in a business is the accumulation of behavioral, procedural, and non-verbal norms of employee conduct with fellow employees, customers, and others interacting with the company. For a strategy to be effectively implemented it must be REAL and for a culture to enable effective delivery of the strategy promise it must be REAL.
Most customers have only the slightest idea about the culture of the businesses they buy from. Some might be energetic enough to go to a company website, search for the About button, look for information on the Mission/Vision, and (if they can find them) read the statement of values or guiding principles the firm has decided to share. They generally read well. They are positive messages and rarely tell you anything about the actual interactions within the organization or its underlying raison d'etre.
Whether one is in a B2C or B2B (or any other variation) environment, a viable business exists when most customers purchase because the business provides a needed or desired product or service to a group of customers in a manner such that those customers are willing to profitably compensate the organization. That is to say that employees either deliver on the Strategy Promise, which causes the customer to desire to purchase from the organization, or they do not.
What is it that enables one organization to consistently deliver on the strategy promise while another does not? What enables one organization to quickly reset their strategy when hit with substantial changes in the competitive, regulatory, technological, or societal environment while others fail? It is the culture of the organization. If that culture is aligned with the strategy promises being made, then the organization can move more quickly than its competitors and deliver more consistently to its customers.
For Strategy to Matter, it must be REAL. For Culture to Enable Strategy, it must be REAL.
In my line of work, I get the opportunity to talk with hundreds of executives every year and virtually all of them claim they have a great (not a good, but a great) company culture. They point out that their culture is codified in value statements and that everyone in the organization knows what is expected. Far too often, as we dig into the company, we find that the actual culture is quite different from what is pitched to us by leadership. On top of that, sometimes it is simply toxic to the desired goals. This disconnect is why we always need to focus on the REAL culture and how that either assists or damages our efforts to deliver to the customer.
Strategy is a bit of a different animal for executives. While I have worked with some who admit the strategy they are pursuing might not be viable, or might not actually separate them from their competitors, they almost universally believe they have a strategy. Furthermore, what constitutes the ‘Strategy' of the organization varies wildly depending on what the term means to the executives. That strategy may simply be a collection of desired outcomes or a loose collection of approaches. Even if the strategy is well designed, it might not be effectively implemented. This includes most of the usual suspects. The strategy may not be well communicated, not backed up by resources or commitment, not well understood by middle management (let alone the rest of the organization) or it may simply be seen as a distraction to the work that needs to be done day to day.
For a Strategy to be REAL it has to consist of a well-defined set of competitive advantages along with a solid understanding of the industry ‘table stakes’ that need to be addressed to attain/maintain parity in the industry. Good strategy design is of no value if every employee (and I do mean every employee) is not fully aware of what the strategy is and is at least trying to implement it. The strategic competitive advantages must be REAL (that is they must be Rare, Durable, Non-Substitutable and Valuable to the organization) to have any impact on customer behavior. We must be able to articulate what activities we believe will lead to success and we must track and refine our efforts as time progresses.
This is where a business culture and its strategy merge. If we are seeking to attract customers past our competitors (i.e. GROW) then we must be able to go ‘eyeball-to-eyeball’ with a customer and say – “This is why you should buy from us” and it must be REAL.
STRATEGY & CULTURE
MUST BE REAL
HAS TO BE CONSISTENTLY DELIVERED
HAS TO MATTER TO THE CUSTOMER
A business culture that enables the organization to quickly & seamlessly deliver on the promises made to customers is one that has the potential to win in the marketplace. These same business cultures are critical to the executive’s ability to make strategic changes efficiently. Organizations that appear to be ‘Nimble’ are ones where the employees are aligned and supportive.
Every organization has a Culture – the real questions are:
What is that culture?
Does it support the goals of the organization?
Every organization should have a Strategy - the real questions are:
What draws customers past your competitors that is Rare, Durable, Non-Substitutable, and Valuable?
How are you ensuring that your employees are delivering on that Strategy Promise?
A Strong Culture Enables A Successful Strategy
