Culture Eats Strategy for Lunch | Featured Article of the Month

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Culture Eats Strategy for Lunch

Building a Winning Organizational Culture

“Everything in our strategy our competitors could copy tomorrow … but they can’t copy the culture – and they know it.”
Herb Kelleher, Founder, Southwest Airlines

Execution remains the number one challenge for organizational leaders. Studies continue to show that the most brilliant strategies don’t necessarily achieve results – less than 8% of strategies actually achieve the intended results ⁽¹⁾. Almost 37% of strategies never make it out the door of the executive boardroom ⁽²⁾.

Why?

Culture! Execution is based on an organization’s ability to provide the right environment for people to work on an engaged and invested basis. It is critical that when leaders make their strategic plans that they spend as much time – or more – in understanding and supporting the culture needed to achieve success.

Few do. That is why organizations continue to underperform.

Culture is what holds an organization together and motivates people within it to do the right things. More than anything else, culture creates the environment conducive to success. As measured by values, mindsets, and behaviors, culture can seem a mystery or a foggy dimension. However, culture can be tangible and accurately defined so that leaders can understand how to work best with the organizational environment to achieve goals.

More than 91% of senior executives in a recent survey stated that “culture is as important as strategy for business success.”⁽³⁾

Yet most organizations derive strategy from a planning exercise that does not account for culture – or even mention it! This process ensures business drivers that may not fit the culture and organizations leave potential performance and achievement on the floor. This traditional approach dooms businesses to mediocrity and expected performance in the 50% to 63% of potential range ⁽⁴⁾.

So what does a winning culture look like?

We recently surveyed organizations recognized by Progress Magazine’s Best Places to Work and found several key themes that defined what a winning culture would provide for people:

There is the opportunity for open dialogue throughout all levels of the organization – time is given to asking questions and listening to the answers.
Employees at all levels think outside of their role and bring ideas forward – people don’t just do “their job”.
There is a high performance environment where people are accountable, with clear expectations for results, and progress is measured – people want to know they are contributing.
Employees and customers speak well of the organization – positive employees create positive customer experiences.
There is a transparent and honest leadership communication channel – leaders don’t tell and sell, decisions and reasoning are shared openly with room for input.
Social connections exist throughout the organization – people enjoy the journey together.
The business is growing and evolving – we all want to be a part of a bigger future.
Opportunities are available for people to grow and develop with clear career planning – people know where they fit in the future and stay to commit to making it happen.

In building such a winning organizational culture, leaders win. Great people are attracted and retained with a strong sense of loyalty; there is high engagement and trust; employees and customers are satisfied and more; and, performance metrics are met and exceeded. Business success comes from creating the winning cultural environment – it really does translate to more money, more time, and less stress.

Creating and supporting a winning culture can be a daunting challenge. It involves changing how people think and behave. As a leader, where do you start?

Start with a cultural audit - the first step is to define the culture and make it tangible as it stands now. Determine the values that underpin the organization (not just the ones on the wall chart in the entry lobby but the real ones that are at play in the business). Then identify the behaviors and profile to translate the unique personality profile of the organization as related to customer-focused actions and bottom-line results.

Values drive action – or create inaction – for the organization. The values cannot be just words put together at an executive retreat. They need to be descriptions of what is most important to how things get done in the organization. Values are often nine or more words embedded on a plaque. Their meaning is usually nothing to how the organization works. Values must be developed by the entire organization and worded in descriptions that everyone understands. Integrity can mean many things to many people so it must be described by the behavior that fits the organizational culture.

Values are the standards and principles that guide actions and decisions. They are the foundation of the culture and explain how change and action can happen.

A survey can be developed to include everyone within the organization to identify and refine the core values down to the six or so that mean the most to the business. Similarly, descriptions can be developed by collaborative surveys that fully represent the meaning of the value to the people of the organization (not just the leaders).

This step is vital for an organization as change and complexity are only increasing and clear values navigate the decisions and directions that will work for the organization – or create conflict and frustration.

Understanding people is often seen as a mystery. As an analyst, I do not believe that to be true. The dynamics of a team or organization can be accurately described through assessments that show the instincts and personality of the overall business. Simple psychometric surveys can fully describe how an organization will take action and achieve goals and the leadership needed to support motivating interpersonal interactions.

The profile of instinctive and personality strengths are not the same for each organization – they are distinct and unique. Mapping the instinctive strengths of departments and the overall organization provides incredible clarity for leaders and everyone to understand how action and results can be achieved.

Just outlining the strategy and providing direction for what has to be done to create results is only likely to be about 45% successful. Execution will bog down if the strategy is not matched to the culture.

With the values and instinctive strengths profile of the organization completed, the organization’s culture is clear.

The strategy can then be tested to clarify the instinctive profile needed to achieve the desired results and then matched to the actual organizational culture. Is there a fit? Incredibly, as a leader, with this information you would actually know. You would know if the merger or acquisition will work or founder, if the new growth strategy will bloom or rot, and if the change initiative will carry or crash.

Once the fit is assessed, behavioral shifts and capabilities needed to support the strategy can be defined that will fit and work with the organization’s culture. These definitions can be communicated clearly to the organization with the right supports needed to move forward based on the culture.

The foundation for a winning culture fits the strategy to the people. The people are the culture. Trying to enforce a strategy or change in an organization without understanding the people is prone to failure. The emphasis on culture shows an awareness of its importance to execution. A winning culture is difficult to copy.

Employees want to be loyal and engaged to their organizations and passionate about what they are doing. Only a strong culture – a culture with values, instinctive, and interpersonal strengths that fit the strategy – can truly engage people and deliver this level of meaning.

Leaders need to move away from top-down directives and first take time to understand their organization’s culture before moving forward strategically. Culture can be quantified and tied directly to strategy. Leaders overlook it at their own peril.

“The fact is, culture eats strategy for lunch. You can have a good strategy in place, but if you don’t have the culture and the enabling systems that allow you to successfully implement that strategy, the culture of the organization will defeat the strategy.”
Richard Clark, CEO – Merck