In my line of work I have the opportunity to see a lot of different companies and situations. What strikes me is how some succeed despite the odds against them while others struggle even in the best of times. What differentiates the extraordinarily successful companies from the others? How have they been able to succeed when others failed? Make no mistake, business fundamentals and a plan for profitable growth are always at the core of successful strategy. But it’s more than that. I’ve seen companies with good systems and strong financials struggle too. There’s more to the formula than just the tools.
The key ingredient is less tangible, but more powerful than market factors. The major distinguishing feature in these companies, arguably, their most important competitive advantage, the factor that they all highlight as a key ingredient in their success, is their organizational culture. Sustained success has had less to do with market forces, financial resources and strategy and more to do with company values, personal beliefs and vision. In fact, not every successful company has a great culture, but almost every company with a great and identifiable organizational culture succeeds.
In small companies, culture is often created by the founder, most often accidentally. Success comes when management takes an intentional approach to strategically evolving the culture in a systematic way to fit the company’s market and competitive strategy. Culture is the set of beliefs that drive employee behaviors. These are things everybody in the company knows and shares as truth. An organization rarely has only one culture type but most organizations have developed a leading culture style. Companies struggle when dominant style is not in alignment with its business strategy. As part of a strategic planning process companies should intentionally consider the beliefs and behavioral characteristics necessary to implement the business strategy.
Certain business strategies work best when supported by a matching dominant culture. Some will thrive in a family oriented, collaborative style. Others require an entrepreneurial innovative culture. Still others need a competitive market driven or structured and efficient model. Knowing which one best suits the business strategy and then shaping the culture to fit that is the essence of a strategic culture.
Planning for a strategic culture has also come a long way in the last few years. Historically, culture transformation has been seen as an art rather than a science. That’s still the case, but with the advent of effective cultural assessment tools, there’s now more science to it than there’s ever been. Today’s assessment tools enable a company to quantify and measure a cultural style and the strength of that style. The outcomes of assessment tools help leaders identify gaps and areas of misalignment. With a descriptive picture of the current and preferred culture, companies can approach a culture transformation by developing plans to eliminate specific behaviors and adding others designed to operationalize the business strategy.
The process of transforming a culture takes time and effort. Behaviors that have been taught and assimilated over years can be difficult to change. Employees need to change what they’ve come to accept as normal. That’s never easy, but as the grease that lubricates the engine of the business strategy, it may be the most important component of a business strategy. The company must analyze the people they recruit, employee goals, and how they manage and reward them. They must also assess succession planning to help ensure that future leaders will model behaviors that support the business strategy. The payoff is worth the effort.
The rapid rate of change in the marketplace continues to challenge businesses of every size, requiring ongoing assessment of the business strategy. Research shows that organizational culture is the reason why most mergers and reorganizations fail. A strategy that is at odds with a company’s culture is doomed to fail. Put another way, when culture and strategy are in conflict, culture wins. Before a company embarks on a new strategic direction or if the current strategy is struggling to get traction, the company should look closely at its dominant culture as the barrier or accelerant to business success.
If you’d like to discuss how culture can play a more strategic role in your organization, call or reach me through the “contact us” tab on this page.