Culture and Strategy Play for the Same Team
Updated: Mar 16, 2019
Culture and Strategy are two sides of the same coin. Both are key drivers of great business performance, but only if they work together. If the two are aligned and supportive of each other good things happen. If they are not, well, witness some of the recent and public ramifications from well know companies in the airline, auto, banking and technology industries. The financial impact to these companies for strategy and culture not playing well together has cost them and their shareholders/owners billions of dollars in brand and market value.
Successful leaders find a way to manage both strategy and culture in an integrated way, not as two separate aspects of their business. I doubt few would argue that point, but how do you do it? What are the steps leaders should take to ensure both sides of the “business performance coin” are managed in an integrated way?
We recommend you start by asking the right questions. As you come to the end of 2017 ask yourself and your leadership teams the questions we have provided below. Based on your answers and an open discussion with your team, take the second step and identify and agree on the actions your organization should take in 2018 to manage both and drive better business performance.
Seven questions every business leader should be asking:
1. What is the business case for managing culture in our company? Before you can really use the power of culture as a business value driver, it is important to understand the "cost of a poor culture" and the business benefits of a corporate culture aligned with your business strategies. One of the ways to get your team to understand the business case for culture is to talk about how cultural barriers such as poor cross functional handoffs, lack of transparency, not following up with teammates in a timely manner, resistance to new ways of working, lack of innovation, and other cultural behaviors get in the way of strategic initiatives and execution.
On the operations side of your business, ask your team what percentage, on average, of a productive day’s work is lost through blaming, finger-pointing, slow responses, lack of trust of other departments, poor teamwork or poor member/customer service. Based on our experience that lost time number averages 30%. To calculate your costs, take your total employee cost figure, including benefits, and multiply it by that number (average 30%) and you will get an estimate of the cost of a low performing/unhealthy culture.
We think you will find the cost of failing at strategic initiatives and/or lost productivity due to a lack of alignment between strategy and culture to be staggering. And even a slight improvement falls straight to the bottom line!
2. Is our culture an asset or a liability? How would we know? Does your team know the strengths and weaknesses of your current culture? Have you measured your company's culture? Have you held conversations with your team about the strengths and weaknesses of the culture? Can you identify the culture barriers to improved strategy execution? In what way is our current culture a competitive advantage? Others can copy your products and services, but they can't copy your unique culture. But if they could, would they really want to?
3. Is building and sustaining a high-performance culture a part of our formal, written business strategy? When an initiative shows up on the formal strategy document, signed off by the Board, and specific accountabilities get assigned, more often than not those initiatives get funded and resourced. Have you made a High-Performance Culture one of your key business strategic initiatives? Do you have specific plans with milestones and deliverables against this initiative? Is it properly funded or just a "hope to improve" item? What gets measured and reported often gets done!
4. Is alignment with culture and values a part of our hiring, performance reviews, bonuses and promotions? In many companies, values and behaviors are just words on the wall or in the employee handbook and have little impact on the day-to-day work. By integrating culture and values into your Business, HR and Community processes they suddenly become more real and important. When living your culture and values becomes an important part of how your people work every day they have even more power to influence the behavior you need to succeed.
5. Have we mapped the various businesses/functions/ geographies and their alignment with the overall strategy and culture of our business? One of the most important insights into corporate culture is that most companies are composed of numerous subcultures rather than one overall corporate culture. And these subcultures can be strong influencers of “how things get done around here.” If you don't understand the subcultures inside your company, then you really don't understand your operational culture. In some cases, subcultures are strongly aligned with the vision, values and business strategies. And in other cases they present significant barriers to productivity and positive change.
6. Do we as a senior team talk about culture as often as we talk about costs, revenue, technology and business performance? Much of corporate culture is a reflection of its leaders, what they think is important, the questions they ask and the stories they like to tell signal to people what is important. Stories of highly creative or service oriented individuals (for example) has a long-term impact even after those individuals have retired or left. Stories contain the viral seeds for sustaining your culture. If the senior team routinely talks about sales, costs and technology, but not about people, values and behaviors, the few times culture is mentioned it will be discounted, because everyone "knows how important costs are to management, not culture".
7. Does our new employee selection and on-boarding process help people understand our culture and why it is important?When was the last time the senior team sat through a new employee indoctrination process? Too often these are becoming menu driven digital exercises and few companies put much emphasis on expected behaviors and culture. It is important to remember that if you don't indoctrinate new employees, at all levels, in the company culture, they will bring their old company culture with them as their default way of working. And when many employees come on board without a good acculturation process, you will wind up with a very fragmented culture.
These questions, as provocative as they are, often lead to even better questions being asked and explored by your leadership team and will undoubtedly spark a new focus in everyone on the importance of culture to your business success. Take the results from these question and others that may surface, and identify the actions you should take in 2018. Then assign a leader for those actions and schedule regular status meetings to track your progress.
Sometimes asking the right questions takes more courage than finding the answers!
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