Culture Eats Strategy ? ? ?

A culture of discipline is not a principle of business; it is a principle of greatness – Jim Collins

Recently Fast Company.com magazine published an article entitled Culture Eats Strategy. The article, quoting the phenomenal success of such companies as Zappos, Starbucks, Whole Foods and a host of others was intended to be a vindication of corporate culture, taking it out of the realm of “soft issues” and the backwaters of HR and thrusting it to the top position of the ingredients for sustainable business success.

While the author does cite some very good examples of winning cultures, he thoroughly and naively misses the point about corporate culture. That’s not surprising, however, since most “culture gurus” don’t really understand culture beyond what they observe through surveys and anecdotal observations of behaviour.  “This company has a culture problem and a lack of accountability”  “That company has a win-lose culture.”  Descriptive, but not very helpful. There are two points I would like to stress when it comes to corporate culture.

Point number one:  To be a true business asset, culture must be derived from strategy, not the other way around.  The following diagram easily shows what most successful executives understand.  Strategy is the actions we will take to win in the marketplace.  Then to effectively deliver on the strategy, we must build an organisation structure that is aligned with that strategy.  An organisation structure where everyone knows who does what and how to get things done.

Then we decide on the culture (read behaviours) that best help deliver the strategy and that can operate effectively with the organisation structure.  In other words, a culture that is aligned with our strategy and structure helps people understand what behaviours are required to work effectively within the organisation structure and that will bring the strategy to life.

A culture that is not in alignment with the strategy and structure can act as an anchor to the effective implementation of the strategy in the marketplace.

Point number two:  Few people really understand where culture comes from.  It is easy to talk about healthy or customer centric cultures, or innovative cultures or an accountable culture, but exactly what creates culture?  We all know from long experience that posters and values statements issued from corporate don’t create culture.  Culture change workshops rarely last and the old culture quickly reasserts itself, blotting out the good intentions of the workshop graduates.

I see corporate culture as “a set of habitual behaviours that determine how we approach problems and interact with each other and customers”. But where do these strong habitual behaviours come from?  The answer is staring us in the face every day.  Habitual behaviours (and therefore the culture) are developed as people interact with daily business processes. Process guides behaviour.

The Zappos culture didn’t emerge from just a specific hiring profile or an employee manual, it developed as a result of the specific business processes designed by the founders and used daily within Zappos.  They may call them “people processes” but they are really business process and they determine the types of behaviour that are required to be in compliance as a part of the team. Employee recognition and customer satisfaction are driven by a specific set of business processes within Zappos.  In those cultures that complain about lack of recognition or customer engagement, you will find very few, if any, processes dealing with these elements.  And if they are on the books, they aren’t practiced, which means they don’t really exist.

Those who build strong cultures know that a consistently strong culture comes from aligned and consistently strong and well documented daily business processes.  Less savvy leaders try to install a culture through “flavour of the month” actions or “culture” workshops.  Culture is built on everyday, repetitive actions, not once a month rallies or workshops.

So, does culture eat strategy?  To me it’s a non-statement, but it helps sell magazines.

Tight Lines . . .

John R Childress

E | john@johnrchildress.com      T | +44 207 584 3774      M | +44 7833 493 999

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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