As one of the first researchers and consultants on culture, beginning in 1978, I fully understand how important culture is to customer satisfaction, employee engagement, cyber security and overall business performance. (see Culture Rules) Yes, culture matters; big time!
It is now well understood among business leaders that culture can be either an enabler or barrier to such important business outcomes as safety, cyber security, customer loyalty and repeat purchasing, innovation, conduct risk, productivity, diversity and inclusion, and M&A integration, among others. And the company that does not proactively manage their culture is doomed to what I call “cultural drift” as more and more employees join the organization, bringing their old culture habits with them. Before long, a unified and aligned culture becomes a fractionated camp of subcultures, competing more than cooperating.
Yes, corporate culture is a critical element in business success. However, in the drive to bring culture into the mainstream of business, I believe it is given too much attention. Culture is important, but it is not everything to the sustainability of a business enterprise. Culture exists as one important element in the company business model. It is important, but not sufficient. The truth is, a great culture cannot make up for lack of funding or a poor competitive strategy.
They had a great culture, everyone was happy; and they happily went out of business!
Culture is important, but it comes last, not first.
Let me explain. A sustainable business is essentially the alignment between three critical business subsystems: Strategy, Structure and Culture. A clear strategy lets everyone know where we are going. Clarity of structure means everyone knows who does what and whom to talk to for information. Culture provides clear understanding of how to behave, with customers, suppliers and peers, in getting the job done.
All three must be in alignment to create a successful organization. And they are interdependent, each reinforcing the other.
An effective organization starts with an effective competitive strategy and a profitable business model. In many cases this rests on an understanding of Product-Market fit, and customer insight.
But then it must have a structure is designed to help deliver the strategy. If the structure is out of alignment, the company will find it difficult to deliver on its strategic objectives.
A good example is the fad of Matrix Management in the aerospace and defense industries in the 1990s. Essentially matrix management was a cost saving structure to eliminate redundant roles and move expertise between various programs as required, rather than fully staffing each program. Good idea for reducing headcount, except it was not designed for effective program delivery and ultimately led to program delays and cost overruns.
And last, but not at all least, the culture should be designed to help deliver the strategy within the structure. A key question to ask is: What day to day behaviours do we need in this company to ensure the delivery of our strategic objectives? And not just people behaviours. You should also ask what policies and work processes do we need to support strategy delivery? These are some of the hidden culture drivers that don’t show up when most consultants talk about culture.
Answers to these culture questions will go a long way in building an effective and aligned corporate culture that is an enabler for effective strategy realization.
What is the right corporate culture? The one that best supports the business strategy!
Learn more about John R Childress as www.johnrchildress.com