October 17, 2016
Strategy and culture are the two pillars of business success. Together, these two groups of variables determine how a business is run and ultimately its profitability. Relying on one alone would be like an athlete running an entire race jumping on one foot. Focusing simply on strategy, for instance, is akin to believing that you can win a horse race with a thoroughbred, even if you don’t have a jockey, or that you’re sure to win a boat race just because you have a great boat, even if you don’t have a crew to sail it. Leaders should rely on both strategy and culture.
During a fascinating interview with Herb Kelleher, who is the co-founder and Chairman Emeritus of Southwest Airlines and who served as CEO of Southwest Airlines from 1971 to 2008, I asked him to explain the difference between strategy and culture. We were seated in his spacious office, which looked more like a teenager’s room than a CEO’s: It was full of model planes, baseball paraphernalia, and abundant memorabilia. His response was a clear, simple story:
When Napoleon sat down in Paris with his generals around a table to decide how to invade Russia, they were making strategy. But what makes a million French troops march to Moscow? That is culture!
Culture, then, is the driving force that can make a million men march to Moscow, full of pride, effort, dedication, and a desire for success, even when the odds are unknowingly stacked against them!
Strategy and culture may be the two pillars of success for any company, but an overwhelming majority of companies focus mainly on strategy and hard variables. Compared to the decades of emphasis put on strategy in the “business as usual” framework, culture has received significantly less attention among executives and business managers. Certainly none of the hard variables or their corresponding frameworks include the human element in its full dimension.
In fact, if we take a look at the different functional areas established by the “business as usual” school of thought, it seems as though people only appear from time to time, in sections such as “job description” or “performance evaluation.” But the profound nature of human beings—their integrity, their emotions, their aspirations—are absent in those frameworks. Everything that has to do with managing people is put under a big umbrella called leadership. Instead of weaving people into each and every one of these variables, “business as usual” sets the human element aside as something to be dealt with separately.
Culture and strategy are not wholly independent variables; they are intimately interrelated. Culture is an important variable in the strategy implementation process—it affects what people do, how they act, how they compete.
What is the best way to create value—by leveraging culture or just focusing on strategy? When it comes to deciding which of these two groups has the highest potential to increase an organization’s results, we have to ask ourselves: Which is more important, culture or strategy?
Well, you can already guess my answer, which is the same as one attributed to Peter Drucker: “Culture eats strategy for breakfast.” I insist that it is time for us all to focus on managing culture. Strategy is always overworked, so we get more out of focusing on culture. Its unused potential is why it’s more important.
Research and multiple examples show that when fully leveraged, strong cultures multiply results. In most cases, you need both the right strategy and a strong culture. However, if you recognize that culture can be a unique way of competing, you will discover that culture may in fact be the essence and heart of the strategy!
If you want to be the Chief Emotions Officer and lead through emotion, inspiring your team as Napoleon inspired his army, then fostering a strong culture is of primary import.
Excerpted with permission of the publisher from People First Leadership: How the Best Leaders Use Culture and Emotion to Drive Unprecedented Results (McGraw-Hill Professional, 2016).