July 27, 2017
A critical goal for leaders is to deliver on their strategy promises to stakeholders. When leaders understand the relationship affecting strategy, culture, and execution, they can achieve this goal. But when they don’t, they can fail to deliver.
Why? Because this relationship—linking strategy, culture, and execution—is critical to achieving excellence in execution. Yet it is too often undervalued by leaders, wrongly understood, or both.
People who argue that culture drives strategy say that culture is extremely difficult to change—that it dominates more than strategy. This may have been true in the past, but it can no longer be a valid way to think about or conduct business due to the fast pace at which business models are required to transform. We are moving faster in business today than at any other time in history, and this speed has shifted the relationship between strategy and culture.
When it’s said that a business must be “agile,” this largely refers to the agility of the organization’s culture in responding to the rapidly changing strategic direction and its ability to transform its business model to support the new strategy. To keep the culture nimble, an organization must constantly adjust it to support the execution of the strategy.
The paradox is that organizations are built to be stable, yet they must keep transforming!
People adopt a new culture when it’s clear that the current strategy threatens their future. Leaders must be able to demonstrate this. Here’s an example:
Microsoft’s CEO Satya Nadella announced to employees in 2014 that Microsoft Windows’ monopoly was under attack and that the organization needed to function more effectively. Nadella’s goal was to reduce the amount of time and energy needed to get things done in the engineering area. The cultural change required reducing the number of people involved in making decisions, thus making each individual more accountable. This shift has been changing Microsoft’s culture.
One of the late Peter Drucker’s most famous quotes is “Culture eats strategy for breakfast.” This is no longer always true—in fact, it can more often be the other way around. Because of the accelerated pace of change in business, strategy tends to eat culture.
At Microsoft, strategy now regularly eats culture for dinner. Organizations need an agile culture that embraces the accelerated pace of doing business and readily supports rapidly shifting strategies.
When preparing to roll out your strategy, assess how your corporate culture affects its execution by asking these questions:
By reviewing the answers to these questions, leaders can start to define their culture and answer in detail this concluding question:
A new strategy designed to drive growth requires significant shifts in an organization’s operating model, and it’s a leader’s responsibility to identify how the culture supports and hinders those shifts and then to drive and champion the transformation.