Monday, January 4, 2016

Culture vs. Strategy: Which Comes First?

The strategy is the essence of winning. And a positive culture makes such winning more purposeful and meaningful.
The strategy is like the business roadmap to leverage the company's resources and achieve its vision; and culture is the collective mindset, attitude, and behaviors of the group of people and it's about how people think and do things here. Many of us like Drucker's witty quote, “Culture eats strategy for breakfast.” A strong culture can lift up a mediocre strategy, but a weak or negative culture will screw a superior strategy. So culture vs. strategy: which comes first? And what are the interwoven relationship between them?

Culture first, the strategy is tailored to a specific culture" In a strict sense, the culture of which the organization is founded is first. Then the business model and business strategy followed by the organizational culture required to support them. And if the business has a great culture, it will strengthen of strategy execution and you will get a great result. In this sense culture is one of many resources required to execute and realize the strategy. Determining the culture required is part of determining the strategy. A strategy should be developed to leverage the underlying culture. If the need for a strategy change stemmed from the inside of the organization. Then culture would have been the prime mover and strategy would have to follow.

The strategic intent should include the desired culture changes. The cultural changes should be made before any other strategy elements which require a particular culture. Culture changes best take form before strategy implementation during the strategy design process. To quote Drucker again, "Culture eats strategy for breakfast." If your culture is dysfunctional, it doesn't matter what your strategy is. Secondly, organizations that try to adopt a strategy counter to their culture and then try to change the culture will see their strategy fail before the culture can change. Keep in mind that culture changes slowly, probably more slowly than any other attribute or characteristic of an organization. Additionally, changing the culture takes incredible efforts, in part because culture is a byproduct of every facet of an organization, not just its leaders and people. What is observed is that an organization has:
(a) Its desired culture that is propagated intentionally by management.
(b) The prevailing culture, how in reality the organization behaves and acts and which to a varying degree can deviate from (a) above.
(c) Various subcultures in its different units, departments, and sections that are the result of the group dynamics in each of them and their local conditions.

Strategy and culture must be integrated and mutually reinforcing. The challenge is understanding the progress needed to achieve a certain target on the timeline of the strategy because culture sometimes has to be 'installed' to meet aggressive targets. the two are interrelated and intertwined. A strategy should be developed to leverage the underlying culture. On the occasions when a new strategy requires the culture to be modified, the modification in culture needs to be "relatively" minor and inline with another more fundamental aspect of the existing culture. The more favorable aspects of the existing culture need to outweigh the less favorable aspect of the existing culture, thereby allowing the employees to accept the change in culture as being in line with their existing beliefs. It means that organizations change strategies and when they do, they must adopt an appropriate culture. Some cultures are more adaptable than others. Take for instance that of a learning organization. A lot of its culture is in a state of flux and can transform to suit a new chosen strategy.

Strategic implementation influences culture as well. The strategic intent must be clear and include the desired culture output. Prevailing culture dominates while being influenced at varying degrees by strategy crafting and execution. Some more important questions to ask the leadership team during strategy development is which core values you need to promote to propel the organization forward in line with the strategic ambitions? Are they different from today and if so what needs to change? What are the beliefs and unspoken rules that everybody in the company knows and shares? How does it drive organizational behaviors? In the digital era, the strategy's time span continuously shortened, and strategy execution is a dynamic continuum. In many cases, the need for change comes from the external business environment. These external changes call for a new strategy. The strategy is "the ESSENCE of the organization and how it thrives." This is fundamentally cultural and is enduring and changes slowly.

The strategy is the essence of winning. And a positive culture makes such winning more purposeful and meaningful. Do not underestimates the inertia of culture. If the strategy doesn't find a welcoming culture, that strategy stands a small chance of being successfully implemented. Changing the culture to fit the strategy is tough because culture changes both slowly and reluctantly. Few strategies can wait for culture's evolutionary change. So the two are strongly intertwined and any change should be lock-stepped and used together to make a business stronger.


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