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Why it's Culture AND Strategy! AND Alignment!

Growth, Strategy and Culture are tightly linked and require some level of alignment. Next time you are considering strategies that depart from the current business, a cultural assessment can help ensure that implementation risk is managed. You could have the right strategy but a misaligned culture would make value realization difficult.
Culture eats strategy for lunch has been bandied about for many years, implying that Culture is dominant at the expense of other corporate dimensions, especially strategy. The reality is that it is not about Culture OR Strategy, it is about Culture AND Strategy and how do they work together to deliver on the corporate vision.

Taking this a step further and going beyond Strategy and Culture, delivering on the company vision requires alignment across a number of dimensions: Brand, Business Models, Strategies, Values, Behaviors and Culture, Structure and Processes and Metrics, Results and Rewards to name a few. It is out of that alignment that organizations are effective at delivering on the vision.

Although for business planning purposes we assume that Corporate Cultures are static, in reality they are not. As the company evolves through its lifecycle, from the start up phase a culture emerges that that supports and reinforces the business model but then as the business matures and even starts to decline, the culture can become a liability and hinder needed changes.

The chicken and egg question you ask? Does Culture or Strategy come first? The pragmatic answer is that culture evolves very slowly and certainly more slowly than strategies and so Culture needs to be assumed relatively fixed for shorter planning horizons unless the organization is willing to create a new organization with a culture aligned to deliver on the significantly different strategies.

Business Model  Alignment

Why Culture is Important AND Urgent! Culture is difficult to replicate, can be a source of enduring competitive advantage and acts as a control point that enables your business model over a long period. Intellectual Property, being another example of a Control Point, is very actively managed and tracked. Do you track your Culture? Culture is a critical dimension that needs to be actively managed – defining it, evolving it and changing it!

Examples of companies that successfully use Culture as a control point include Southwest Airlines, Virgin, Apple, Dell, … those are companies with unique cultures that enhance their business model (and brand). As elements of your growth strategy depart more and more from the current business model, the cultural dimension becomes more critical to strategy execution. Some strategies will be supported by the existing culture while other strategies will be inconsistent.

Culture Alignment

Some examples:

Corporate acquisition. Both companies had strong but different cultures. The Compaq culture eventually became more dominant but is was not aligned with the HP Business Model nor were the HP employees integrated into that culture. In the end multiple cultures co-existed with some level of friction.

You are launching an initiative to implement a new business model and an executive is assigned to lead the effort. 6 months into the project, it is clear that the initiative is behind plan and failing. The executive that you selected had a cultural profile that matched the existing business, not the new business model.

Your strategy calls for moving the company from a product to a solutions orientation and hire an executive from a solutions oriented culture. The strategy is launched but soon sales of the new solutions are significantly behind plan – the sales force culture has difficulty adapting from a product to a solutions sale.

In summary:

When thinking of Culture and Strategy, we need to move away from an OR to an AND mindset - Vision AND Brand AND Business Models AND Strategies AND Culture.

To deliver on the company vision, alignment is key. Although perfect alignment is impossible, choices have to be made about where best alignment is required and where good enough alignment is needed. In any case, alignment needs to be actively managed.

Next time you are considering strategies that move beyond the core or acquisitions, cultural assessments and culture management are some capabilities that will add significant value. The assessment will help ensure that implementation risk is understood and managed while the culture management will help define what culture you want and facilitate the required change management. Having a great Culture and Strategy is just the first step towards value realization.