Article:

Culture Beats Strategy Every Day

19 April 2016

Scott Way , Director, Industrial & Organisational Psychology |

Strategy and culture need to be aligned and complement one another if they are going to lead to a meaningful improvement in organisational performance.

Culture is one of the hardest aspects of an organisation for senior mangers to express, let alone align with a corporate strategy. For organisations where the culture is poorly aligned with strategy, the two often pull in opposite directions and create broader organisational issues. 

Among staff, the draw of an established culture will far outweigh a new initiative drafted within the C-Suite. In other words, when these two aren't aligned, the existing culture will beat the organisational strategy, despite the best efforts of senior managers.

While poorly aligned strategy and culture can create an obstacle for businesses, the opposite is also true; when these two work in unison, they can unlock significant benefits for an organisation.

What does poor alignment between strategy and culture look like?

A lot of Australian companies will discuss how their corporate culture is team-based and founded on mutual accountability. In this situation, individuals are expected to put aside their personal focus in favour of building a successful team.

The question is, though: How does this actually take shape within an organisation? 

For many businesses, this cultural goal is poorly aligned with other strategic elements of the company. They might emphasise the importance of teamwork but continue to provide individual performance incentives or set KPIs for each staff member rather than the team.

These all add up to poor alignment between the culture of teamwork and the way the organisation is measuring individual success. Staff will pick up on this inconsistency and will quickly lose trust in the process if they see individuals rewarded based on their solo performance.

While this poor alignment is easy to spot, it can be harder to fix. Companies that do want to make this shift will need to be sure they are planning for a long-term shift in both culture and strategy.

Embedding corporate culture takes a long-term approach

For senior executives, part of the issue that can arise when building a new company culture is that the results won't be felt for a number of years. People's perceptions will only change with time and can manifest themselves in a number of different ways.

Many of these efforts fail because senior managers don't see the impact in the first year and will abandon the project. However, it won't be until the second and third year that these changes start to achieve the desired results.

Starting small and building up

Alongside failing to think long-term, senior leaders need to be sure they are creating a program that is first and foremost achievable. It can be tempting to create an extensive list of core themes that are going to define the company culture, but often this involves trying to change too much about the company culture too quickly.

Adopting a restrained approach and starting with two or three points is often more effective. Importantly, these few ideas need to be achievable and agreed upon throughout the leadership team. Setting unrealistically ambitious or broad goals won't change the culture within an organisation and will fail to engage employees.

Finally, introducing a new culture to a business must take a soft approach. It's about changing the culture gradually so that staff remain engaged and motivated, while still buying into the new internal culture.

One way large organisations do this is to trial a shift in culture with just one section of the company. A subsidiary or single department can be a useful test bed to trial a change and then extrapolate these successes to the enterprise as a whole. They then adjust, tweak and revise the culture gradually as they need to in order to get the right balance for the broader strategy.

Culture and strategy are closely intertwined, and both have considerable impact on employee performance. When the two aren't aligned and staff are confused, the incumbent culture will often win, undoing the efforts of senior managers. However, when the two are aligned and inform one another, the impact on staff performance can be considerable.