A company’s cultural trinity determines how work gets done
While analytics is at the core of strategy development it is a necessary but not sufficient pre-condition to effective strategy execution. Using external data to understand market forces, using customer feedback to interpret consumer trends, and reviewing market share movements to understand competitive movers and faders are central to strategy development processes. But when it comes to mobilising organisations around strategy execution there is a need to harness less tangible forces such as unspoken mindsets, behaviours and social patterns – i.e. an organisation’s culture. It turns out that strategy development is just one of three levers in a cultural trinity that determine how things get done in an organisation – which is naturally at the heart of the strategy execution challenge.
The cultural trinity brings together the why, what and how
An organisation’s cultural trinity brings together the why from leaders, the what from strategy, and the how from an organisation’s operating model. Leaders provide and inspire the purpose for why the organisation exists and why it can be effective. Strategy offers a formal logic for the company’s goals and orients people around them. The operating model drives the modes of interaction between diverse individuals – across space and time. The external expression of these three forces is an organisation’s culture. It expresses goals through values and beliefs and guides activity through shared assumptions and group norms.
Without all three cultural levers working in unison and in balance, strategy execution can fall short of expectations. Thankfully, all three cultural levers can be managed making an organisation’s unspoken and pervasive mindsets and behaviours less mysterious than they may at first seem. Managing these levers is core to strategy execution – something that can’t, and shouldn’t be, outsourced to the HR department.
Ensuring an organisation’s cultural trinity is aligned and in balance is key to strategy execution
Competitive market outcomes reinforce that just as there is no one ‘right’ strategy, nor is there one ‘right’ organisational culture to deliver effective strategic outcomes. The key is alignment, balance, and ‘fit’. Just like an Italian lakeside villa perched on the mountainside, with the Ferrari parked on the pebbled driveway out the front, the sleek timber speed boat moored out the back shimmering against the backdrop of the stone walls, timber shutters and windowsill flowerpots draping colour and vibrancy. It just ‘fits’ in the cultural and geographic context. Take any element away and the magic fades just a little.
Similarly, an organisation’s cultural trinity does not operate in a vacuum, it is part of a more complex interplay between geography, socio-politics, competitive market forces, and industry dynamics. In many cases – multi-national portfolio companies need to find a way to execute across a range of these factors all at once.
Practical tensions exist in aligning an organisation’s cultural trinity for effective strategy execution
This interplay gives rise to a range of practical tensions in aligning an organisation’s culture trinity to achieve the goal of effective strategy execution.
- Tension between cultural theory and reality – Organisations can spend considerable time articulating their culture and its desired values, norms and behaviours and how this links to strategy. This may be an outcome of deep levels of employee engagement in culture development, reinforced by reward and recognition systems and repeatable cultural cues. However, evidence suggests that the gap between an organisation’s cultural theory and reality can be large. It is easy to overlook power hierarchies within organisations and the disproportionate impact that values, behaviours, and mindsets of leaders have on the broader cultural fabric of the organisation. Equally, underestimating the power of legacy systems, processes and structures can serve to insidiously undermine the intent of both leadership aspiration and the delivery of strategic goals.
- Tension between common or uniform culture and diversity of thought – The attraction, selection and attrition model of organisations suggest that strong cultures can easily lead to conformity of thought that can be incongruous with the goals and benefits of organisational diversity. A useful analogy is to think about the cultural environment of an orchestra versus that of a rock band. Both create music, both compete for attention in the entertainment industry but develop their products in vastly different ways. It is infrequent that organisations fashioned on an orchestra attract, select and retain those who have developed in a rock band – and vice versa. One wonders of the distinctiveness of the music that would result if they did.
- Tension between a stable and uniform versus a flexible and adaptable culture – Different organisational cultures may be suited to certain types of business activities. Targeting a stable and uniform culture across different business activities can lead to the risk of cultural averaging, thereby not meeting the needs of either business activity well. This is a challenge in vertically integrated businesses where an upstream centralised production focused business may require a culture of discipline and controls to drive efficiency and risk management. A customer facing downstream business requires a culture of customer centricity, innovation, and autonomy. Finding a common language underneath the upstream and downstream dialects to facilitate sufficient comprehension is central to an integrated strategy execution challenge.
- Tension between integrated or independent cultures – different organisation cultures may be suited to different competitive environments. An organisational culture required to win in consolidated markets may be different to an organisation competing in fragmented and competitive markets. A common tension in strategic execution is whether to absorb and integrate cultures in the event of mergers and acquisitions or to allow the acquired culture to stand alone. The decision should be subservient to the core rationale for the acquisition synergies and whether the rationale is best served in an integrated or independent way. Regardless of the desired strategic positioning, invariably the drive for functional services efficiency can lead to an unconscious but incremental erosion of an acquired businesses cultural distinctiveness.
Organisation culture does not need to eat strategy for breakfast
It is frequently stated that organisation culture eats strategy for breakfast. While this is often true, it doesn’t have to be this way. Ideally they can both sit at the breakfast table and feast on the competition together. Applying greater focus in the strategy execution process to alignment of an organisation’s cultural trinity and identifying and dealing with the practical tensions that inevitably exist has the potential to enhance strategy execution. The levers for aligning organisational culture are as tangible as the levers of resource and capital allocation and need to have an equal seat at the strategy development table to enhance the probability of success in implementing strategy.