Culture Eats Strategy for Breakfast … And how to deal with it!!
Culture Eats Strategy for Lunch
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Transcript of Culture Eats Strategy for Lunch
the clarion call
the clarion group REAL. CLEAR. INSIGHT.
Culture Eats Strategy for Lunch…
Wendy Helmkamp and the Partners of The Clarion Group
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The Issue Why do you care about culture? Because it can help or hurt top-line growth, operational efficiency and attracting talent. But the establishment of and influences on culture — already potentially murky territory — might get even trickier if you don’t pay attention to current changes in how business is transacted.
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The Complexity of Culture No one will argue that culture isn’t important.
Companies that have a strong culture (often reflected to outsiders by the brand experience) have more successfully differentiated themselves in the market in terms of attracting customers, talent and shareholders. Think about Apple, IBM or Proctor & Gamble.
Culture creates internal alignment which facilitates organizational performance through time and space. Consider Toyota or Southwest Airlines, companies that can re-create the product or customer experience regardless of where they operate.
During tough times, cultural values can “hold an organization together” even more so than strategy or structure. Think about the turnaround required by Starbucks in 2008 through 2010, and what helped it endure during that period of time.
And finally, in-depth studies show that a “healthy culture,” meaning one that is strategically aligned and can adapt to change, leads to superior business performance.1
Culture’s Role in Creating Value
2013 the Clarion Group, Ltd. All rights reserved.
Given culture’s importance to creating value, it may come as a surprise to know how often leaders come to us for advice on their strategy, or for help redesigning their organization, yet neglect to consider the role culture will play in either helping or hindering them in achieving their goals. Perhaps this is because culture seems amorphous, and the interdependencies are difficult to see.
We tend to think of culture as an organization’s identity. It originates from the values, assumptions and beliefs of its leaders, and gets manifested as behavioral norms. Culture sits primarily below the surface, like an iceberg, residing in people’s subconscious, yet it plays out daily above the surface, in people’s interactions. In other words, a company’s culture resides in people’s hearts and minds, and becomes apparent in what people say and do. As leaders come together to solve critical problems and make decisions over time, a shared mindset forms. When these decisions and solutions meet with repeated success, creating value for the business, the beliefs and behaviors are reinforced and spread throughout the organization.2
Our experience shows that when shifting business needs cause leaders to substantially change their strategy or dramatically re-structure how work gets done, the assumptions and beliefs they hold about how critical problems get solved and decisions made must change as well. This is in leadership’s purview to address, and they must, or sub-cultures proliferate, sub-optimizing the organization’s performance. Small groups build and reinforce their own ways of solving problems. Islands form and people start to feel disconnected from the enterprise as a whole.
Changes in culture can emerge from anywhere – and do – so leaders must attend to culture as diligently as they do their strategy or structure.
Adapting one’s culture is not a simple task. It can be done, however, when leaders are committed, willing to adapt personally, and exert direct influence over the organizational levers that reinforce how work gets done and decisions are made.
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Culture sits primarily below the surface, like an iceberg, residing in people’s subconscious, yet it plays out daily above the surface, in people's interactions.
2013 the Clarion Group, Ltd. All rights reserved.
Culture Amidst Escalating Complexity While in many cases leaders have the influence and authority they need to drive culture change, there is a dramatic shift underway in how organizations create value which calls for a different way of thinking about culture. We are in unprecedented times of complexity and change, where new business models are constantly emerging and the consumer is increasingly in the driver’s seat. It’s hard for a day to go by without hearing or reading about this major metamorphosis. A recent example reported by Fortune.com is Aetna, the health insurer, which predicts that many people will soon be picking their own health plans. People already make use of Aetna’s health app, iTriage, which lets them do their own diagnosis on health ailments and find doctors. Aetna now develops consumer-facing applications to sell through Apple’s iPhone App Store to reach the millions of consumers carrying mobile devices.3 Aetna is a fascinating example of the convergence of healthcare and technology, with consumers increasingly dictating what products they want and how they want to buy them. This is a substantially more complex and difficult business model to guide and lead.
In a traditional (20th century) business context, organization boundaries stay firm and leaders make most, if not all, of the major decisions with limited external influence. Not that this is necessarily simple: think of companies with diversified product sets or multiple geographic locations. Now, boundaries are much more permeable; they will become more so in the future. Value is “co-created” with many different partners. In our recent article, “Ready or Not” we discuss in detail how consumers are taking a greater role in influencing the direction of product design, pricing, and even the reputation of an organization based on whether they “Like” a product or not. The importance of culture does not diminish in these scenarios; in fact, it increases. So how does culture get established and influenced in this new and rapidly developing context?
Re-thinking Culture In a much more dynamic and multi-faceted business environment, the importance of culture does not lessen — it takes on a different, expanded shape. As indicated earlier, culture can either help or hinder the achievement of goals.
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How does culture get established and influenced in today’s changing business context?
the clarion group REAL. CLEAR. INSIGHT. 2013 the Clarion Group, Ltd. All rights reserved. Page 5
FROM TO
values-based super-ordinate goal-based
my culture/your culture partnership culture
legacy culture emergent culture
Here are a few ways to think about culture differently which may raise the performance of your organization.
From values-based to super-ordinate goal-based: While the essence of culture is the shared values, beliefs and assumptions a group holds, a new unifying factor emerges – the super-ordinate goal. A super-ordinate goal is one where two or more people or groups must be involved to realize the
outcome. Consider the nature of internet sites like Wikipedia or Facebook. The developers and users share a common purpose: knowledge-sharing and connectivity, respectively. Rather than solving problems together to create shared mindset, users share a common interest and intent. This results in common behaviors in how “to act” on the sites. A common goal combined with consistency in how people behave on the sites, allows anyone who visits to both experience and reinforce the culture immediately. There is natural alignment without any formal structure or leadership modeling to influence behaviors. When goals are met and the cultural experience is positive, the result is longevity and success.
From my culture/your culture to a partnership culture: Many organizations use specific descriptors to illustrate their cultural values: entrepreneurial, innovative, quality-driven, to name a few. Or, if you were to ask an individual what it feels like to work at his/her organization, you might hear qualities like “it’s cut-throat” or “fast-paced.” In the world of partnerships, especially where consumers play an increasingly greater role in value creation, individual cultures need to give way to what’s needed for the partnership to succeed. One value, in particular, must take precedence. The value of openness — openness to ideas, to sharing in decisions, to solutions coming from anywhere, as well as openness to not having all of the answers. The “co” in value co-creation must be fully embraced. This value, and all of its supporting behaviors, should be cultivated by each entity in the partnership if it is not embedded in its culture already. The “degree of openness” can also be used as a screen to evaluate whether the partnership is worth pursuing.
From legacy culture to emergent culture: The roots of an organization’s culture — those initial values, assumptions and beliefs which eventually spread throughout the entity — are often attributed to the organization’s founder. The combination of his/her personal values and the aspirations or higher purpose he/she holds for the enterprise become its cultural bedrock. Consider Ray Kroc at McDonald’s or Walt Disney. Companies that are dramatically changing how they create value recognize that a culture based on legacy is insufficient (and could very well lead to its demise!). The complexity, speed and variety of environmental factors organizations must contend with today call for a continual re-visitation of cultural values. The assumptions and beliefs people hold about “the way we do things around here” in this environment will morph, regardless. The new paradigm is to allow for culture to emerge, while ensuring that it serves the organization’s purpose and strategy, as they too evolve with the times.
2013 the Clarion Group, Ltd. All rights reserved.
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The Clarion Institute is a part of The Clarion Group whose purpose is to watch our work with clients in the context of the larger world; to look for patterns and connections; to produce frameworks that help others view their issues differently; to develop points of view that help clarify thinking; and to engage with our clients and community on how to make more things possible. We would love to hear from you about the topic of this publication or about any other topic.
About Us: Culture is quite paradoxical. It provides organizational glue, yet it should never get too sticky. It influences how people behave, and how people behave influences culture. It requires leaders to intentionally adapt culture, yet leaders themselves must adapt (or be replaced) for culture to change. Despite these apparent polarities, culture has been and will continue to be a natural phenomenon of organizational life, even if much of it is operating below the surface. This fact will always make culture a phenomenon not just worth paying attention to, but essential to long-term success. Think about the culture of your organization, where it is helping and where it is hindering you. Here are some questions to prompt your reflections:
1) What few values, assumptions and/or beliefs are most important to your organization’s success? (“The customer always comes first.” “Sustainability in our operations.” A belief in “doing business responsibly and ethically.” “When the fun stops, we should stop what we are doing.”)
2) If you were to ask different leaders what organizational values matter the most, would you hear consistent responses?
3) Do your strategic decisions or how you solve critical business problems demonstrate these values and beliefs?
4) How do your values and beliefs support how you plan to grow as a business? Are any shifts required?
How you answer these questions will determine your course of action. Contact us if you’d like to discuss it; we’re listening.
1 James Heskett, The Culture Cycle: How to Shape the Unseen Force that Transforms Performance, (FT Press, 20111). John Kotter and James Heskett, Corporate Culture and Performance, (The Free Press, 1992): Authors conducted a series of studies of more than 200 firms in 22 different industries over an 11-year period and saw all success measures: revenue growth, net income, stock prices and employment, increase significantly for firms with healthy cultures. The results of this study have withstood the test of time.
2 Our perspective draws from Clayton Christensen, What is an Organization’s Culture? (Harvard Business School, 2006) which draws in turn from Edgar Schein, Organizational Culture and Leadership (Jossey-Bass Publishers, 1988).
3 Jessi Hempel, Don Draper Goes to the Data Center, (Fortune.com, July 23, 2012).
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