Strategy and Culture

Culture eats strategy for breakfast, Peter Drucker observed. And indeed so: Strategy's rational aims and goals are all too often frustrated by ways of seeing and doing things in an organisation. Yet strategy gets so much attention and effort - and, indeed, one hires those fancy strategy consultants - while culture is seen as that soft thing that one can't really define, one can't really measure and ultimately, one can't do anything about.

But culture comes from somewhere. It is not a given, an environmental factor that one has to live within. This is possibly the second misconception about culture, that it is an extension of the host society. Indeed, there is that influence of the host society, but an organisation's culture is just that and no more. While the host society supplies some of the precepts, an organisation's culture is a man-made thing, driven by the Founder or Senior Managers and shaped by the 'strategy' of the subordinates to live within that setting. 

It's a human thing, yes, but that does not make culture less definable. In fact, it is far more tangible than strategy. For all those boasts about smart strategies predicting the future, we know that most of strategy making is either a leap in the dark or after the fact justifications. The obsession with Powerpoint templates and presentation techniques are there for a reason: Style matters in strategy more than its substance. 

Strategy is, strictly speaking, a part of the culture. Management consultants would indeed want to have universally applicable models and rules - that's because they are management consultants. Without the possibility of a culture-free strategy, there would be no management consultants. Strictly speaking, it is actually the other way around: The assumption of culture-free strategy exists because there are management consultants.

So, culture doesn't really eat strategy: The latter is already inside the bowels of the former! To give so much focus to this superficial and rather inconsequential aspect, and neglect the overarching reality of an organisation is a common mistake many CEOs make. But that's not what I wanted to write about here. I wanted to write about organisational culture and how to deal with it at the time of a great change.

I should know. My whole career has been a sequence of navigating disruptive frontier, often from outside the organisations I served but a few times, from the inside. I have wasted my time on strategy sessions and was commended for my strategic insights, but all I ever did is to treat any organisation I worked with as a collection of people and made the effort to understand what really drives them. If I was looking out for strategy, it is the one with small s, the kind of things people do to protect their self-interest and advance their own desires and agenda in an organisation. 

Because so little thought is given to the culture, often it shapes itself around the practices of a few key individuals, or, in other cases, around the customers or suppliers of the organisation. When a banker starts a software company, he often runs it as a bank. recognising the smallness but not always the difference of the enterprise. When a training company works with a large customer, it picks up, without conscious effort, the language, practices and even some of the organisation structure of the customer. When an industry body works for an industry, it mimics the approaches and practices of its constituent members. Culture is often shaped, but not always consciously.

And, that's not a bad thing in itself, but not being conscious about this will be. Here, differentiating strategy from culture causes trouble. Google, as it cultivates its developers, or Cisco, when it maintains its ecosystem, build and maintain a culture of openness, inclusiveness and encouragement. This is not a strategy, because if it was, it would not permeate at all levels of the organisation or be swept aside with management changes. Rather, it's embedded as a cultural strategy (or strategic culture if you will) and drives those hugely successful organisations. 

On the other end of the spectrum, one sees those new private universities trying to run with the imported disciplines of financial services, just because its founders came from there. Or a small training company straddles itself with industrial grade systems just because its customers use them. In those cases, cultures are completely out of sync with the nature and the needs of the business, and does more harm than good. But then, its existence is not acknowledged, and while the organisations would want to hold strategy sessions, they would loath looking at their cultures, which is the root of their troubles.

The problem is though one could learn very little about how to deal with organisational cultures by reading the tomes produced by business school professors. In their world, there is something called strategy, distinct from culture - and indeed, strategy supersedes culture. Instead, the best sources of looking at culture comes from the brilliant outside satires - this explains why Dilbert was so successful - and the work in social sciences such as psychology and anthropology. I would any day read Adam Grant (I concede he is a business school professor, but a psychologist) than pick up a text book on Organisational Culture.  


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