Saturday, October 01, 2011

Culture eats strategy ... where's the data?

I find irksome the management mantra that is commonly spouted of "Culture eats strategy for breakfast" because no-one ever seems to be able to justify the statement with data. I thought I'll pen a few thoughts on this.

An organisation consists of a mass of people, activities and practices combined with reserves of physical, financial, human and social capital. It's the interaction of the former three which impacts the latter either positively or negatively.

Culture results from the interaction of people with social (e.g beliefs, values, reputation) and human (e.g. skills, knowledge, myths) capital. In much the same way, the business itself can be described through the interaction of people, activities and practices with various forms of capital.

Strategy, is simply a plan of action, an intention and an aim e.g. it's the act of trying to achieve a particular goal or result. Either something has a strategy or we leave it to chance, randomness and accident.

We often talk about product strategy, marketing strategy, business strategy and organisational strategy but equally (if not in many cases more) important is cultural strategy. If you don't aim or plan to develop a particular culture, you'll end up with something by accident and that is not necessarily a good thing.

In recent years, the creation, building, "gaming" and planning of culture has become an increasingly more visible topic. Few have highlighted this trend as much as Zappos and Tony Hseih's work on delivering happiness. Be under no doubts, you can plan to build a specific culture.

Once a culture has formed it can certainly impact what business, product and marketing strategies you can effectively deploy in much the same way that past product strategies often impact future product strategies through inertia such as concerns over cannibalisation etc. In some cases, a future product strategy may require you to plan a new culture by spinning-off a group from the main corporate body.

As a rule of thumb your future strategies are impacted by today's strategies.

Whilst I can see some modicum of merit in bland arguments such as culture trumps products in certain industries, the culture eats strategy argument appears entirely misguided because you can plan to create or change a culture. Your strategy might require you to create a new group, to focus on happiness or to game the system - it doesn't have to be random or accidental.

To cut a long story short, the "Culture eats strategy" statement hypothesises that :-

unplanned, random and accidental [lacking strategy] culture eats for breakfast having a plan, intention or aim [for culture].

... I'm sorry I don't buy that, especially unless backed up by considerable amounts of data to counter examples such as Netflix and Zappos which show the opposite.

The counter hypothesis is that having a strategy for culture, organisation, business, product, marketing etc is better than not having one i.e. strategy eats all for breakfast, lunch and tea. In other words having a plan of action, aim or intention to achieve a goal is better than relying on randomness, accident and fate to do the same.

Now, the counter hypothesis would appear to be an obvious truth which is dangerous in itself. So, I'll start the process of collecting data and let's find out whether the "Culture eats Strategy" brigade have a leg to stand on. I doubt they do but then I might be pleasantly surprised.


Chris Bird said...

While we don't have data on whether culture eats strategy for breakfast or not, there do seem to be organizational "immune systems" - those parts of an organization that are resistant to outside agens that want to "infect" it with something new and, dare I say it, "Strategic".

We can all come up with anecdotes, I am sure. So I won't dwell on any specific companies - it's just that the resistance to change (inertia), and the active destruction of change agents - immune system reaction can slow things down dramatically. As Shaw said in The Doctor's Dilemma, "Stimulate the phagocytes". That seems to be what is happening in many organizations!

swardley said...

Inertia is something which I've talked about at considerable length. It can be both a benefit (in particular economic phases) and a significant hindrance in others.

I cover this a bit more in various blog posts, see Is Microsoft's biggest enemy Microsoft?) however for a general overview my Strata talk provides some of the background.

Brian said...

I think part of Chris' point is that you can also have a culture of inertia which can make it hard to implement strategy.

Let's say I partially agree with you, culture doesn't always eat strategy for breakfast but some cultures do. The difference is sometimes we fit the strategy to the culture and sometimes we strategically build that culture to further our strategy. But it can be easier to prevent a culture from eating a strategy than vice versa

andyjpb said...

How do you think an organisations ingrained cultures and existing strategies affect it's ability to "pivot" and adapt itself when necessary?

In order to change, a certain culture is required. If the whole idea is to change and see what sticks then that's a strategy.

swardley said...

@Brian, @andyjpb : first and foremost, culture doesn't have to be random but can be altered, developed, created and changed.

Inertia (which I've covered in many previous talks) can come in many forms (including institutional and organisational) and is both beneficial and disadvantageous depending upon the economic cycle that an activity is in i.e. in the peace phase (where focus is on margin) then inertia to change an activity is beneficial whereas in the war phases (where focus is on disruption) then inertia to change can have highly negative consequences.

Now as with all activities and practices, your present strategy influences your future strategy i.e. it can open or limit opportunities. Hence your business strategy today can influence the types of product strategy you may implement tomorrow.

These feedback loops exists between culture, structure, business, product, marketing etc. Hence your strategy for culture will impact your future business strategy etc.

When it comes to culture, your choice is simply have a plan of action, aim and direction (i.e. strategy) or don't (leave it to chance).

The normal excuse given to failed strategies is often the culture wasn't able to adapt etc. However, this is often simply to disguise poor strategy and in particular strategy which doesn't cover culture and how it needs to change.

When a culture is pre-existing, obviously you need to consider how to adapt unless adaption is not possible in which case the strategy often involves creation of a new team / business unit / bringing in people from outside etc.

The idea that change requires a certain culture is perfectly reasonable when used in planning to change a culture but it is not a blanket excuse for blaming culture for every failed strategy.

Culture is like any other resource, it can be managed and it should be.

Anonymous said...

This is really the case of tail wagging the dog. Or maybe a more apt saying is: create your own market. Does culture dictate strategy? Or is it otherwise?

-Seth Cope

Anonymous said...

I've read some of your blogs, and I would like to thank you for all the information you're providing about organizations. We do need cultural strategies, and not just business strategies because the human interaction/relationships that are involved in the business, are the ones that make it successful. -- Charles Zahel

Anonymous said...

"In other words having a plan of action, aim or intention to achieve a goal is better than relying on randomness, accident and fate to do the same."

I agree. I do believe that in the business world, marketers/businessmen don't just rely on luck; they should plan every cause-and-effect situations rather that just believing in chances that they'll make it to the top. Being happy-go-lucky, to make it short. Everyone knows that business is a serious deal, and no simple luck or randomness can bring it to the top without a proper strategy. Thank you!

- Isabelle J Haylen