As senior leaders, should your focus be on the strategy or the culture? There’s an ongoing debate about which is truly more important, particularly when companies are trying to change their direction.
American theorist and author Peter Drucker famously stated that “culture eats strategy for breakfast.” Suggesting that no matter how well-thought-out your strategy is, it will never be successfully implemented if it is not fully supported and aligned to your organisational culture—that is, your people’s belief and behaviours.
What’s the difference between culture and strategy?
To keep it really simple, a business strategy focuses on ‘what we do’ and ‘where are we going’. Culture, on the other hand, focuses on the ‘how’ and ‘why’ we do what we do to operate as a team. Culture is created on the foundation of behaviours, rituals and attitudes that are made collectively acceptable within an organisation. It has a profound impact on how individuals make decisions and how they respond to challenges and adversity.
Culture vs. strategy: which is more important?
Both culture and strategy are crucial parts of the responsibility of senior leaders. Which one requires the most focus? Companies with great cultures perform better over the longer term than their industry peers, and have longer business life cycles. We believe you need a great strategy, but a great culture is more important in building a sustainable business for the long-term.
Culture drives performance, engagement and discretionary effort. Ensuring you are proactively creating your company culture is vital to your company’s success. Gallup research links culture as a key driver for employee engagement. Strong employee engagement accounts for four times the earning per share growth to that of competitors, higher productivity, better retention, fewer accidents, greater wellbeing and 21% higher profitability.
While a common misconception is that culture can take care of itself, in reality this is not the case. In order for your company to be successful you must align both your culture and your strategy—and understand the intrinsic link between the two. It is for this reason that culture and strategy must nurture each other.
There are four key reasons why having a successful culture in place creates a more sustainable business in the long-term:
1. Attracting and retaining talented people to your organisation
A stand-out culture is what attracts talented people to your business. It is what engages your team in meaningful and challenging work and instils pride in your organisation. Partners, suppliers, clients, customers and external stakeholders will want to be involved in the business because of the culture that emulates from looking after your people.
2. A great culture creates an environment for innovation and agility
Innovation at speed creates agility. This occurs as a result of creating an environment for people to be able to contribute ideas, challenge each other, solve problems together and at a rapid speed. It enables your team to change and pivot when necessary, whether times are difficult or not.
3. Taking ownership of potential risks to the business
Ultimately, safety and risk is about people looking after people and is the number one priority for every organisation. You may have the best processes, frameworks and safety strategy, but if you don’t have a culture of people looking after each other, you’re never going to get the results you require. A great culture stabilises risk as everybody in the organisation is really buying in, taking ownership, and taking custodianship of the potential risks that could impact the business.
4. Positive impact on the customer experience
Companies with the best customer experience have great cultures working behind the scenes. In these organisations, you will find that the customer comes second. Richard Branson famously stated that “if you take care of your people, they’ll take care of your business.” By starting with your team, you will have people working for you who are really passionate, engaged and happy. This level of engagement within your team goes on to benefit your customers, suppliers, partners and shareholders. This does not take away from people first as they are all treated equally.
3 Steps towards initiating a strategy for your culture
Step 1: Personal reflection as a leader
Reflect personally on how much of your time is spent thinking about creating a strategy, versus thinking about influencing and shaping culture. It really should be three to one. Seventy five percent of your time should be focused on building and embedding a great culture in the organisation to allow you to deliver and execute your strategy.
Step 2: Start a conversation about culture
Talk to as many people as you can within the leadership team of the organisation. Here are three simple questions to consider:
- What do you think culture means?
- What do you think the state of your culture is right now within the organisation?
- What sort of culture do you feel the organisation needs to move forward into the future?
Step 3: Create a strategy plan for your culture
Top performing companies articulate their culture and embed it into the organisation by closely aligning it to the overarching company strategy. It is the responsibility of the leadership team to create the strategy for your culture. Aligning together to develop a plan for how you’re going to build your culture will make you a more sustainable business in the longer term.
Overall, organisational culture needs to work hand-in-hand with your strategic business plans to maximise the success of one another. If you get the weighting of importance right between culture and strategy as a leader in your organisation (three to one), your culture will ultimately be the enabler of the execution towards any type of strategic plans your business requires.
Hear more on the debate about culture vs. strategy from Partner and Director John Colbert in this video below—feel free to share this with colleagues or anyone you know, who might get value from this.