You Don’t Rule Your Company. Corporate Culture Does
…and what to do to implement strategic initiatives not matching your corporate culture
Culture eats strategy for breakfast — Peter Drucker
This quote to Peter Drucker, commonly considered as the father of management, briefly summarizes the power of culture in all the elements composing a company. If culture eats strategy, it can eat whatever it wants.
But what is corporate culture? I would define it as the set of behaviors, values, and beliefs predominant on how the people of a company make decisions and interact with their workmates, industry peers, and market environment. If you want to deepen the cultural elements, I strongly recommend this HBR article describing the six components of culture.
Culture is the very first, and the central element of the drivers for growth in the companies. The other factors strongly depended on this one. Culture will be the connecting cornerstone to fuel, constraint, or impede the success, first in the strategy, and ultimately in innovation and marketing as growth drivers.
Organic growth drivers. Self-development.
CEOs must have a bright understanding of how their corporate culture is, how the strategy fits with it, and what cultural elements can they leverage and should adjust to have a deep alignment with the other three drivers of growth in the triangle.
Aligning strategy and culture: Southwest Airlines case
To illustrate how culture drives strategy, consider the company Southwestern Airlines, the pioneer in low-cost flights, established in 1967. This company’s culture has been deeply studied and used as an example in business schools worldwide because of their care for the employees and customers, alignment with the low-cost strategy, and the consistent results achieved year over year. Southwest has a purpose mission, vision, and values, perfectly connected that drives the low-cost strategy.
From values to strategy
Southwest Airlines values are the next ones:
Live the Southwest Way
Work the Southwest Way
Safety and Reliability
Friendly Customer Service
The next image connects the Southwest corporate values, one of the most critical elements of organizational culture, with the activities system that delivers the strategy. As we can see, there is an exact fit between the strategic activities map with the corporate values. There is no isolated activity or value.
Southwest Airlines’ strategy activity map and corporate values
From purpose to strategy
At the same time, the values and strategic activities are perfectly aligned with the purpose “ Connect People to what’s important in their lives through friendly, reliable, and low-costair travel”.
From mission to strategy
The same can be said about the mission of “Dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.” Recheck the strategy map to see the match with the mission with all the red activities.
Southwest is famous for taking care of their employees, and we can see in the activity map specific strategy activities related to this fact. Its culture leads to happier employees that provide outstanding customer care, both totally aligned with the strategy. An operational example is a fact that the crew is the one who cleans the aircraft after a flight, including the captains. The impact is clear: Southwest doesn’t have to pay for cleaning services and doesn’t depend on another crew to clean the aircraft. It helps to avoid potential delays and extra costs. The crew does it because their behaviors and beliefs are driven by their purpose, values, and mission. Cultural elements that are fully aligned with the strategy of the company.
The numbers speak for themselves
The quantitative impact of this alignment, of course with other factors, is exceptional: from 1979 to 2014, the airline industry in the US lost an aggregate of $35 billion, and six major airlines bankrupted in the 2000s, being the worst-performing industry in the history. Meanwhile, from 1972 to 2018, Southwest achieved a record of 45 years in a row of profitability, being awarded as the best performing stock in the US with an average rise of 26% per year until 2002.
Culture drives strategy, and not the opposite. While building a new venture, be aware of taking care of defining and driving the company culture to drive the strategy you are thinking.
Our businesses need products people love, but a proper alignment with the business model, strategy, and culture will probably boost growth.
Strategic initiatives not matching the companies culture are highly problematic to implement yet low feasible for success. This happens because decision-making is driven by the culture, which ultimately does not let to allocate resources for non aligned initiatives.
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Implementing strategic initiatives not matching the culture
As one of my MBA professors used to say, “to manage is to anticipate”, which is a critical task of the top leadership in companies. That means that changes are needed in order to further improving, survive, or accelerate growth. The problem is that changes and people leading them will be dealing with the company culture. Sometimes those changes do not fit with the company culture but are necessary.
Some actions would be recommended to increase the likelihood of success while implementing any strategic initiatives:
Stimulate the initiative from the top of the organization.
Hire new people unbiased by the company culture capable of driving the changes.
Give them resources, formal authority, and time.
Change the performance metrics to drive resource allocation towards the new initiatives.
Formally communicate the initiatives and why to the employees.
Follow-up closely as essential topics in the executive committees, helping to address problems arising.
(BONUS) If needed, create a new business unit with all the above elements so that the company culture does not affect that hardly the initiative. This action will probably maximize the likelihood of success.
Even taking these steps, the risk of not being successful with strategic initiatives not fitting the culture is high. After all, culture eats strategy for breakfast.
Ultimately companies’ culture determines what an organization and its employees are capable and incapable of.
My purpose is to help people with my thoughts while learning with your feedback. If this post has been useful for you, please share the story with people that could benefit from it 💙.