AUTOR:
CECILIE SCHJERVEN
 
20.05.2018
Observations

“Culture Eats Strategy for Breakfast.”

An organisation’s culture and its brand performance are inextricably linked to one another. Is culture the long-neglected, prodigious management tool?

 

Planning for the future?
The vital link between organisational culture, leadership styles and business performance is the main topic in one of the recent issues of Harvard Business Review (HBR). The ‘spotlight’ on culture is comprised of five essays that report on a vast research project undertaken by Boris Groysberg, Jeremiah Lee, Jesse Price and J. Yo-Jud Cheng. Culture, often thought of - if at all - as an abstract phenomenon, is described as a potential, powerful tool to be aligned with an organisation’s strategies and goals. This potential power for business is clearly captured in the phrase, ‘culture eats strategy for breakfast,’ supposedly formulated by the late management guru Peter Drucker.

 

Regardless of whether your company sees itself favouring stability and safety or opts for flexibility and welcomes change, it will have an organisational culture. While this seems obvious, the same ever-present culture is more rarely accounted for or used when an organisation plans for the future. Strategy, a plan of action to achieve goals, rules, is something most leaders see as fundamental in determining or maintaining continuity and growth. One reason for this is its rational and logical character. Culture, on the other hand, is seen as tacit and far less manageable. Therefore it is often demoted or altogether ignored in organisational thinking.

 

The HBR report, however, links strategy and culture to one another in an intrinsic fashion. The research shows that a strong strategy requires a strong organisational culture in order to fulfil the organisation’s missions and goals. It presents evidence for that cultural factors can be measured, managed and used as a tool in conjunction with strategic initiatives to enhance effectiveness and results. The research included surveying the culture and leadership styles of 230 companies and 1300 executives in various industries across the world. Business leaders were interviewed and altogether 25.000 employees worldwide took part in an online survey.

 

Soft but Malleable.
One difficulty in understanding organisational culture from within the same organisation is that it entails looking at oneself. However, much has been written about organisational culture and in the 1980s it was argued that it could influence performance, growth and success. Yet, almost four decades later, it remains a fact that culture is often ignored despite that social behaviour, unwritten rules and mindsets within an organisation may influence strategy and vice versa. The research reported in HBR makes a far more definite proposition and returns to the basic premises for the work done four decades ago by recognising the difference between individuals and groups within an organisation as one defining criteria for cultural entities. 

 

Meanwhile, culture continuous to be seen as ambiguous and ungraspable due to its ‘soft’ or qualitative aspects. Culture does not lend itself to being translated into numerical units; it cannot be quantified in the traditional sense. Theories formulated about half-a-century ago, place variables such as values and attitudes at the core of the phenomenon. Hence, the research reported in HBR also engages qualitative measures to present a model for handling culture with its corresponding soft aspects. The cultural model or framework presented can be used to identify, improve and develop organisational performance. It hypothetically offers organisations a unique opportunity to access culture as a formative force when defining strategies to reach goals. The unstated hypothesis is that firms or organisations which would embrace and use culture actively, would build a sustainable, flexible and competitive advantage in the market.

 

The research identified two fundamental dimensions of organisational culture: how people interact, varying between ‘independence’ and ‘interdependence’; and how they respond to change, varying between ‘flexibility’ and ‘stability’. Further to this, the research set out eight styles or characteristics of culture and leadership: Caring, purpose, learning, enjoyment, results, authority, safety and order. Responses to the surveys and interviews were mapped according to these variables. Overall, the parameters of the comprehensive study maintain the softness of culture but make it intelligible and eventually allow for it to be used as an instrument in planning and meeting with changes in the markets. 

 

Change Management through Culture.
One of the insights from the study shows that if an organisation has a strong, agreed upon culture, employees’ engagement and motivation are higher and can directly influence improved customer orientation. Likewise, higher employee engagement is ‘most strongly related to greater flexibility when an organisation must respond to change’. The cultural styles related to flexibility were enjoyment, learning, purpose and caring.

 

At a time when firms and organisations express strong interest and need for so-called change management, it is noteworthy that the research reports culture to be a chief means for achieving organisational flexibility and meeting with internal and external changes. For instance, if an organisation has to react to changes in customer expectations or market conditions, learning, one of the eight cultural styles, enables innovation and the potential for transformation. ‘In a dynamic, uncertain environment, in which organisations must be more agile’ Groysberg et al. says, ‘learning gains importance.’

 

Organisational Culture and Brands.
Directly relying on what researchers such as Rokeach and Hofstede set out long ago, the report initially states that culture expresses goals through values and beliefs and guides activity through shared assumptions and group norms. It is not a big leap to connect the same characterisation of culture to brands. Intangible and abstract in the way culture is, brands aim to differentiate themselves relative to competitors in the market. They do so by creating forms of customer loyalty through customer experience and identification with values expressed in the quality of services and products, in visual presentations and the atmosphere and feeling of marketing initiatives. In the end, all of this boils down to the customer or user identifying with a set of values that brand consultants and theorists argue must be rooted within the organisation itself.

 

To build, maintain and develop a brand, it is generally assumed that an organisation must formulate a comprehensive and well coordinated strategy. Thus, at once we are back to organisational culture! In other words, if the aim is to have a strong brand, one is well advised to start the work at home and build a strong, coherent organisational culture and formulate rational, strategic plans in alignment with this culture.

 

In HBR, June 2017, Denise Lee Yohn writing about organisational culture argued that ‘when your brand and culture are aligned and integrated, you increase operational efficiency, accuracy, and quality; you improve your ability to compete for talent and customer loyalty with intangibles that can’t be copied; and you move your organisation closer to its vision.’ It remains puzzling then, that a study reported by Forbes in November the same year, found that ‘despite culture being in the top three priorities for company boards, only 20% of 450 London-based directors and board members reported spending the time required to manage and improve it.’ Perhaps it simply proves that people dealing daily with numbers, will not take responsibility for what cannot be directly calculated in a spreadsheet? Revenue, after all, is not soft!