One of the late Peter Drucker’s most famous quotes is “Culture eats strategy for breakfast.” This is no longer always true and, in fact, it can more often be the other way around. Because of the accelerated pace of change in business today, strategy tends to eat culture.
The landscape has altered dramatically since Drucker’s day. Today, with businesses moving faster than at any time in history, pace has dramatically reshaped the relationship between strategy, culture and execution.
In Drucker’s era, a strategy for an organization could span for 10 years and assumed a decade of stability and growth. Today, most are working in a medium or high Strategy Cadence (Cadence is their speed of implementation), which means strategy has to change every three years or so. This fast pace of change means that the organizational culture is constantly in a state of flux, and it is more readily influenced by rapidly transforming strategic decisions.
In 2014, Constellation Research stated, “Since 2000, 52% of the companies in the Fortune 500 have either gone bankrupt, dropped out, been acquired or ceased to exist.” Former CEO John Chambers of Cisco claimed that 40% of companies will be gone in 10 years, adding that “Either we disrupt or we get disrupted.” The BBC reported that Professor Richard Foster from Yale University said that by 2020, more than three-quarters of the S&P 500 will be companies unknown in 2016.
The relationship affecting strategy, culture and execution is shifting. To accentuate this shift, the question to consider is, “Does strategy drive culture or does culture drive strategy?”
Strategy is about crafting the organization’s future; and can’t be constrained by the culture. The culture needs to be adjusted to support the strategy and needs to be agile. When crafting strategy, leaders have to keep an open mind and avoid limitations the culture may place on the vision.
Culture does not drive strategy. Rather, culture drives the way you
People who argue that culture drives strategy say culture is extremely difficult to change, that it dominates more than strategy. This may have been true in the past, but it can no longer be a valid way to think about or conduct business due to the fast pace that business models are required to transform. When it’s said businesses today must be “agile,” this largely refers to the agility of the organization’s culture in response to the rapidly changing strategic direction. See Figure 11.2.
Keeping the culture nimble requires constantly adjusting it to support the execution of the strategy.
The paradox is that they are built to be stable, yet they must keep transforming!
“Leadership is not about maintaining the status quo, but maintaining the highest rate of change that the organization and the people within it can stand.”
–Sir John Harvey-Jones, English businessman
People will adopt a new culture when it’s clear the current strategy threatens the individual’s future. Leaders must be able to demonstrate this. Here’s an example.
Microsoft’s CEO Satya Nadella announced to employees in 2014 that Microsoft Windows’ monopoly was under attack and the organization needed to function more effectively. Nadella’s goal was to reduce the amount of time and energy needed to get things done in the engineering area. This cultural change required reduced the people involved in making decisions, thus making individuals more accountable. This shift has been changing Microsoft’s culture.
Strategy now regularly eats culture for dinner, and organizations need an agile culture that embraces the accelerated pace of doing business today and readily support these rapidly shifting strategies.
Robin Speculand is a Global Pioneer and Expert in Strategy Implementation. He is the founder & CEO of Bridges Business Consultancy Int, creator of the Implementation Hub, author of four books on implementation (two became international best sellers) and is publishing his fifth, Excellence in Execution – HOW to Implement Strategy at the end of 2016. The thoughts expressed in this article are extracted from his new book.