Culture Beats Strategy

Belief systems are more powerful than information systems.

We see that every day, in hundreds of enterprises, lodged within a similar number of differing sectors, industries or geographical locations. All the data in the world is unlikely to change a deeply ingrained culture. 

That is why change is so difficult in organizations; what people fear or hope frequently outweighs what they know.

The news that Booz, the global management consultancy has produced research demonstrating that leaders believe culture is more important than strategy confirms a significant alteration in the understanding of what drives institutional performance.

There was a time when it was considered weak, soft or un-manly to acknowledge that anything other than the deliberate execution of rational planning would work to produce acceptable results. The delineation of responsibilities based on organizational model which were themselves derived from the military strictures that won WWII dictated that scale and mass would overwhelm the competition.

But as the following research suggests, a change has come. Employees - actual or potential - tend to view themselves as volunteers, with options. The need to earn respect flows both ways: employees need to demonstrate their value, but managers must now establish the justification for their leadership. People are more likely to question authority and the reason why something is being done, not just accepting it by fiat.

That most mergers, acquisitions and strategic initiatives fail is due more often to cultural than operational issues. Research my colleagues and I did on the success factors in entrepreneurial businesses established that the most statistically significant driver was the alignment of corporate strategy and employee interests.

In this economy, a supportive - and complementary - organizational culture is essential to executing a successful strategy. JL

George Ambler comments in On Leading In Turbulent Times:

60% of executives believe culture is more important than strategy or their operating model.

Research from Booz and Company found that 84% of executive believe culture is critical to their business success and 60% of executives believe culture is more important than strategy or their operating model. Clearly culture has a huge impact on business today.

“Everything I do is a reinforcement or not of what we want to have happen culturally.” – Steve Ballmer, Microsoft – Culture and the Chief Executive

The survey – conducted by the Katzenbach Center at Booz & Company – to better understand better understand global perceptions of culture and its impact on change – explored the views and perspectives of 2,219 executives. The report describes culture as follows:

“A company’s culture is the collection of self-sustaining patterns of behaving, feeling, thinking, and believing, the patterns that determine ‘the way we do things around here.’” – Culture and the Chief Executive

To be honest leaders have recognised culture as critical to their success for a number of years. Whilst this research serves to confirm the importance of culture it does of to raise a number of concerns as to how leaders are managing their organisation’s culture.

“In my view, the most significant finding from the survey is that organizations aren’t leveraging elements of their existing culture to sustain change,” said DeAnne Aguirre, a senior partner at Booz & Company. “We clearly saw that a much more holistic approach, one that leverages assets like informal networks and storytelling, is required if companies want to see the effects of their change programs stand the test of time.” – Culture and the Chief Executive

Key Findings

Some of the key findings from the survey are as follows:
Overview

• 84% believe culture is critical to business success.
• 96% said some form of culture change is needed within their organisation.
• 51% think a major overhaul is currently needed in their culture.
• 60% think culture is more important than strategy or operating model.
• Only 35% think their company’s culture is effectively managed.

Top Reasons Employees Resist Change:

• Are skeptical due to past failed change efforts
• Do not feel involved in the change process
• Do not understand reasons for change

Top Barriers to Change:

• Competing priorities create change fatigue
• Systems, processes, and incentives do not support change

Creating Sustainable Change

• Only 54% of organisations are capable of sustainable change
• 70% of those respondents whose changes were adopted and sustained leveraged organisational pride and emotional commitment.

Sustaining Change:

• Focus on a critical few behaviours with the most cultural impact
• Expand change capabilities beyond leadership and communication alignment
• Activate informal levers, such as peer networks and storytelling

“Survey findings also suggest strong correlations between the success of change programs and the leveraging (or lack of it) of culture as a driving force behind the efforts.” – Culture and the Chief Executive

For the full findings and report see www.booz.com/cultureandchange.