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4 Good Reasons Why Culture Is More Important Than Strategy
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“Strategy will only succeed if it is supported by the appropriate cultural attributes.”
Late last year, Booz & Co. released research in Strategy +Business showing “Why Culture Is Key.” Of course, this is the central point of our book Winning with a Culture of Recognition, and it’s encouraging to see these research results on the importance of culture to organization success.
The research is quite good, but these four key points in particular stood out (all quotes from the research):
Culture matters, enormously. Studies have shown again and again that there may be no more critical source of business success or failure than a company’s culture – it trumps strategy and leadership. That isn’t to say strategy doesn’t matter, but rather that the particular strategy a company employs will succeed only if it is supported by the appropriate cultural attributes.”
Think about this in terms of Zappos, for example. Zappos strategy is to be the best in customer service. To achieve that strategy, Zappos created a culture of happiness (their term). That culture is reliant on training employees well, trusting them to do their jobs well, and respecting the decisions they make.
Our data shows that companies with unsupportive cultures and poor strategic alignment significantly under perform their competitors…. In fact, companies with both highly aligned cultures and highly aligned innovation strategies have 30% higher enterprise value growth and 17% higher profit growth than companies with low degrees of alignment.”
Alignment is clearly critical, but an ever-greater struggle as priorities and strategies change more rapidly than ever before. Strategic employee recognition plays a foundational role in helping employees understand changing strategy so they can stay aligned with business needs in their every-day tasks. You can ensure employees stay aligned by adjusting the reasons for recognition in your strategic program and encouraging all employees to frequently and in-the-moment praise their colleagues for delivering on those expectations.
We believe the way to [achieve much higher degrees of cultural and strategic alignment] lies in gaining a greater understanding of the cultural attributes that any given company needs to foster, given its particular innovation strategy.”
Defining those cultural attributes is unique to every organization. Think of these attributes as your core values. What are the behaviors and actions you need and expect from every employee in order to achieve your strategic objectives? Those behaviors are your cultural attributes.
Yet even the most successful companies concede the difficulty of maintaining the cultures that led to their success. Palensky of 3M, certainly one of the most consistently innovative companies ever to exist, describes the challenge: ‘That’s the thing about cultures – they’re built up a brick at a time, a point at a time, over decades. You need consistency; you need persistence; you need gentle, behind-the-scenes encouragement in addition to top-down support. And you can lose it very quickly.’”
As Wally Bock pointed out and I elaborated on in this post, corporate culture is a bit like a bonsai tree. It can be steadfast and strong, but it requires deliberate nurturing to grow in a particular way. One bad chop can also kill the culture you’ve worked for years to create.
How critical to success is company culture perceived in your organization?
You can find more from Derek Irvine on his Recognize This! blog.