Organizational Culture: Enabling Strategy Execution

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August 9, 2007 - By Keith Jones

I have been working with executives and executive teams for many years now and much of my time is spent helping them understand the role culture plays in the execution of strategy; or to put it another way, convincing them that they should care about culture. I have been privileged to work with many great & influential people in many different countries. The following 15 points summarize my thinking and opinion on this subject at this date and time:

1. The ultimate goal of any “for profit” organization is Shareholder Value Creation.
2. Market share, profit and rate of growth are the primary drivers of Shareholder Value Creation. Over any sustained period, growth activities generate three times as much shareholder value as productivity activities.¹
3. If the above is true then the goal of any strategic plan is to describe how you will organize yourselves to capture market share, drive profits and increase rate of growth.
4. Putting plans into practice is easier said than done; less than 10% of strategies effectively formulated are effectively executed.²
5. Organizational culture is often the difference between successful & unsuccessful strategy executed.
6. Culture is the collective behavioral norms & values of a group of people (in this case that group is your employee population). These behaviors and values are either helpful (productive) or they are not.
7. If strategy reflects the leaders’ beliefs & assumptions about the market they are in and how best to compete in that market, culture (in theory) reflects the same leaders’ beliefs and assumptions about employees and how best they should work.
8. With this in mind, it ought to be possible to guarantee effective strategy execution by simply developing a strategic plan and then defining an appropriate culture for the organization. By all accounts, you could even hand it over to HR to go implement that culture and wait for the value to come rolling in. There’s just one problem!
9. Cultures don’t actually emerge in that way. In all but the most decentralized democracies, leaders influence the behaviors of followers; in all but a handful (literally) of companies, the same is true. There is no abdication of influence here! Culture cascades through an organization in a “monkey see monkey do” manner. It does not matter what the leaders say (or the plans they draw up); it matters what they do and how they do it!
10. And what & how they do things is more often a product of their collective personalities than a conscious choice based on the strategy they prescribe. In other words, the workforce is influenced by a sum of the leadership parts and in turn the culture that emerges is more aligned to their personalities than to the strategy. This is particularly true in organizations where executive selection screens for “similarities.”
11. Of course, even a broken clock shows the correct time twice a day and it may be that the leaders’ group habits do fit the strategic bill. My preference would be to make a conscious choice rather than leave it to blind luck!
12. So, if you want to tell whether your culture is aligned to your strategy check the habits, routines and practices of the top leadership team. Are they walking the talk and do the behaviors fit the strategic intent? E.g. does your strategy talk about being a company driven by service excellence and therefore people being your number one asset? If so, where do discussions of people fall on the agenda at executive meetings? Is it number one? Number two? If not, the walk doesn’t match the talk! And chances are it won’t match it further down the organization either.
13. Aligning your culture to your strategy is a top business priority if you want to create shareholder value on a sustained basis.
14. If it’s not aligned today and you need to change the culture, start with the leaders and their behaviors, practices and habits – it’ll cost less, yield quicker results and be less likely to fail.
15. The best way to change the habits of leadership teams is to hire a strong team coach for them. Not a behavioral psychologist but an operational “swing coach” (to borrow a golfing analogy). Someone who observes and/or facilitates every team meeting for at least a year and whom reports on a consulting basis to the team leader. Teams cannot see their own behavioral backswing – particularly executive teams – and they therefore need someone to help them know whether they are on form or not!

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¹ A.T. Kearney Value Building Growth Database, 2001
² David P Norton, 2004

Keith D. Jones is president of OI Partners, Atlanta. He can be reached at kjones@executrack.net or 678-699-0517.