Why Culture Doesn’t Just Beat Strategy, It Must Be the Strategy
A strong culture that aligns with a specific vision and strategy is a winning combination. Here’s why.
PHOTO CREDIT: Getty Images
Culture - and its application to strategy and results - is now a core focus of great organizations that "get it." Volumes of research from global consulting firms coupled with my own experiences as a business owner and consultant point to the fundamental belief that there is a distinct correlation between culture and financial performance. I address this topic thoroughly in my new book, TakingPoint, which is about leading organizational transformation and the role culture plays in successfully leading change.
But many companies fall significantly short in doing four things: (1) clearly defining their culture, (2) managing that culture, (3) aligning culture with strategy and desired results, and (4) leveraging culture during times of change.
In the 2017 Deloitte Human Capital Trends report, senior executives and human resources professionals from across the globe rated the areas of culture, engagement and retention as "urgent." Due to globalization, a wider array of employment opportunities and organizational transparency driven by sites like LinkedIn, Glassdoor and Indeed, the power is in the hands of the job-seeker, not the employer. And today's top talent cares deeply about the culture, purpose and work environment. That means that most companies out there have some work to do.
An organization that has a clearly defined culture which aligns with their core objective?
Naval Special Warfare (NSW) - home to the Navy SEAL and SWCC (Special Warfare Combatant-Craft Crewmen) teams.
The Navy SEAL training and selection process is now widely depicted in many books, movies and online resources. But you really can't understand the almost surreal essence of this environment unless you experience it for yourself. BUD/S is the first six months of the long training pipeline and is designed to develop the world's most elite and sophisticated special operators - warriors that are aligned behind a clear and concise mission narrative.
To defeat our nation's enemies.
The irony is that the training after BUD/S only gets more challenging - and peak performance is everything. The small handful of students that graduate from BUD/S go on to SQT, which consists of many more months of arduous training. The students are constantly under the microscope being tested on their physical and tactical perfection in all things Naval Special Warfare.
As the saying goes, "You either manage your culture or it will manage you." The NSW community does a very deliberate and thorough job of building, managing and protecting our culture--the shared beliefs, mindsets, values and rituals that have been forged over decades of relentless training and brutal combat. Like any organization, it isn't perfect and we have our flaws. But our culture is not haphazard, it's by design - it's what fuels our ability to be nimble, adapt to change and defend those who can't defend themselves.
If you make it through training--and that's a big if, since only a few out of every beginning class of 200 or so candidates survives to the end--your fellow SEALs know you're coming in with an extreme level of training, toughness and willingness to be a part of the most feared and elite special operations fighting force in existence.
They know you're a "culture fit."
Developing and protecting the culture is one of the most sacred parts of the SEAL experience, but if you listen to a lot of conversation in the business world, "culture" isn't much more than a soft buzzword that gets put up on a PowerPoint slide once or twice a year ten minutes after you talk about the corporate mission statement or annual strategic initiatives.
But treating culture like an afterthought isn't just foolish.
Because an organization that doesn't actively create the culture it wants will end up with a culture anyway. It will be the disorganized total of its employees' thoughts and experiences--based on everything from how they're treated to where they sit.
That kind of "ad-hoc" culture can have some positives. You can think of it like a big tailgate party before a football game. If you happen to end up with the right people, and the weather holds out, and everybody ends up liking the food, the party will be a fun experience.
But high-performance organizations don't leave those kinds of details to chance. They make the conscious decision to build and define a culture that attracts and retains the right team members, promotes the organization's values and reinforces those values throughout the company with consistent action. And their culture is aligned with specific strategic objectives - culture matches strategy.
So why is this so important to talk about how culture impacts change?
Because so many organizations get it wrong. There is a common thread among the highest-performing organizations that prioritizing culture beats business strategy every time. I'd like to take that theory a step further. For companies that will thrive in the 21st century - culture will BE the strategy.
According to a 2013 survey of more than 22,000 business executives by the Katzenbach Center at Strategy&, most leaders understand the key point I just mentioned--that culture plays a critical role in achieving great financial performance - and successfully leading and managing change.
As I pointed to earlier, defining and managing culture is more important than ever. According to a 2017 Gallop pole, only 33% of the workforce in the United States is engaged - the rest being passively or actively disengaged. Globally, that number sinks to only 17% engagement. You can see why this is a serious problem.
Culture is reflective of leadership and culture is what drives engagement.
Weak culture = low engagement.
Great culture = high engagement.
According to Fortune's Best Companies list and Glassdoor's Best Places to Work list (data complied through employee surveys), organizations like Hubspot, Nextflix, Apple, Google and many more rate the highest primarily due to how actively they focus on maintaining a great culture. For example, Netflix's Culture Manifesto is one of the most widely viewed documents on the Internet. And most of the companies that are winning when it comes to culture and being the "best places to work" are doing so by actually being the best PLACES to work. They invest heavily in cultural experiences and the workplace environment.
This consistency of action happens with big decisions and small ones. My friend and client Gordon Lansford runs J.E. Dunn Construction, one of the largest commercial builders in the country. When he took over as CEO, one of his core missions was to establish a culture of transparency, honesty and accountability. And he was determined to show that the people are J.E. Dunn's greatest asset.
We have a saying in the SEAL Teams - "Take care of your gear and your gear will take care of you." Similarly, when you take care of your people, they will in turn take care of you (the business). Gordon, like other great business leaders, understands that if you take care of your people, they will take care of the customers - which leads to great financial return.
And great financial returns equals happy shareholders!
One of the ways he did this was by changing the way employees are evaluated--separating it from the usual career development process. And candidates for executive positions in the company have to show with their record that the company's people have been their primary consideration. Over the past three years, by focusing on promoting a culture of open communication, trust and accountability - and rewarding these behaviors - the company has seen measurable growth and the financial returns to prove it. And more importantly, you can feel it when you walk into the office.
It's way more than a catchphrase.
One of the unfortunate side effects of the economic downturn that began in 2008 is that it has caused many organizations to manage out of fear. Because of the uncertainties in the marketplace--and the very real threats to many companies' survival--many, many leaders see the concept of "culture" and the tasks of defining and managing it as luxuries that only get attention once more concrete and easier-to-measure objectives are handled. This has resulted in many organizations being heavy on management and light on leadership - which is the antithesis of companies that navigate change successfully.
That's a short-sighted view, because the organizations that dominate their segment--Amazon, Apple, Zappos, and many more--do it specifically by defining and managing culture! Culture IS the strategy. It is the single greatest differentiating factor between mediocre performers and the organizations that operate at the top.
As Gordon Lansford says, if you focus on your "people practices" - and put the team first, the other issues tend to work themselves out.
When you define the culture you want for your organization, align it with the vision and strategy and establish it authentically, you will have built the single most powerful tool for navigating change. You will be building a team that can adapt and thrive in adversity--which is something every organization has to do just to survive. And while organizational change doesn't need to happen in such rapid succession as in urban combat for example, adaptability is key for success.