Culture and strategy. Do we have to choose one over the other?

27. January 2022

Black and white.
Good and evil.
Anima and animus.
Emotional and rational.
Social and personal.

Is life made of dualities? Strategy and culture are one of these dualities we often encounter business-wise. Are we talking about opposing forces? Dichotomies seem to give us two opposing aspects on different poles, and the choice we have to make is either one or the other. Will we choose to act for good or evil? Will we focus on creating a stable business strategy or distinctive company culture? The thing is, we are much more complex.

There are so many shades between black and white, and we are living proof of the spectrum between those polarities. We are a combination of various qualities, each present by a different degree. Some traits or behaviours may dominate our nature, while others will resurface only on special occasions. We are the best representation of the polarity concept.

There is a scope and extent of each aspect contained within the other. A continuum of polarities exists within us, and we often personify a varying combination of them. Nothing flourishes in extremes, so often, the key is in finding balance. To conclude whether this is the case with company strategy and culture, we need to define the two first.

What is strategy and can you run a business without one?

Before we dive into defining what the term business strategy encompasses, we should take a step back and examine what strategy actually means. The term was introduced 15 centuries ago, originating from the Greek στρατηγία stratēgia, meaning »art of troop leader; office of general, command, generalship«. Military tactics, siegecraft, logistics were just several skill subsets that the »art of the general« embodied. The term strategy evolved through the ages and came to denote a high-level plan to achieve one or more long-term or overall goals under uncertain conditions.

Strategy is not solely reserved for the military quests anymore. Nowadays, it stands tall in all life areas, be it personal development goals, professional life goals or business goals. Our personal strategies are often shaped by our beliefs, values, and personal management system. We hardly go on living our lives, hoping everything will turn out for the better. Even if we don’t have a specific strategy pinned on our vision board, we have at least some sort of a strategy in our minds. What we’ve learned through primary and secondary socialisation and social norms stimulate our goals. Strategizing can sound scary, but we should never forget that the new experiences can serve as an excellent basis for regularly updating our life strategy by having our end goals and vision in mind.

Now, let’s try to grasp what strategy means businesswise. Researchers and practitioners agree that there is no consensus on the subject. Peter Drucker (1954), was the pioneer in addressing the strategy issue. He was under the notion that an organisation’s strategy consists of the answer to two fundamental questions: What is our business, and what should it be? Reflecting on the term’s origin, Drucker didn’t believe that »business is war« or that the business strategy should be associated with an act of warfare. Instead, he thought that strategy should enable an organisation to achieve the desired results in an unpredictable environment. Analysing the company and its marketplace to identify »certainties« was the first strategy development step.

The business strategy should serve as a framework for making both short-term and long-term business decisions. Hundreds of decisions are made in each company daily. From what software should we invest in and use, to marketing, recruiting and sales approaches, and even how each employee should make the most out of their workday. Not having a strategy in place that will guide these decisions, the organisation can be torn in different directions, less effective and profitable, and risks suffering internal confusion and conflict.

To summarise, we can consider business strategy as a set of guiding principles that construct a desired behavioural pattern. It should direct our people to the paths they should and shouldn’t take. Always having the end goal and desired results in mind is what makes both business and life strategies similar. They even point at the same impediments, the worse our starting point is and the more ambitious our goals are, the more effort it will take us to realise said strategy. We should put double the effort in to make it distinguished, and we’ll have to play smarter and work harder to make it a reality.

What is culture?

The term culture might even be more complex and broad than strategy. The consensus case is the same. There is no universal understanding and little consensus within, and even less across disciplines.

Almost seven centuries ago, when the word »culture« first appeared in the Oxford English Dictionary, based on the Latin culture, it denoted »cultivation« or »tending the soil«. A couple of centuries later, the term was associated with the phrase »high culture«, implying the cultivation or refinement of mind, taste, and manners. Nowadays, it is defined as the characteristics and knowledge of a particular group of people, encompassing language, religion, cuisine, social habits, music and arts. Simply put, culture is how we are doing things over here.

Consequently, organisational culture is the assortment of values, expectations, and practices that guide and inform the team members’ actions. It can be seen as the ultimate collection of traits that make our companies authentic. The term »organisation culture« refers to the values and beliefs of an organisation. The company culture also determines the way people interact with each other and behave with others outside the company.

Edgar Schein is one of the most prolific psychologists famous for his model of organisational culture. According to him, organisations do not adopt a culture in a single day. They tend to form it as the employees undergo various changes, adapt to the external environment and solve problems. Schein is famous for characterising three levels of organisational culture: artefacts, values, and basic assumptions.

• Artefacts are the organisational characteristics that individuals can easily view, hear, and feel. A visitor or an ›outsider‹ should also be able to notice them. The architecture and interior design, the office location, the employees’ manner of dressing, and even souvenirs and trophies represent physical artefacts. The language and technology used and the stories and myths circulating among the people are also part of this level. It also includes visible traditions that display ›our way of doing things‹ expressed at ceremonies and rituals, social and leadership practices, and work-related traditions.
• Values, according to Schein, are at higher levels of consciousness, and they represent the employees’ shared opinion on ›how things should be‹. The members don’t necessarily act according to these values, but they can help them classify their situations and actions as desirable or undesirable.
• Basic assumptions are the third level that makes the company culture’s core. These kinds of beliefs are never challenged since they are taken as facts. A pattern of basic assumptions evolves among the social group members. Understanding the basic assumptions gives meaning and coherence to the seemingly disconnected and confusing artefacts and values.

Schein noted that the company culture appears and solidifies through positive problem-solving processes and anxiety avoidance. The way the company solves and reacts to problems is a more prominent factor early in its history, as it will commonly face many challenges. How it responds to those earlier challenges will significantly impact the future cultural DNA. Still, every new problem has the potential to be a pivotal opportunity since new issues are not always the same as the old ones. While broader strategies and mindsets may solidify, the culture adapted by problem-solving can evolve.

On the other hand, anxiety avoidance comprises learned reactions that allow groups to minimise anxiety. Seeking order and consistency and figuring ways to minimise internal and external conflict are elements connected to anxiety avoidance. The resulting behaviours are quite stable since we tend to indefinitely repeat the responses that we know will successfully avoid anxiety.

The collision between culture and strategy

Can strategy and culture operate independently in an organisation? Should they be considered separate entities? This capitalist era enforced a result-driven approach to many companies, and many managers seem to use their strategy to justify chasing numbers, KPIs and ROI. Even though some companies might win the numbers race and double their profits, their people might be impaired in the long run. These demanding managers believe that strategy deals with the »real business« and is the route to success. They deem culture only as »panem et circenses«, using this concept just like the emperors of old used sustenance and entertainment to subdue public discontent. Like a nice thing to have that will hopefully make people happier in the foreseeable future. This complete focus on revenue can create burnt-out and overworked employees, and the culture deficit can lead to high levels of friction and productivity decrease.

Some leaders found it tempting to focus on developing strategy more than culture in the past few years of unprecedented change. Most would argue that a strategy that describes a general long-term vision without defining what it requires of the organisation’s culture is bound to fail.

An insightful Harvard Business Review article concludes that culture is always the winner when strategy and culture collide. Even the famous Peter Drucker quote says that »culture eats strategy for breakfast«. Drucker pointed out the significance of the people factor, implying that regardless of how effective your strategy may be, your company’s culture always determines its success. Even if you have the most detailed and solid strategy in place, chances are, your projects will fail if the people executing said strategy don’t nurture the appropriate culture.

Culture doesn’t refer only to bean-bag chairs at the office game room. It indicates how people act in critical situations, respond to various challenges and manage pressure, treat partners, customers, and each other. If they don’t share the leader’s passion for the company’s vision, the strategy won’t stand a chance since they won’t be keen on implementing the plan in the first place. The company will most likely struggle to execute even the trivial daily strategies, and accomplishing a new one would be out of the question.

As we all know, change is not easy, and people are prone to resistance, especially when it comes to things they are used to and hold dear. Some leaders might battle cultural intransigence for years. Connecting their desired culture with their strategy and business goals might give the profound answer to the question: Why do we want to change our culture?

Culture and strategy need to work in synergy

We need to spend a significant effort and time planning and strategizing, but company culture happens whether we work on developing one or not. There are cases it’s created unintentionally by the founders and executives. It’s worth noting that their actions speak louder than words in the process of culture creation. As time goes by, cultures tend to evolve even though modifying them on purpose can be a pretty complex process. These unplanned developments are not always for the better, and even though it might sound counterintuitive, leaders shouldn’t fight them but work with and within them.

Culture doesn’t have to trump strategy. They should work together in harmony, complementing each other’s success. Alignment is clearly essential, but it’s getting even more challenging over the past few years as priorities and strategies change in the blink of an eye. To help our people understand the ever-changing strategy, we should recognise them and show appreciation for their successes tied to our company’s values, purpose or objectives. We can ensure our team stays aligned with our business needs in their daily tasks by encouraging them to frequently and instantaneously praise their colleagues for delivering on said expectations.

Developing an in-depth understanding of what people need from each other to perform well is vital in driving complementarity between strategy and culture. We should always make an effort to learn how the culture really works while creating the strategy. Try to grasp what people talk about, criticise, prefer, remember, and admire in the company, and ponder their stories, tonality, and language. By listening and empathising, we will find the unwritten norms and values that characterise the culture and the most prominent strategy enablers (communication, technology, tools, incentives, compensation, and benefits) behind the seemingly concealed sentiments. Take the opportunity to analyse how the cultural weaknesses, like particular mindsets, assumptions, and practices, for instance, reflect on goals and productivity. You’ll probably find they limit the exploration of new prospects and potentials, preventing superior performance and higher growth levels.

To achieve the desired synergy, we need to focus on appreciating and incorporating people’s perspectives, mindsets, and skillsets. The most successful companies managed to develop a culture that has grown greater and more powerful than any individual. People are often inspired to conform to a strong culture since it’s the thing that links everyone together, no matter the department they’re in. When people become engaged with the company, the business strategy is more likely to be perceived as a personal one.

When culture and strategy are created simultaneously, they are more prone to be aligned and in full sync to complement and stimulate each other. This harmony fosters the creation of incredible organisational transformations. When we understand our business’ authentic culture, we’re familiar with all the factors, so creating a strategic business plan is almost effortless.

When we say that culture is critical, we’re not undermining strategy and leadership. A particular strategy a company employs has better prospects of thriving if it is supported by the fitting cultural characteristics. Strategy is important, but if we’re looking for long-term success, it must be accompanied by a strong culture. While the strategy will answer all the »what«, culture should define just »how« people will put it into good practice. Prospering companies don’t think of culture as an obstacle they need to tackle but as a change accelerator, their competitive advantage. Even if companies are performance-driven, they need to be primarily person-centred and values-led.

Jörg Müngersdorff