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Culture Doesn’t Trump Strategy

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In the last 40 years of the 20th century, strategy was the champion of business supremacy. As a critical success factor, strategy turned into a lucrative industry for a host of consulting firms such as McKinsey & Company, and the Boston Consulting Group. Smart strategic thought became the conduit for propelling companies to decades of top tier performance.  In the new economy, culture is the poster child of corporate success. 

Culture is Today’s Poster Child

When one considers the power of culture at such notables as Google, Zappos, Amazon, and Twitter, there is good reason. Pundits are making the case that culture is the new means to the same end, using strategy as the foil. How many times have you read or heard that “culture trumps strategy?” This decree is nonsense.

The truth is that one success factor needs other success factors to be effective. For example, we know that a great strategy without great execution isn’t worth the paper it’s written on. Culture, strategy, leadership, branding, innovation, customer orientation and employee centricity must co-exist. Most leaders and managers know this. So why then, has strategy been singled out as the whipping boy?

Shareholders and Customers Have Never Been So Demanding

Might this have something to do with the increasing demands of customers and shareholders? Investors expect their companies to do more, do it better, do it faster, and do it at lower costs. This creates frantic searches by leaders and managers for any and every opportunity that might yield a new source of revenue and profit.

If these opportunities lead to a better bottom line and a corresponding stock price hike (even in the short-term), they must be good . . . or so the saying goes.

Strategy is Constraining. Intentionally So

Leaders who walk away from strategic confinement take their organizations in incoherent directions. We used to call this mode of operation, “doing business by the seat of the pants.” Like chickens running around with their heads chopped off, “seat of the pants” leaders either don’t appreciate strategy’s guidance, believe strategy is a deterrent to opportunity, or have never enjoyed the rewards of astute product or service differentiation. Without strategic clarity, the complexity virus infects the company. Left unchecked, it will stifle, stagnate, and bring the organization to its knees.

Business Models Change. So Must Strategy

Strategy does not curtail change because business models need not be static. Despite the decline of “instant” coffee, Nestle envisioned a better future because they expanded their definition of the category. They defined their business as “convenience” coffee and pioneered a new category within the tenets of their brand and coffee expertise. A $5 billion business known as Nespresso was the result.

Similarly, in the digital world, a strategy that confines retailers to bricks and mortar is foolhardy. Although late to the game, Walmart and Target are making huge strides in carving out a piece of this growing digital pie. You can bet their strategies for e-retailing aren’t wishy-washy.

Beyond determining the playing field, and telling you “what not to do,” strategy helps define the culture. When strategic intent is clear and concise, it provides the impetus for uncovering opportunities, enhancing know-how, and ensuring perennial stability in employment, earnings, and shareholder value.

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