“Culture eats strategy for breakfast.” Ever hear that one? This Peter Drucker quote has been percolating in some business circles for decades now. As a proponent of the power of culture, I buy this claim implicitly, but it’s controversial as all hell – indeed, you may find yourself jeering at the soft-headedness of the idea even as you read this. I can almost hear some readers bellowing at their screens, “A company is nothing without a sound strategy!” – and I agree: if you don’t have a top-flight strategy for your business, you’re sunk. You can’t thrive without one.
So why is culture more important than strategy? Let me share a framework with you, and then we’ll see how “culture trumps strategy” fits in.
Think of the following as a hierarchy, with most essential at the top: Principles, Strategy, Tactics, Practices. All four are absolutely necessary, but Principles are the most important by far, and specific Practices the most expendable.
Principles are the lifetime values that guide your company from its inception through the rest of its existence. “Doing the right thing pays” is a Principle. If that is your company’s core Principle, then every decision you make, every direction you take, will either be in alignment with this or it will defy it. “Is it the right thing?” you can ask. If so, it will pay – sooner or later.
Yes, Principles are beliefs, and they can be plenty squishy and unquantifiable. Sorry, Processors. Plenty in life is impossible to measure, but – as Drucker so aptly pointed out – those can be the most important things of all for an organization.
Strategy done right should be measured in years. “Employees first, customers second (and no one else even gets a mention)” – that is a strategy. Firms with this strategy, such as Wegmans and HCL, are committed to treating their talent well, so their talent spoils their customers rotten, so the customers return the favor with increased patronage and referrals. That is a damn savvy growth strategy. It is built firmly on the bedrock principle that doing the right thing (being good to your people) pays (in revenue from the customers your happy people delight).
Tactics are the week-in, week-out things you do to make sure Strategy gets done. When top executives are in continual contact with staff and customers in order to ensure that both remain engaged, that is a winning Tactic designed to support the Strategy of “Employees first, customers second.”
Practices occupy the lowest rung in the ladder of importance. A Practice that supports continual executive engagement of staff and customers would be, for instance, “Each day, all top executive must have lunch with one or more front-line workers and speak with at least three customers.” That’s a Practice. If that doesn’t do the trick, it is easily changed, maybe to this: “Each day, top brass locks themselves out of their office for at least three hours and manages by walking around.”
Practices can – and should! – be changed regularly, like underwear. Tactics should be reviewed often as well, though changed a bit less frequently (or your people will beg you to stop moving their cheese).
So back to the original issue: how can culture trump strategy? It’s simple. What we mean when we say that is, commitment to a strong culture is a Principle. Granted, it’s a Principle that few business leaders understand, but that’s another post for another time.
One final note, just to be crystal clear: you need all four of these aspects of business, in balance, to be effective as an organization. Principles with no Practices? That’s dysfunction. Tactics with no underlying Strategy to guide them? That will keep you busy, but it begs the question, why do you bother?
A healthy organization has all these things: a strong set of Principles that guide all decisions, and that can be called up when the org seems to be losing its way. A simple, well-planned Strategy to guide you forward from where you are today to your goals three, five, or thirty years from now. Tactics that can be duplicated throughout the company for maximum efficiency. And Practices, or best ways of doing things, that allow you to check in hour by hour or day by day to make sure you’re making the most of your effort.
Show me a company that lacks one of these four key aspects of business, and I’ll show you… well, unfortunately, I’ll show you an awful lot of companies out there today.
Chances are very good that your company lacks firm Principles to operate by. I suggest you devise some. If nothing else, it’ll keep you out of the headlines. If you do it right, it’ll keep you in the headlines, but for all the right reasons.
Final note: Principles do not have to be morally commendable, though I’m sure you know where I stand on that. Here’s one that is morally neutral, but it’s sound:
- Principle: Increase stockholder value.
- Strategy: Grow aggressively by buying companies in key industries, and assimilating them into the organization.
- Tactics: Study all firms in a given market. Keep the pipeline full. Bring on one new firm each quarter.
- Practices: Dedicate teams to scout, teams to negotiate price, teams to fund and close, teams to absorb new talent…. We can get very granular here for each team, and each member of each team.
I hope it goes without saying (but nothing ever does): an organization will likely have several (hopefully complimentary) Principles guiding it at all times. Each one will have Strategies, Tactics, and Practices that stem from its bedrock Principles.
What I’ve noticed is that, while there is no shortage of Strategy in the corporate world, there is a dearth of Principles to inform that strategy. It explains a lot of the wandering companies seem to do: they’re operating without a compass.
Does your company have a compass? If not, I recommend you do something about that.
[This post first appeared on Ted’s previous blog.]