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Brain Circuits
Management myth-busters: Does culture really eat strategy for breakfast?
Culture eats strategy for breakfast is one of the most enduring truisms of management. But is it really the case? And what is culture anyway?
What is culture?Â
To understand the relationship between culture and strategy, it helps to define what we mean by culture. A simple way to understand it is, “The way we do things around here.” It’s what people have learned over time and what they know how to do, and you can’t spell it out in PowerPoint presentations (although many organizations try). It’s hard to get it into people’s heads but, once you do, it’s even harder to get it out – changing organizational culture is difficult.Â
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How do culture and strategy interact?Â
In business, we frequently see good strategies getting bogged down in cultural challenges when it comes to execution. That’s because any fundamentally new strategy has to be accompanied by an equally profound change in the mindset of the leadership and those responsible for strategy implementation. Going on a journey – say, an outdoor trek – is a useful analogy. Strategy is the basket of decisions we make about where we want to go, how we prepare, what food and equipment we bring with us, and so on for the trip. We can think of this as the journey. Culture is the landscape. Are there mountains to climb, rivers to cross? Are there well-trodden paths to follow, or do we need to clear a new path through the jungle? The terrain influences the preparation and the destination, and both need to be given due consideration. Â
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Context is keyÂ
How much consideration should be given to each – whether culture or strategy is the priority for the organization – largely depends on industry context, and ultimately, how large a role culture places in the industry. In asset-light industries (such as professional services) and service industries (such as hotel chains), culture really matters. That’s because firms compete by creating intangible value and there’s little else they can do to gain competitive advantage. Â
But in resource-intensive industries such as pharmaceuticals, mining, and energy, making the right strategic decisions usually matters more. That’s because making the wrong call about which drug to develop or where to locate a mine can make or break a company, and no amount of cultural change is going to help remedy the wrong call.Â
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Key takeawaysÂ
- Strategy and culture are both important, but not necessarily equally so. Â
- You need to consider both, and the extent to which you prioritize one over the other depends on your situation and the industry you’re in. Â
- Culture is a lot harder to change than strategy. If you have a problem with your strategy, you can define a new one. If you have a problem with your culture, what do you do? Terrain takes a long time to reshape without very heavy and extremely expensive earth-moving equipment!Â
So, even if you are in a resource-intensive industry, next time someone tells you they think culture eats strategy for breakfast, tell them they’re going to have indigestion for the rest of the day.Â
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All views expressed herein are those of the author and have been specifically developed and published in accordance with the principles of academic freedom. As such, such views are not necessarily held or endorsed by TONOMUS or its affiliates.
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