Sunday, August 23, 2009

“Culture eats strategy for breakfast”


A strategy can be written in short order and communicated to the team by using multiple mediums in a matter of weeks. The best part is that if you get it wrong, the strategy can be adjusted and changed as needed. Culture, on the other hand, is a big deal. Every company or organization gets the culture it deserves. To make matters worse, when you end up with the wrong one, it can take a generation to fix it.

In the January 23, 2006 Wall Street Journal, Debbie Holton wrote an article regarding a quote made by Ford that "Culture eats strategy for breakfast." She commented that this quote comes from the war room of the new Ford makeover. The article sums it up in one paragraph. "Mr. Fields says he is now trying to rouse and create a sense of urgency in a corporate culture that has withstood repeated efforts at overhauls, ranging from former CEO Alex Troutman's sweeping Ford 2000 globalization effort, to former CEO Jacques Nasser's dot-com era campaign to remake Ford into a diversified consumer-products company with a strong internet component."

Have you seen a world-class strategy crushed under the weight of miscalculated culture? What could have been done differently?

115 comments:

John Erste said...

Corporate Culture is a sum of the people within the corporation with heavy emphasis on the personalities of leadership. I have been a member of a large organization that had bad corporate culture, but pockets of small groups with excellent culture. These pockets existed because their leadership was able to sift out the overriding bad culture and maintain an environment that allowed the team members the ability to flourish in their jobs. To this day, many of those small team members remember the experience fondly.

David Armstrong said...

Culture is a funny thing. In many respects it is invisible and is the sum of the "way we do things around here" and that comes from the way we manage.

I have worked in companies that had a strong functional culture that could take a good strategy and run with it or take a weak strategy and make it better.

And I have worked in companies that had dis-functional cultures. These tended to be decentralized organizations where at best, people in different parts if the organizations opted in or out and at worst, the organization had an entitlement culture. In both of these organizations, strategy came in second to the culture.

In her 1991 book, Danger in the Comfort Zone, Judith Bardwick talks about breaking out of an entitlement culture and moving to an earning culture. The process is not easy and one of the positive examples she gives is Ford.

Despite the comment made by Mr. Fields and quoted in "Culture eats strategy for breakfast", is it possible that Ford made enough of a shift in its culture over the past 18 years that it was able to come through the current economic turmoil without a government bailout?

LF Enterprises said...

I worked in a major multinational that desparately needed a culture change from entitlement to performance, and rewarding decision-making and risk taking instead of CYA behaviors. A new CEO was promoted from within and declared this to be his goal, stating that "culture eats strategy for lunch" (same thought, different meal). He also knew that it started at the top with he and his leadership team, that true culture change would take 3 - 5 years in a multinational, but declared that he would change the people, or he would "change the people".
After about 6 months of stagnation, after Plan A was not working, he went to Plan B and wiped out half his leadership team and put in new leaders who believed in the new culture that he was trying to inculcate. This changed everything, and true cultural transformation accelerated.

brianhodgson said...

Agree. Another way of saying this is execution is more challenging than strategy. The execute well in any reasonably sized organiztion, companies need to have a healthy culture.

Larry Bossidy's "Execution - The Dscipline of Geting Things Done" and "Good to Great" are both good books that support this.

Lalit Ahuja said...

Classfiying any company's culture as "miscalculated" may, perhaps, open a lot of doors to various opinions on what is defined as the right culture or even if there is anything as a right/correct culture.

I think the atleast the "implementation plan" for any strategy (if not the actual strategy itself) has to be cognizant of and work within the confines of the institution's culture. Of course, cultures can change and have changed, but the headwind encountered in going against the culture is generally very strong and can lead to significant resistance and much longer time in implementing any strategy. There is also the risk, as a strategist, of being tuned/shut out by those who possess the power to approve and dictate a change in an institution if the implementation plan of the strategy calls for a cultural shift, especially so if the cause for the strategic review is not tied to the survival of the institution.

Michael A. Bloom said...

Culture arises from the accommodation of fear, habitual practice and tolerated, unchecked demagoguery. A strategy, if to be successful, must take such into account.

Gary Gross said...

John,

A world class strategy will not be succesful unless there are a strong Change Management plan included to drive the cultural changes need to execute the plan. To that point, for a culture to change there MUST be buy in to the change, a positive motivation too change and a known defined goal that will result from the change. It has been stated that there in no "I" in team, but I submit that teams can not be succesful without 1) Buy In 2) Motivation and 3) A Known Defined Goal.

Gary

Grant Vokey said...

I'm not sure if I would call them world class strategies but I have seen the scenario a number of times.

The primary issue has been a miscalculation of what motivated the culture to begin with and the courage to take a stiff stand on the old culture in favour of the new one.

Grant

Kailas Simha said...

Hi John,

Thank you for opening up a very interesting topic! There are several examples that come to my mind. Ironically (since you have mentioned Ford here), Fiat's Palio - World Car project out of India suffered the same fate and Fiat has had delays and constant modifications to the project. If my understanding is right, the project was shelved/moved out of India as it seems the company lacked cultural background of India and working with Premier Auto. Similar have been several forays of Chinese companies into India. Sipani Auto out of India is another example - where they launched a product that was technically way ahead of what the market could absorb. Hindustan Motors, API, Allwyn Industries are all examples of how internal culture resisted changes in strategy and led to the eventual decline (demise) of these behemoths.

Not knowing the ground realities, background, market and importantly, the culture (both national and corporate) have been proven to have disastrous effects on companies.

Likewise, adaptive companies who were responsive to the culture have seen great successes as well. KFC in India, Maruti Suzuki, Pepsi, Unilever, have all benefited from understanding the culture and have benefited from changed/adapted strategies.

Bob Eastman said...

I think that "Culture eats strategy for breakfast" is a great way to put it. Although I cannot immediately come up with a specific supporting anecdote, I remain convinced that this is true; and this is most succinct expression of this that I have heard.

Most recently, I am seeing a lot of discussion of culture vs. the adoption of an internal social media strategy. One worthwhile post on this is by Daniel Siddle's article at headshift, "Balancing Technology and Culture During a Social Business Implementation", http://tinyurl.com/ofotu9 , (alas, not a supply chain context).

What I found most interesting about Daniel's article was what I perceived to be a too-facile categorization of "good" and "bad" cultures. My response to Daniel (which he did not see fit to publish) was, in part, a questioning about how one describes a culture as "good" or "bad", or how one company excels at company culture vs. another company.

I agree with you that culture is a big deal. Although I struggle with when a culture is 'good' or 'bad' or 'right' or 'wrong', I do believe that it can take a long time to change, and I think that 'culture eats strategy for breakfast' is a great way to put it.

Thanks for sharing this with us.

Bob Eastman
robteastman at comcast dot net

Maurice Calloway said...

The irony is Fords statement is that Culture also drives demand, which drives supply strategy. Automotive leadership from the Top 3, lost touch with cultural demands and ended up with a dated and underwhelming product automotive portfolio. I'd rephrase it slightly.. "Culture drives Strategy to the Bank"

Devon Oslund said...

I think one of the difficulties here is that strategy is communicated through "content" communication (that is, the literal content of what the speaker says), while culture is established through "process" communication (that is, the messages communicated by how the speaker delivers his message, or by what the speaker does).

Since people everywhere know that content is unreliable compared to process (because people often say things they do not mean), they quickly learn to pay more attention to that "process" channel.

In other words, if the actions we take contradict what we say, then people quickly learn to ignore us when we talk.

For a strategy communication to be not only heard, but believed and taken seriously, for it to impact corporate culture, it must be communicated through more than words. It must be reflected by real, fundamental, and lasting changes in the actions, not only of its originators, but of anyone responsible for communicating that strategy.

Otherwise, we're not really setting up new strategies at all, but just making mouth noises in order to look busy.

Michael Kotowski said...

John -

I just finished reading Outliers by Malcolm Gladwell, and self-admittedly I had a hard time getting started, once you get through the initial chapters it all starts to gel.

His shared insights of cultural dissonance and uniqueness turn some of our "standards" and "strategies" right on their ears for those considerations.

I strongly reccommend that anyone/everyone dealing in a global position or marketplace relationship read this book and assimilate it to your own specific needs, projects, issues.

Besides aligning with those cultural/authority/social issues, I recall - and forgive me if it's just folklore or urban legend, though keep in mind that sometimes "perception does become reality" - wherein one of the Big 3 automakers in the early 70's, launched a car make/model in South or Latin America, that when translated literally meant a "piece of s--t" in some of that region's dialects. Maybe a little more market research was in order than actually took place? Regardless, it's hard to recover from something like that!

Herb Kessner said...

John:

Great topic. I've been involved in many consulting projects wherein the client, usually a F500 company decides, for sound reasons, it wants to expand its competencies and services. It then hires, for significant packages, senior practitioners, experienced in the new field to hit the ground running. In almost every case, the resistance to the efforts were so great, sometimes bordering on abuse that the initiative was dropped and the new hires moved elsewhere. The company culture won. The cost of this round trip is extremely high.

I find that changing strategy, structure and process needs to be accompanied by addressing and initiating culture change.

-Herb

Gary Wood said...

John,

I own two Chrysler and two GM vehicles. I own Ford stock.

I also subscribed to your blog.

Ask me about Supply Chain Analytics.

Subir Bakshi said...

Here is the LP/RS (Logical processor with a mix of Reactional Stimulator) answer:
Strategy is the brand promise adopted by the company to differentiate it from its competitors. The choice of strategy cannot be objectively gauged at first. What can be objectively gauged is strategic alignment. A study of strategic alignment will let you know if you have the right routines, procedures and responses in place to stick to and reinforce your chosen strategy. Culture is one of the mechanisms that reinforces/supports strategic alignment. It is the thread that weaves the fabric of the entity.Your promises to your customers, employees, colloborators and stakeholders need to be measured frequently using leading and lagging indicators chosen for each of these strategic alignment drivers and adjustments made periodically. These measurables then need to be driven down to scorecard formats that allow objective evaluation and reinforcement through formal and informal networks/methods hence leading to individual accountability. This takes a lot of hardwork, painstaking planning and execution and follow through. Hence the Apex leader in this case with his management team would determine the brand promise and then deploy resources to establish a strategic plan and then measure strategic alignment. At this point you can identify gaps and make small corrections till the company's strategy and culture is strategically aligned. Easier said than done, I know, but several tools exist to make this process successful. You do have to have the right assets in place by the time you complete these iterations. If you still are not succeeding, your strategy may be flawed and at this point you can objectively evaluate/revisit your strategy.

Jeff Williams said...

Absolutely!

Most of my experiences have been victim to a culture that is either negative or absent. While I wouldn't call any of the strategies I have seen "world-class" but I sure have seen most of them totally ignored due to a complete lack of any driving culture based leadership.

Jeff

Anonymous said...

Hi John,
I am impressed by the articles you publish on linked in !! They are a great read, good topics. And this one, I unfortunately recognize pretty well too!
:-)) regards,

Mark Weare said...

Spot on Lucy, Implementation is one of the keys or should i say the poor Implementation of a strategy can be evident.

As human beings – many fear change, change is unknown, untested
Though we need to embrace change if we are to grow. As John Bishop alluded to “Every company or organization gets the culture it deserves” which can be brilliant or catostophic.

We must begin with the end in mind with refinement along the way or end up in permanent damage control. Clearer connections and communications across all levels can in some way help to alleviate through shared vision.

Dave Waters said...

Definitely a great discussion.

Lucy Garrick said...

Many times. I think the statistics I read say that 90+% of strategies fail not because the strategy is bad but because it can't be implemented. I believe this is a failure to adapt to change issue and should be treated as such

Dan Hearsch said...

The problem with relying on the apex leader to set the tone is that at so many companies, the apex leader changes so often. Further, the reach of someone in Mark Fields position trickles down to different areas of Ford Motor Company in different ways and at different rates, and it has everything to do with the intermediate managers in place, some of whom have not changes and are not able or willing to change along with the tone or message of the upper echelons.

The truth is that success is all about the blocking and tackling, and the effectiveness of people in the day to day activities has so much more to do with competing immediate demands than the longer term strategy.

Changing culture is as much about enforcing and enabling behaviors as it is changing the requirements of different job functions.

Within a company like Ford, changing the way Ford is perceived by those in the market is an issue for marketing, and one that marketing cares about. The question is, how does that change make it into the ranks of the engineers, buyers, accountants, and those in the manufacturing plant?

Gail Johnson Morris said...

John

What a terrific question - love the quote and completely agree with it. Culture wins, every time. Culture is all about the tone at the top - it's the apex leader and what that leader does, tolerates and rewards. People are very smart - they know that no matter what you say... it's what you do that actually = what's important.

True culture shifts take >5years to accomplish and are a sustained and focused effort where all the social operating system levers are pulled (meetings, performance, selection, recruitment, succession, rewards, speeches, print media - you name it, it's incorporated) and aligned. No one is immune, no one is exempt from demonstrating the 'new' cultural norms and respectful calling folks out occurs on a regular basis, until the culture changes.

With that said - good luck with actually making the culture change stick. What most of us consider culture change is really an organization's climate - the culture speak of the week/month/year until the next new broom leader comes in and invokes his/her own plan for culture.

It's fun to watch how quickly poor new mgmt. (can't call them leaders because they don't lead) try to re-brand what came before them, rather than working with what works and continuing the heavy lifting of a true and meaningful shift in culture.

Culture eats strategy for breakfast. If you want a new culture, implement new processes and behave your way to the attributes you wish to see. (Then pray you get a chance to actually embed the culture before you leave!)

Gail.

Sebastian Font said...

I have seen cultures eat strategies for breakfast. I've seen cultures eat $30M SAP implementations for breakfast as well.
You want culture change? It must start from the top layer of management, not just the CEO. And if any one member of that layer is not on board, and does not walk the walk, all efforts will be for naught.
Is culture worth the effort? Absolutely. Competitive advantage comes from culture, and the internal behaviors of the organizations. That's how great organizations have been built, like J&J, GE, Walt Disney, Google, etc. But most CEOs and executives hate that touchy-feely stuff, so the concerted efforts are never concerted enough. There is talk without the walk, and you get failures like GM's.

Sandra Wichman said...

John,

What a remarkable quote and even better discussion! Culture does eat strategy for breakfast....especially when those sculpting the strategic direction pay little heed to how the strategy will be cascaded and implemented. I have witnessed lofty visions put into strategic and tactical play....not realizing that they are the meat and veggies floating in a broth of culture. I have witnessed smarter strategists consider the need for a different culture for the organization to survive and meet the requirements of its vision. To modify the existing dysfunctional culture took several years.....and to close the gaps in performance to meet the new vision....another few years; but this strategy worked, saved a promising organization....and served culture up for dessert!

Mimi Meredith said...

I worked for a $2 billion company in which every senior level executive had risen from within the organization. Only half of those executives had college degrees, so their exposure to new theories of workplace engagement couldn't even be gleaned from case studies in textbooks. Not only does culture eat strategy, it also eats talented people who exhaust themselves pushing good programs and ideas uphill.

I give a rousing "Amen!" to Sebastian's call for 100 percent engagement at the executive level. The willingness to call for that commitment, and appropriate follow up to change saboteurs at all management levels, seems to be the determiner of success in effecting a true cultural shift.

Jeb Lyne said...

I love the quote, “Culture eats strategy for breakfast.” This is particularly true because “Culture” is not cannibalistic. When a strategy is created without taking into account for, or preferably actually collaborating with key members of that culture, this strategy is untenably different, probably incompatible, and instantly edible.

But enough food analogies…the most interesting cultural shifts I have seen are within companies that grow through acquisition. Many companies discover that cultural fit, though difficult to measure, is critical to successfully integrating new acquisitions. They also discover that good fit means more retained personnel from the acquired company. This translates into better retention of the best elements of the culture of the acquired company that made it a good candidate in the first place.

Along this same vein, another interesting cultural phenomenon is the benefit gained when the culture of a company acquired to fill critical capabilities gaps is permeated systematically throughout the new parent company. This is important because, particularly with large companies, the smaller acquired company often is the innovative engine that helps the larger company maintain relevancy. If the beneficial cultural elements are not systematically identified and nurtured by an executive champion and then spread throughout the parent company, there is a real risk of the smaller company’s benefits being diluted to the point of disappearance, especially when these capabilities meet ingrained resistance from the legacy capabilities being augmented or replaced.

The questions I pose, then, are how do you identify beneficial culture, how do you change detrimental culture into beneficial culture, and how do you measure this transformation? Also, how does this translation convert into better margins and reduced revenue fluctuations and, as an executive champion, can you predict this financial impact before you begin your cultural shift?

Ken Stephens said...

Maybe I am wrong but I thought that a good strategy also has to encompass the culture or the culture that you are driving towards. A world class strategy should be so bought into that management makes decisions based on the strategy. Decision made against the strategy are exposed and dealt with. That makes it impossible for those who are bucking the system to stay. A lack of strategy (a true strategy not the B school type) is what allows bad cultures to exist.

Sean Graham said...

I learned this lesson the hard way, but eventually caught on. In order to implement a new strategy, we had to replace 75% of a club's staff. We had the complete support of the COO and this is why I feel we ultimately succeeded. Any and all push-back by unwilling staff was rebuffed by company leaders and after awhile, as new staff were hired, the culture changed for the better.

I will say that I had never encountered such a challenge as dealing with a corrupt, losing culture that so many had bought into; wow, what an education I got with that experience!

Ed Spruck said...

Herb - agree...but how easy is it to change culture and in how many instances has a company been able to change culture simultaneous to changing strategy and structure? Culture can be shaped over time but in my experience it's not something that can simply be "changed", even with executive leadership trying to drive it...because culture is as much about what a company wants to be (i.e., the C-suite view) as it is about "who we (the employees) are". In other words, it seems to me that long-range strategy needs to take into account current culture and needs to incorporate a multi-generational approach whereby strategy/structure shifts as culture is shaped. This is a long process.

Thoughts?

Anny Guerette said...

I agree with M Sussman, and to change parts of a corporate culture you need to be equipment with a very strong management team that will not let one pass by and be very patient and mostly believe in the change you want to bring.

The culture is harder to change because you impact the person in much closer way then a strategy which is result and work related. It’s there way of thinking, behavior, it’s personal.

Steve Sussman said...

John, I have seen this many times and the key is that culture always wins. [I am not sure what you mean by 'miscalculated.'] Culture is the ideology of an organization and ideology drives the ship; and ideologies are very difficult to change. BTW: Ford was my client. If strategy does not align with culture, of any type, the answer is clear - change the strategy or suffer no progress.

Anonymous said...

I agree John. Strategies come and go. The power is in the combination of a strategy that fits the culture. I have a personal example in my organization. I lead a contract electronics manufacturing firm traditionally focused on military applications. It's taken almost three years to go from customer adversarial to partnership. The journey was inadvertently made more difficult by a Corporate HQ message that wasn't properly presented at a business unit/local level. In the end, a culture is created by a mission, values, and repeated reinforcement. It's a behavior that backs the words...walk the talk if you will.

Now the second part...maintaining a culture in an evolving marketplace. Thanks for the discussion thread.

Best regards,

Bob Wynes said...

Organizational culture is a complex set of ideologies and core values. It creates energy and determines the success or failure of an organization to IMPLEMENT a particular strategy.

A great example of organizational culture driving strategy is Wal-Mart. The company's cost leadership strategy is deeply ingrained in the organization. Their headquarters are rows of draby cubes, meeting rooms have white walls,expenses are closely monitored at all levels, managers are even expected to stay together in budget motels when traveling together.

These are extreme cost saving measures for the world's largest retailer. The company can surely afford to spend money to update their offices and increase travel budgets but senior leadership chooses not to. Why? It weakens the company's cultural energy and in return puts their cost leadership strategy at risk.

Great Topic! I'm glad I found you today on linked in!

Robert Johnston said...

The "culture" as you state it is more likely seasoned automotive professionals watching their CEO paint the wagon a different color and come to the realization that there isn't a "breakthrough" strategy. And one of the reasons that "sense of urgency" doesn't always take hold is that its probably running in "crisis" mode so often, that an immunity develops. Too often executive leaders believe Change = Improvement or they come up with some new Buzz thats hot without thinking through it.

The solution to this "culture" issue is purely better leadership that can instill trust with the people and uses best practices from outside the automotive industry.

Amit Kaul said...

There is a difference between strategy and execution.
Execution is the culture.

Clayton Berry said...

Speaking specifically to Mergers and Acquisitions - they take place in all industries and are a result of strategic planning/vision or at least basic financial analysis. And while lots of time and money is spent justifying the M&A, including hiring consultants for IT and Accounting integration, very often the culture and human transition part is dismissed entirely or at best, put at the bottom of the priority list.

Certainly aligning IT and Finance in M&As are important, but as your note suggests (and tons of research supports), culture is equally important. So why is it overlooked? I believe a few reasons:
1) It’s not easily quantifiable
2) It’s not easy
3) Perhaps businesses (and the people running them) these days are forgetting the human element a little too often, using the excuses of “global pressure, “fast pace”, “bad economy”, etc, to cover the simple truth that they are lacking in either leadership or management skills (or both).

Ok, but what can help then? First, acknowledge the importance of the culture issue, and really mean it. Second, look for help (internally or externally) in dealing with this, and start immediately. A common mistake is, “once the employees see how profitable we are after the change, they’ll naturally jump right on board!”

As with any project, a culture shift should be managed and measured. There needs to be goals and priorities, and have support in place to achieve these. Upper management also needs to realize that managing a culture shift is extra work for everyone involved, and on top of that, there will be problems and interruptions. As such, they need to understand that during this time, productivity will generally be sporadic and overall less than before.

Unfortunately, some leaders stress the need to work harder and get this done faster - to reap the benefits (their goal) and get over the pain faster (band-aid analogy). This of course once again dismisses the human element of reacting to, accepting, and dealing with change, wherein time compression is usually not practical. To this part, it’s usually helpful to have onsite counseling, as well as pre-shift working sessions and information sessions to prepare people. As always, consistent, open communication is a huge key when dealing with M&A as fear is a huge behavioral driver and trust (or lack thereof) can really derail an effort.

I believe the number is something around 75% of all M&As fail (either completely or just never realizing increase in financial metrics presumed). Above I have noted quite a few reasons why, and a few ways to combat these. Summary of needs for success:
1) Understand, acknowledge and plan to proactively deal with culture shift
2) Strong, capable, human-oriented leadership and management
3) Consistent, open communication
4) Recognize the need for (specialized) help and start working on this issue immediately
5) Don’t assume, check in more often with managers and employees on how things are going, and how this is affecting the people and the business during this time.

Once you’ve done the math on the M&A, put that aside and ask, “but is this a good marriage?”

I don’t believe my reply here is exhaustive by any means. I think the key is for people to understand it’s not easy, nor routine, and that they will need help. I hope my reply steers them to ask these important questions and seek help if this situation arises.

Steve Sussman said...

Agreed, culture-changing strategy and tactics from the sourcing perspective is normally difficult and elevated buy-in is a continuous process akin to presentment of Brand Plans. The problem always remains that changing sourcing's culture does not mean you can change the organization's culture - that is different. Many times this is impacted upon by where sourcing sits - at the Boardroom table or not. Or, as John Campi (ExVP Purchasing) recently remarked about Chrysler's supplier culture (public citation omitted) "I've never seen anything like this...." (and then he departed) and the Big 3 have been trying to change that for years.

As an aside, I found the same thing at Twitter. I thought I had a great strategy aligned with their culture but I was in for a surprise, here's my blog post -

Anny Guerette said...

That you create a change in a company that it's regarding the culture, procedure or process; your team needs to feel that they had a part into that change somewhere or somehow down the process. This way they will better approve of the change, accept it and make it progress. To better implement, you need to be a very good listener and a good coach.

Kelly Brown said...

The first thing an executive would need to do is recognize that the leaders are not necessarily located in the top chair, and then go looking for them.

I look for MAVINs (a term I first encountered in "Tipping Point" by Malcolm Gladwell), person's who are the recognized technical authorities on a subject, and consider carefully how to get them on-board with my efforts. Mavin's don't control the resources, but they do control ideas.

Not only do they provide a wealth of detailed technical information, winning a single Mavin to your cause is worth a dozen managers.

Nick Hohenwarter said...

I've worked for two different companies over the past 5 years that have entirely different cultures. Since I've had the fortune of working for both, I've developed a strong belief that the actions of company leaders - any employee that is viewed as a major contributor, or a "go to" person - have a stronger impact on corporate culture than a communication from executive management. I think that executive management's impact on culture change is dependent upon the company leaders embracing the ideas and messages passed down from executive managment. Once company leaders show their approval through action, then others will also embrace it.

So, now the question is "how does executive managment influence company leaders?"

What are your thoughts on this?

Mimi Meredith said...

Thanks for accepting my babbling clarification, Jeff! I am having one of those strategy-eating days with my own corporate culture...and here's the scary party...I work for myself! Yikes!

Dean Elger said...

The key to implementing a new strategy is to tie into the culture and have the tribal leaders start the change. The tribal leaders are the true leaders in an organization and they usually are not represented correctly on the org charts. They are the people everyone go to for advice and comments after the conference calls.

Siavosh Dehdashti said...

Culture change is possible, and as already indicated, happens over time. What facilitates the culture change is a clear and simple Vision, articulated, communicated and practices by the leadership team, every day. The strategies that sound good, but don't go beyond slides are not worth the time it took for them to go on to a slide presentation. Effective strategies are always aligned with the established Vision, and supported by clear and measureable plans, goals and objectives for every organization, team, and individuals in the business, in order to produce results.

Brad Blonkvist said...

I completely agree. In the sourcing realm, culture can best be influenced by merics and reporting. Too often, the historically heavily experienced commodity manager is more relationship-oriented /gut-feeler than fact-based decision maker.

We have found that clients which institute better reporting and metrics can change this culture in months rather than decades. For example, having commodity managers present their annual sourcing strategies akin to brand managers presenting their brand plans for the year will quickly allow the general manager to appreciate the different talent levels had and desired.

Monthly reports, benchmarking templates, required spend analytics, etc can change the job descrition, eventually sort out the required skill sets and therefore the corporate culture within procurement.

Another example might include measuring days at strategic supplier site. This has a way of quickly shaking out the supply leaders of the future from the order placers of the past.

Brad

Dave Martens said...

Always work change from the ground up! Whenever I have entered a new facility I always go to the dock and start right there. When they know you know........positive change happens.

Matthew Blackledge said...

I think you're right Tom; very few companies give themselves time to answer these questions. It takes a huge amount of effort and is never easy to define. Also, what the management see is often different from the informal culture and networks on the shop floor.

Keith Hudson said...

"Why Work Sucks and How to Fix It" is a fascinating study in culture change at Best Buy as they transitioned their back office to an entirely "Results-Only-Work-Environment". Productivity increased 37%, and voluntary turnover reduced as much as 90% in some groups. All that from identifying and changing the industrial age thinking we are all saddled with into knowledge age thinking.

I highly recommend it.

Michael Lisagor said...

Hi, Brett - I completely agree. I have two different strategic planning consulting clients that are facing this cultural hurdle - one successfully, one not so successfully! It takes a strong commitment to change and usually some outside facilitation to move this beast in the right direction.
Mike

Brett Zabek said...

Strategy is dictated by corporate culture. A risk adverse culture will not have a very progressive strategy and if they did adopt such a strategy, a shift would happen at the slightest perceived bump in the road. For a conservative culture to pursue a different path a paradigm shift must occur at the highest levels of the organization. Without this change in vision, any strategy that deviates from the norm is doomed to failure for one of two reasons:

1) Leadership will have it on a short leash and pull the plug in a blink of an eye
2) Lack of experience in driving and managing a progressive strategy is not in the corporate DNA

Anonymous said...

John,

Your question caught me at a great time. I am currently working with a client whose name could be substituted with Ford and I'm guessing the article would ring true. I'd love to read the actual article but can't find it anywhere online. Do you happen to have a copy of the original article?

David Schlitter said...

I work with both large and small companies in a variety of industries and I've always found that culture is a direct reflection of top management. Too many top brands are hampered by highly risk averse cultures where CYA is the main concern. I've noticed that larger companies tend to have the most risk-averse cultures and are the slowest to adopt new technologies. I see the opposite in small, entrepreneurial companies. I wonder what would happen if larger companies started hiring more entrepreneurs? Would this be enough to change the culture, or does it have to come from the top down? If it has to come from the top, are people who are a long time product of a bad culture capable of changing it?

Otto Thav said...

Unfortunately LinkedIn does not allow me to cut and paste my entire book in this space. My recent Non-Fiction "SILVER PARACHUTES" book discusses your question in detail and suggests many preventative solutions. You can preview inside the book for more details at:

http://www.amazon.com/gp/product/0557010624?ie=UTF8&tag=thavllc-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0557010624

Peter Galicz said...

Great discussion! I always enjoy your posts John.

Kailas Simha said...

Very relevant an good question, Les. I have always believed that passion is the primary driver for all things (need being a part of it). Especially in organizations where the cultures are not geared towards winning, it is the responsibility of the leaders to educate and create a passion towards corporate goals.

On a different topic, here is an interesting read from the FT to-day on different facets of leadership -
http://www.ft.com/cms/s/0/1d2be7d6-91a0-11de-879d-00144feabdc0,dwp_uuid=fc1ed142-a0ec-11dd-82fd-000077b07658.html?nclick_check=1

Ananth Ramanathan said...

Les, great question and this is not an answer, but more of a comment along those lines. The discussion above has included market culture and corporate culture, my thoughts are along the corporate.

I see winning strategies developed with today and tomorrow in mind. But I find that corporate culture can hold up the execution of these strategies to the point that the strategy becomes yesterday's strategy, by the time everyone comes around. Where do you start the mind shift? How can mid level executives effect this change?

Les Hedgespeth said...

Dittoes on the topic choice. QUESTION, I would like to hear from all on this. Different perspectives yield great choices.

If a culture existed that was far from providing a winning scenario for the company, how would you go about such a massive change in paradigm for the organiuzation? Suggested Book to read?

Andy Cooper said...

Agree , strategy make get you into the game , however the culture of execution & accountability scores the points !

Jeff Williams said...

Whew - Thanks Mimi for the follow up. I was ready to just hang it up and go get that Walmart greeter job.

Jeff

Mimi Meredith said...

Heavens no, Jeff! Some of the most astute business people I know have no college experience. In the example I offered, the lack of the quest to expose oneself to that outside information (because as you said, anyone can avail themselves of case studies) was combined with the additional insulating factor of leadership rising from within. Spending an entire career in one place can breed a depth of experience and commitment to an organization that it second to none.

I think when management fits the profile I mentioned, managing strategy and nurturing culture can become a very insular experience unless there is a commitment to availing oneself of educational resources, whether through formal CE opportunities or informal commitment to understanding the world beyond one's own industry. If management is unaware of trends and contemporary ideas, they may miss the chance to create a culture where new contributions and process improvements are welcome.

There is so much more I could say, as these are all issues that resonate strongly with me. However, I wanted to pop back in and make sure that I clarified that I don't believe a college degree is required to develop a good anything--let alone that it's a prerequisite to strategic and cultural leadership. I'm off to a meeting. Have a good day everyone!
M

Tom O'Connor said...

How many companies do the penetrating soul searching necessary to answer the questions "What is our culture" and "Does our culture support the business we want to be"? This involves a serious integration of soft skills and hard skills that few companies are willing or able to invest the time in.
Changing a culture effectively is impossible with out the top executive on board as an active participant or at least as a champion. Which then brings the followup question - has Mr Fields been successful so far? If so, what is now being done differently on Mr Mulally's watch?
Unfortunately, I can't answer Mr Bishop's question about specific companies - great strategies that fail are often chalked up to poor execution, if they are discussed at all. More frequently, though, the strategy itself is deemed in retrospect to have been defective. That's much simpler than correcting cultural or execution shortcomings.

John Bushling said...

Culture will eat strategy for breakfast, lunch and dinner. I worked, indirectly, with a group where the culture was to blatantly ignore any strategy or 'change' that wasn't status quo. The group ignored the plan for change and drug their feet until it died. The CEO and the executive leadeship team had initiated the change but were so far removed as to be uncommitted.

If a CEO and executive leadership team believe their strategy is significant they need to live and die their startegy and be the chief cheerleaders. Anyone not on board needs a short mentoring time frame and immediate removal if mentoring is unsuccessful. This would apply to anyone in a leadership position. Those who would not take the needed steps need to be removed also. Non-support that is allowed to exist becomes pandemic. Culture changes slowly but needs a constant drumbeat to advance.

Does it all sound harsh? I guess its' harshness is determined by the necessity and scope for the change strategy.

Jeff Williams said...

Ken - You are totally correct that good strategy would encompass culture. But good strategy only succeeds in GOOD cultures. What most are talking about experiencing is the culture getting in the way of developing and executing good strategy. Hampering cultures usually manifests themselves through authoritarian leadership, risk

A businesses culture should be embraced as long as it is beneficial to market growth and supports opportunities for all to participate in those benefits.

What many see are cultures that stifle growth, limit voice and suffocate. Vital change isn't incorporated and a "not invented here" attitude exists.

Mimi - You stated; "Only half of those executives had college degrees, so their exposure to new theories of workplace engagement couldn't even be gleaned from case studies in textbooks.".

Do you honestly believe that it takes a college degree to successfully develop and execute a strategy or create a positive business culture? Textbook case studies can be read by anyone, anywhere, anytime. Experienced operations and organizational leaders can be better served by actual life skills and the daily interactions with others than lectures and case studies. I happen to think that we've educated common sense and flexibility out of graduates. It is only with some years of exposure to how people and life really works that some get it and are able to develop the skills necessary for change leadership.

They don't teach wisdom in college or from text book case studies.

Jeff

Don O'Grady said...

Strategy and culture are the very heart of real change and transformation. As already mentioned its fairly easy to come up with a strategy. Unfortunately, and all to often its a set of slides held by the top executives and goes no further. Employees don't know what it is; Executives understand it differently; and the CEO can't understand why more traction isn't being made. Culture is the manifestion of how the company runs and that is where the intersection with strategy matters.

I agree that its difficult to change culture; but we have examples of where it was done and the results were impressive. Some of these examples are dated but still relevant; think Allied Signal, Harley Davidson, and examples of companies that have struggeld to change their culture (GM, HP).

Culture does matter and its where HR can and should play a major role

Great subject. thanks for putting it on the table

Steve Christensen said...

As always a thought provoking discussion. Michael Hortiatis hit upon my reaction: how could it be a world-class, or even a good, strategy if it isn't aligned with the culture. I've worked in a number of large companies whose culture was stifling to any strategy; few people have the energy/drive to make it work. So without question, culture eats strategy for breakfast. Any one who attempts the latter better fully understand the former.

Michael Hortiatis said...

Interesting comments.
Shouldn't one develop a strategy recognizing the culture in place? Perhaps achievable strategies are successfully developed by companies subconsciously recognizing/accepting their culture.
The hardest strategy to implement has to be the one that includes a change in culture.

Trevor Webb said...

Well said Derek ! Common sense is not necessarily common.
At the end of the day what companies are in business for is to generate profit. It is good to be aware of the subleties within companies - such as culture etc. However , it looks as if companies get side-tracked by "buzz-words" or the latest "technologies" and head off on a tangent - to the exclusion of the rest of the business.
People like having clear "targets" , clear mission statements , clear discipline codes etc. Companies fly when top management act in consistent and reliable manner and are not scared to tackle issues in a fair and consistent manner.

Kelly Brown said...

Understanding requires cultural context. Ideas, words, actions, values out-of-sync with the current culture in place are largely not heard, seen or understood. The same phenomena occurs with music, literature, and fine arts. Understanding requires cultural context.

We can't understand or communicate well unless we are in tune with the culture on-the-ground, which tends to have nuanced differences top to bottom in large organizations. Being culturally attuned to the top management is good for business, but usually not a sure bet for success.

Andy Clark said...

Whether considering culture as the simple, "the way we do things around here" or as the more complex 3 level (artifacts, espoused values and basic underlying assumptions) discussed by Edgar Schein, matters. I think this is fairly easy to see by simply observing the huge number of failures associated with the many M&As.

In answer to your question, if an organization's culture is not considered when developing a strategy (world class or not), the probability of successful execution or implementation of that strategy is low.

Joseph Sisto said...

Great topic ! I agree with that statement. As a student of human behavior and being in the corporate world for years, I agree. Culture is represented in combined values, processes, rewards, idols and rituals. What things does your company do, that really show who and what is rewarded for behaviors? What is ignored and what is despised? A strong culture can resist and overcome many strategic directives along with mission-vision-value statements that don't resonate among members of the culture.

Terry Barnhart said...

To John's original post, I believe that strategy includes not only where, when and why, but also an implementation plan, or "how" of making it happen (moreover the "how" must be self-learning and adjusting, as nothing ever goes to plan). This is for just basic strategy. For world class strategy, I believe that serious thought needs to go into those elements of culture that actually serve not merely to absorb the strategy, but to actually self-install the strategy through the organization. Building on Ed's point, this includes acknowledgement of "who we are" as employees, leaders, community members and the like. In this way, you can think of change as a virus to make your corporate body stronger. If the virus is designed in such a way as to trigger the immune system (the example cited above is a great case study), it will fail. But if the virus is designed to get past, or better yet, use the body's immune system to accelerate uptake, then the strategy is self-inserting, self-reinforcing, and ultimately successful.

I hypothesize 3 required elements to a strategy that will help self-installation:
Must be percieved as (and deliver) improving life as a colleague
Must be compatible with how we as colleagues percieve ourselves
Must be linked to our future together

Thoughts?

Jillian (Coppley) Darwish said...

It seems an opportunity for both strategy implementation and culture lies with the ability to create space within strategy for collective contribution and ownership, not just execution.

Nice elated article at link below from Peter Bregman
http://blogs.harvardbusiness.org/cs/2009/02/for_fullscale_returns_do_thing.htm

Derek Small said...

Great discussion! This is the kind of stuff these forums should be about - as long as the right people read 'em! Maybe any one (everyone) involved in these things should forward the link to their entire address book!

Just a few thoughts from the UK.

Companies as entities do not have cultures. It is something that arises out of the chemistry of the people there ate time and particularly itsleadership ethos. I have seen companies pay attention to culture and make miraculos turnarounds in a matter of months! I have seen the same companies go right back to where they were - or worse - under the poor management of egoistic fools put in from a different and less effective culture.

It is possible to build culture, but unless the leadership thinks that it starts with them and the example they set then it will fail!. Too often poor management can cast a shadow over the whole of an organisation they influence.

It is such a disservice to a business (but common practice) to label things like culture change 'soft skills' since they are the difficult things to make work and often meet with huge cynicism unless handled well.

People often talk about balance. Real balance is gained by achieving the right mix of behaviour and desire with technical competence and actual delivery of performance. These things are often are difficult to find in partnership, but emminently worth investing in. When it works there is nothing like it for beating recssions, making progress, beating the competition and keeping the work in your own back yard. It's such a shame that so many poor leaders think that the answer is simply to go for the cheapest solution rather than best value. Even in today's world good customers are happy to pay for exceptional value.

How do you know it when you get it? I recall an old discussion about whether common sense was important. Yes it is, but unfortunately in reality it is not that common. When common sense is applied then it simply 'sits right' with the people.

Trevor Webb said...

Think Jack Welch says it best when he talks about repeating and being consistent in words and actions. It is easy to be consistent for a week - not so easy to be consistent for years at a time. One of his key foundations for success at GE was clearly identifying what they needed to accomplish , identifying which behaviours were in sync with their goal and then managing consistently in all areas of the business.

Marc Genberg said...

Great quote that is thought provoking for those in positions of leadership and influence. The focus on strategy is important but should also clearly include culture.

Even on a personal basis, we've seen self-inhibiting or -destructive 'culture' that limits opportunities. And conversely, there are those examples where culture provides the enabler to success.

There are great examples of culture driven successes. And we now have a few examples of culture driven failures.

Change is hard. John Cotter has written substantially on change and the difficulties of change. I'm sure there are a number of other great thinkers on this subject as well.

Sachin Chavan said...

Brain vs Heart... The old battle continues.

Clue: Try winning anyone over using your brains!

Alison Smith said...

In my last role I was certainly considered a saboteur. It would have been easier for everyone to be honest about the old values and the new values and have a discussion about whether leaders/managers are prepared to make the changes being asked of them. I had invested so much time and effort to develop a team with shared values and ways of working that anyone coming in saying they were no longer valid and we had to change was met with HUGE resistance. We struggled on for longer than we should have before agreeing the new culture was not one I could support as we had opposing values. What that reminds me of is the fact that many people working in organisations don’t support the organisation culture anyway – old or new.

Having said that I'm still not sure it's always miscalculated culture as much as miscalculated implementation of the strategy. So long as the belief is the strategy and how we're implementing is right and they're all wrong to be resisting I'm not sure any strategy stands a chance.

Strategies that are good for the organisation might not be considered to be good for those working within it. Often new strategies arise as a result of a new leadership team coming in with new values and ways of thinking. The people working there who have supported the last strategy and values and ways of working are being asked to support the new strategy.

From experience resistance is certainly higher when it's a new leadership team than when an existing team implements a new strategy. Although I would suggest that's because they bring the culture along with them. So if resistance is there is it the strategy people are resisting, the new leadership team or simply change?

Building support for a new leadership team requires more time and effort than many are prepared to give. Yet this would be the quickest way of getting everyone supporting them and their strategies. As others have said resistance is reduced by getting everyone singing from the same hymn sheet - this is generally achieved through communication (open and honest), inclusion and involvement. It requires listening and acknowledging people and what they have been doing and explaining the reason for the changes. Often new strategies are adopted without allowing any time for this.

Michael Deneys said...

I come across this on a daily basis working in the construction industry. The reluctance to move away from paper, stamps & signatures often overcomes strategies clients have put in place. It takes a hard nosed, disciplined client to force a cultural change but the benefits far outweigh the costs. I have assisted in a few of these by firstly showing the client where they needed to change before they could expect their supply chain to change.

When supported and backed by a strong, no nonsense client change is as easy as you make.

Matthew Blackledge said...

To flip the question around a little, I have seen many successful small companies that have an amazing culture but would never dream of having what anyone else would recognise as a strategy. There are many small aerospace service companies who are more reactive than proactive but they have an excellent reputation with their customers beacuse their culture means their staff give their absolute best in every situation.

These companies tend to grow organically as they attract individuals who also have the same values and they have a low staff turnover because of the satisfaction the staff get in the quality of the service they deliver.

Unless you've got a culture that values delivery and execution, you can talk strategy all day and never get anywhere. This sort of culture can be undermined with a few bad hires, so the quality control of staff coming in is absolutely critical.

Norbert Richter said...

Benz buying Chrysler and grossly underestimating or discounting the cultural barriers of integration and synergy is another recent example of cultural calculations gone awry. As Benz was looking to gain from certain economies of scale and easier entry into American markets, they became distracted from fully appreciating and evaluating the softer expectations of the new team (among other things).

Nishith Tiwari said...

Well the best known example of strategy going wrong due to cultural misinformation ( although it not in the realms of commerce and doesnot involve a particular organistion) is the US invasion of Iraq .

Mr.Bush thought he will be liberating Iraqis from a despotic dictator.Result a nation got fragmented .Sunnis killing Shias and vice vesra.Kurds trying to spliter away into their own nation.Al Quaeda sniping away at the American army.

One of the biggest disasters in the American foreign policy and strategic intent in the Middle East.

David Schneider said...

In every organization there is the "official" and the "shadow". Sometimes a leader is a member of both parts, but in most cases the leaders of the shadow side of the organization are not entitled or titled, but chosen by the followers. The "Shadow Gang" can disrupt the efforts of the "official" leaders, sometimes stopping the "official" plan in it's tracks. It is the rare and true leader that brings the "shadows" into the light and unifies the culture to the better.

CHANDAN SHARMA said...

Does a strategy is made without incorporating the culture component?

Mike Charron said...

The short answer is yes, there are several examples in which the best laid strategy was felled by the local organization's (or market's) culture. As often as not, the strategy was established by an outsider that was brought in specifically because the organization really wanted the intended results--but it ultimately failed because it was executed using the methods and incentives that worked someplace else but did not address the difference in culture.

While the strategy may clearly lay out plans, objectives and actions, the culture will govern the actual communication channels, the value people place on the strategy, the way decisions are made and the way people are rewarded or punished for the actions they take. And, all these things may be different depending on who's in the room at the time!

Several years ago I was a Manger in Supply Management and was asked by my Director of Manufacturing, very clearly and specifically, for a low-cost outsourcing strategy for several large, critical assemblies in a new product. After a few weeks I returned with what I thought was a great bit of work, with several viable options, cost and risk analysis, and a recommendation. What the Director actually wanted and expected was a cost reduction plan, including proof that the outsourcing idea was a bad one. Everyone (except me, the new guy) understood this real objective. Needless to say, no selection was made and the project was killed.

In this case success was defined by how the project was handled, not the output. I should have understood the culture that what was asked for was not what was actually wanted (yes, this happens!). I should have understood the value placed on the opinions of the established "thought leaders" surrounding this Director. A simple, four-page presentation laying out the actions we will take, presented in a formal session with the appropriate internal experts present and pre-briefed, with all their heads nodding in agreement, would have been a far more successful approach.

…and the recommended technical solution would likely have been the same!

Herb Briggs said...

I have seen bad cultures resist good management and strategy for years. I have also seen good cultures resist bad management and bad (or non-existant) strategies for years.

Cultural is powerful because it is actually a self-perpetuating cycle. A cycle of made of people: primarily people at the associate level. We leaders need to understand that the typical employee looks at his "workplace" as the sum of his interactions with other employees--- and virtually all of these interactions are with his peers, not the leaders of the organziation.

What's in a good culture? Low attrition. A new employee is surrounded by tenured people who know what they are doing. Performance is likely to be good, and morale is likely to be good. This perpetuates itself.

What's in a bad culture? High attrition. Lots of new people all the time. Production is not up to par. In bad cultures there is usually a minority of employees with lots of tenure, but unfortunately, many of them have "quit and stayed." The talented employees have formed defensive "Mash Units" to protect themselves from the rest of the culture. The untalented have turned "pretending to work" into a high art. There are rigid hierarchies, and woe to the person who moves someone else's cheese. This is the atmosphere in which the new employee finds herself, and it rubs off very quickly.

What's a good (or bad) strategy in the face of these collections of paradigms and attitudes? Cultures take years to change, and if we leaders think that we can fix them with clever mission statements and new marketing and business strategies, we're fooling ourselves.

Gregg Miner said...

As a consultant in the lean transformation world which has a 70% - 90% failure rate, lack of understanding and changing the culture is the single biggest failure mechanism.

This is why my primary focus with clients is on developing the leadership skills to embrace the change associated with lean transformation. The most important points I make sure to get acorss is there is a process to changing culture and it WILL take time.

John Ford said...

Can an unsuccessful strategy be considered 'world-class' if it ignores the culture of the organization charged with implementing it?

Loren Miller said...

As a student of strategy, I believe the key difference is between strategy, which is a top-down mission and array of techniques to influence the organization and its surroundings, and culture, which is the people. Unless the organization is willing and legally able to fire a lot of employees of one set of cultural assumptions and hire a lot of replacements of another it will not be able to change the culture. Much better is to align the strategy with the culture that exists.

If the problem is employees who don't care about agility or winning and losing, that is different. A focus on winning is intrinsic to human nature. Just make the stakes big enough and people will buy in. And agility is doable. Cut red tape and incentivize quick decision making cycles.

Anonymous said...

I agree with many of the sentiments, organisation culture is a huge invisible hand guiding everything; strategy must support the organisation culture.

What I would add in this conversation is that underneath the framework of an organisation's culture are usually several sub-cultures around for example business units, geographies, functional groups or a combination.

In my experience when implementing sourcing strategy in a target business group pitching at the sub-culture level helps identify the critical factors in the change management process and smooth the enablement of strategy.

Ashutosh Agrawal said...

A great discussion packed with lot of wisdom.
I have been involved with managing cultural change as part of my company's strategy. We knew that we cannot reach our goal with the present work culture.

Changing culture is a herculean task. I can very well appreciate that any strategy implementation, without taking into the account the 'culture' component, is on the road to failure.

For many organisations, their distinct culture (at corporate or lower level) is their competitive advantage. Eg: Toyota, Southwest airlines etc.
Maybe getting the right culture first is more important and can itself be a major part of company's strategy.

Thomas Boyle said...

Like a new year's resolution, a cultural change must be 'out with the old and in with the new!'

Although much of GE's decades of consistent earnings growth is due to Larry Bossidy's application of favorable GAAP guidelines, Welch's promotion of those "on board" with the new culture, drove the businesses forward.

Everyone who has worked for GE knows what it meant not to be 'on board'. If you did not embrace the idea of being #1 or #2 in your industry, you and/or the business were subject to the same fate.

Coddling of the old culture, will further entrench the old ideas and doom any strategy to failure.

IMHO
Tom

Emre Akin said...

It is not only organizations own culture, but also culture of your partner(s) can eat the strategy as breakfast.

I have observed several outsourcing campaigns led by some international A&D companies aiming to meet their local content/offset requirements. The campaigns that were unsuccessful were mostly the ones who based outsourcing strategies on their own organizational culture neglecting the expectations and dynamics of the proposed partner(s) from local industry.

Michael Beason said...

Having a strong culture that supports your goals is a strategy. Leaving the culture to fend for itself is another strategy. Doctors that perform muscle testing often say that the human body resists itself by consciously activating muscles that exert in opposite directions. Corporate culture left to chance can often have the same effect.

Working with many small aerospace suppliers, we see a variety of cultural approaches and most have not been consciously chosen.

1. Love/Hate - the supplier who sees the customer getting out of his car in the parking lot and locks the front door of the building. "Send me the order and leave me alone." Years of purchasing abuse have caused this supplier to adopt the strategy of loving the orders and hating the customer.

2. Insurance - the supplier knows that the customer is going to do things that could be a "business-killer" so he adds 30-50% for everything from delays in shipments, slow paying, requests to hold inventory, returns when the customer demands that you restock until he can speed up production, and the list goes on. Again, this culture is based on a supreme distrust of the customer. And from what I've seen, they may be right.

3. Gotcha! - the supplier keeps detailed records and leaves things intentionally open so that mistakes like incomplete specs or wrong MRP orders, are documented so that every time the customer tries to blame everything on the supplier, out comes the evidence. The CEO is usually an attorney. Customers are so easy to catch.

4. Responsive - in this culture, everyone works 24X7 getting the customer what they want. They over-inspect, expedite, and play the game hard and long. They don't have process control so they have plenty of problems to solve but they are committed to solving them. The entire culture is one that is finely tuned to responsiveness. Customers love this one. They're so easily fooled! These guys have high turnover and even higher heart attacks. The owners get old very fast and there's nobody in the current workforce that really wants to work in that environment - do you see our children fighting for an aerospace career? And when you scale up an operation based on responsiveness, you get big surprises.

5. Corner the Market - these are roll-ups like Semitec who buy up all the small qualified suppliers in a particular industry and then promptly shut down the poor performers leaving less capacity than orders. While we call it "late delivery," - Wall St. calls it "backlog" and they like it. These guys want to be your next "Tier One" supplier. By combining the efforts of all those companies, they can, in theory, do almost anything - and cheaper. Cessna loves these kind of little garage shop suppliers - owner-operated with lots of retirement incentives. The roll-ups typically have no overhead or infrastructure. ROI is the rule and the only rule.

6. Highly Disciplined - this is a very rare breed in the aerospace industry. The culture values data, root cause analysis, standard work, and process control. You see a lot of this in the surviving automotive suppliers. They can operate all day long at 100% on-time and 0 PPM Quality and not even break a sweat. They go home at night and when they're in, they're working on how to improve worker capabilities and skills. You know when you've walked into one of these because every worker can tell you everything about the business - it's like walking into a Toyota plant. Most suppliers in aerospace who walk through a plant like this don't understand what they're seeing. or they walk out saying things like, "Yeah, but do they have fun." Well, fun is in the eye of the beholder.

Lots of strategic choices. Strategy is the art of arranging the players on the field before the battle begins. Building a strong culture is just as important as any other strategy. That's why SEA addresses culture in its work with small suppliers.

Liviu Caliman said...

Yes Grant, this is rarely an option.

However, an alternative for the 'if possible' to be possible could be

when one individual or group let itself go, start afresh, build a great new organization, lead by example and implement the new vision or strategy. Its success will prove the obvious, that the other culture was wrong.

This isn't the 'norm' when dealing with an unhealthy culture, yet it is possible in business, politics, etc.

On the other hand, organizations don't just end up with the wrong culture as a given, as from a lottery. That culture was created, and it's also part of a larger culture. If the organization has a healthy vision but its culture is not serving the organization, some people will also need to be changed.

In its introduction to this question, John also wrote that

"Every company or organization gets the culture it deserves."

I quite agree with this.

Craig Lorne said...

Steve,

"Generally an org has two cultures: seen and hidden. The "seen" culture is what management articulates about "what we want to be..." and the hidden culture is is in the lower business groups."

I'd agree with that to an extent. I'd argue that the hidden culture is everywhere, including the board. And i'd agree that it's a longish term task.

The appropriate model for me is the cultural web. Honest appraisal of the 6 elements and the dominant paradigm is the start. You can then map that onto where you need to be and finally you can work out what you need to do and if it is suitable to the environment, feasible and acceptable to the stakeholders.

But to consider strategy without consideration of the internal environment is not strategy, it's hoping.

Grant Vokey said...

Hi Liviu

I would agree that sometimes it is easier to start from scratch but if you are part of a company, you can't just let everyone go and re-hire. As a result, you have to deal with the people (and the culture) that you have.

The "if possible" is rarely (to almost never) an option.

Grant

Siddharth Prakash said...

“Better strategic thought” leads to better “strategic choices” is true but the question is which is more dominant culture or strategy during a massive change programme such as at Ford?

Strategist at Ford cannot force “culture choice” but can make “strategic choice”. In that sense "strategy must support the organisation culture."

This may require a strategist, for example a procurement strategist, to modify pure grand strategy into a smaller strategy but easier to succeed in the culture. Johnson and Scholes could be a framework to help make strategy practical (strategic choice) but there are other frameworks as well.

Liviu Caliman said...

Social psychologists have stated some decades ago that 'culture and psyche/mind make each other up'.

I don't envy those minds that need to change a culture.

Faced with a stiff and resistent culture, it may sometimes be easier to start something from scratch... if possible...

Steve Sussman said...

1. Have a look at this: http://www.bridgestrategy.com/topics/winning_strategy . A good case study is the Winning Culture at D&B and why it works. Took 5 years to improve from a fragmented culture.

2. Generally an org has two cultures: seen and hidden. The "seen" culture is what management articulates about "what we want to be..." and the hidden culture is is in the lower business groups.

3. From a sourcing implementation POV, certainly pitching these sub-groups is logical and key to successful program CM.

4. J&S is good and seeks to tie culture, structure and control using a framework or wireframe approach. Very much a consultative tool and I have used it.

5. The problem is that culture is derived from years of decisions, reaction to mistakes, internal politics, consultant impact and changes in direction derived from market drivers. This becomes messy over time. At some point new C levels or the Board want to start with a clean slate and install a Winning Strategy/Culture. In essence, building the 'culture bus' is not the key, getting everyone on board as a believer is!

6. The question then becomes, due to the nature of this group: how does procurement assist and have a hand in shaping the bus or influencing an existing bus and those already on it?

Craig Lorne said...

I'd disagree with many of the statements here; those along the lines of "strategy must support the organisation culture."

The development of strategy is, in part, the development of the culture, structure and control. It's not just the industry analysis, capability analysis, a rational choice and implementation from strategy. Better strategic thought links implementation, choice and analysis together, rather than a chain. Have a look at some of the work of Johnson and Scholes.

What I think is being discussed here is strategy choices made, ignoring the context. That is doomed to failure. Linking the three is a recipe for success.

Jose-Luis Bretones said...

Imagine your company culture is such a great competitive advantage that it carries you succesfully through 50+ years. Then you wake up one day, a few new industry players in the right markets have become big enough to become an opportunity, but it turns out your culture is precisely the entry barrier preventing you from "asimilating" new parters...I used to believe in Porter's 5 forces but it seems to me he got it all wrong!

Pawida Wipawaburt said...

Absolutely! Over 5 years of direct research with multiple organizations (financial companies, engineering companies, government agencies, and whole sale and retail companies) for my doctorate dissertation, "A study of employee satisfaction with four types of organizational culture", I found that when the leaders ignores the values shared among their employees, changing strategy becomes difficult and my be worse off than if the change strategy had not been attempted in the first place. My study also showed that even in the same company, the culture in each department was different. Marketing manager can not assume that the managing strategy using in marketing department can be used in IT department.

Daniel Barnes - Piddock said...

I am a firm believer that any change to a business requires the full support of the people at the top but more importantly the people at the coal face.

While it is true that the whole is greater than the sum of its parts, trying to make wholesale changes against the flow of opinion of your workforce is like the little Dutch boy trying to plug the hole in the dyke with his finger. While it is a valiant effort in the long run it is destined to fail.

My experience has shown that cultural changes can only be successfully made by proving the long term benefits not just for the company, but also for the individuals. An educated carrot and stick process, with the right amount of reward and praise, combined with reporting back what tangible difference everyone’s hard work is making.

We humans are simple creatures, and to forget that deep down we all want what is best for ourselves is a critical mistake when trying to implement any change to a business.

That is not to say that businesses should be held at ransom by their staff, but remember the parable of the man who built his house on sand. Every company must have a strong foundation, and in a successful business that foundation should be your people.

Derek Small said...

Good points Daniel

I can't remember where I heard it but I think the phrase 'Enlightened Self Interest' sums it up. It's the W.I.I.F.M. question of course. If there is personal benefit then we'll go with change. If the folks at the top are smart enough to figure out what mutual benfit looks like, then change isn't difficult at all. It's simple really, but unfortunately 'Simple' is not synomomous with 'Easy'.

John Bishop said...

Tahnk you the MONAY of you to comment on this posting. You have broken a LiaV record from a couple months ago!!!

Matthew Ingram said...

The culture prevalent in most businesses today most likely will not change overnight, especially on the education requirement. And colleges and universities aren't likely to develop programs to teach students the real-world application of concepts, even in MBA programs. Although mentor and internships helps students get a little taste of the challenges ahead and MBA programs are introducing more group work.

I must admit that I have been pleasantly surprised in my MBA program, especially with the group work required, and the thoroughness of our comprehensive project for the capstone class (Strategic Management). In addition, I have learned a great deal about how to evaluate projects using NPV, IRR & MIRR from Managerial Finance and reading "The Goal" has radically changed how I view business processes.

For me, I started out by gaining the real-world experience and going back to school at night to get my bachelors and pretty soon my MBA. I am amused by traditional students, who are amazed at how easy it is for me to get an A and maintain a 3.80 gpa. It's just when you hear the concepts, you realize that you have done it, but you didn't know what it was called and now you know the name.

There are executive MBA programs out there that can help non-traditional professionals meet educational experience requirements. I think Wake Forest & Duke both still have programs like this here in NC. They are usually very labor intensive and expensive, but well worth your time and money.

Jeff Williams said...

Matthew,

You've captured my experiences in your statement:

"The real trick is finding someone, who shares in the company's vision, builds strong relationships, asks questions, has a passion for serving customers, with a vested interest in making sound decisions and builds a thorough understanding of the day to day operations of the company. Sometimes, those folks don't have a degree, but they sure can manage!"

I feel I am those things and have the desires and passion that you mention. I understand the importance of the right culture - I see strategy clearly and I've proven (at least to myself) that the other aspects you mentioned are part of my DNA. However I have no degree and as such can't get an interview. If someone out there is looking to master the "trick" and there are those like me out looking to fulfill the need, how do we get together?

Who is looking to fill a need and looking outside the traditional barriers. How do good businesses find good capable leaders when so much of the HR talent acquisition system is bound up with processes that filter good candidate out due to degrees?

Maybe this is another discussion.

Jeff

Robert Gardner said...

Well said. This is typically seen in organizations which have entrenched cultures and antiquated espoused values. Without an effective culture of accepting change for improvements, often new overarching strategies fail. Most strategies and processes are based on the performances of people. This is often seen in organizations that try and adopt the Toyota Production System, Six Sigma or Lean principles trying to realize the same successes of other organizations and fail because the culture needed to foster those initiatives are nonexistent.

Peter Cook said...

IMHO good exection always outweighs a great strategy. Execution is dependent on people and groups of people make up culture. QED

I'm delighted to find that Tom Peters agrees with me - see http://www.tompeters.com/cgi-bin/mt/mt-comments.cgi?entry_id=11222

Peter Cook

Author "Sex, Leadership and Rock'n'Roll - Leadership lessons from the Academy of Rock"

http://www.academy-of-rock.co.uk

Stephanie Schulze said...

Have you seen a world-class strategy crushed under the weight of miscalculated culture? What could have been done differently?

First, I'd drop the "world-class" strategy. To be honest, who really cares about whether its a "world" class strategy or just a strategy?

To try and answer your question - Culture is a mix bag of many areas. Ethics, Integrity, Committment, Strong relationships, etc. It's not an overnight kind of thing and furthermore, your either committed to supporting it or not.

If a company has the above qualities mentioned, they will align their strategy to ensure the core values are not broken. This is a hard thing to do but its a price worth paying.

Do differently?

First, figure out what the culture is - if you don't have one - create it. Make sure you incorporate the employees views in that as well - be a team. Communicate the mission statement to ALL employees and take it seriously.

Honest communication is the key!

Steph

Harlan Goerger said...

Fantastic comments. When a CEO ask me about company culture I quote an old plumber friend of mine. "Harlan, to be a good plumber you just have to know it all runs down hill." What are you running down hill? That is what creates your culture.

Culture is created by the leadership or lack of. No direct effort to create the culture the leadership wants, they then get what they deserve, dysfunction!

Now take a great strategy with a dysfunctional culture and yep, culture has lunch.

In most cases of a significant culture change in existing companies, leadership will have to change their mindset and style or their career.

Harlan Goerger, Author The Selling Gap

Loretta Brown said...

This quote is wonderful. Culture certainly has a huge part to play in the success of any organization, ahead of strategy. If everyone in the organization is adopting a leadership mindset the culture will be a leadership culture.
Thanks for the reminder about the article.

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