By Robert W. Bradford, President & CEO
I’ve read a couple of interesting articles recently that assert that culture beats strategy every time. While culture is critically important – and usually part of a good strategy, nothing could be farther from the truth. Here’s why:
- Strategy is about doing the right thing in the right place at the right time.
I can’t overemphasize this one. I’ve seen lots of companies tout their culture as awesome and admirable over the years. Some of them had great strategies, others had serious flaws in their strategies. Companies that are doing the wrong thing – but with great culture – still struggle to gain and retain profitable customers. Yes, the few customers they have love them, but that’s not enough to keep a good company with a bad strategy afloat.
- Too much attention to culture can diminish, rather than enhance organizational effectiveness.
In the 1990’s, culture was seen as a panacea for a multitude of issues, and was used to lure promising employees (especially in tech, where big venture capital money made it easy). This ultimately led to spending on company gyms, employee playrooms and “fun in the grass” team building exercises. Properly applied, these investments can improve effectiveness, but many companies over-invested. For example, a day or two of teambuilding activities each year might yield some benefits for most companies, but ten days of such activities would show dramatically diminished returns. This issue can be seen in almost any area where time and resources can be invested in culture – but companies still end up over-invested.
- Fixing a strategy issue points you in the right direction, while fixing a cultural issue can move you in the wrong direction, faster.
There is no question that attention to culture can improve effectiveness. I think of this as the speed with which you move in whatever direction you intend. Strategy, on the other hand, is about choosing the right direction. Moving faster in the wrong direction isn’t just pointless, it’s downright dangerous.
So why are people talking about the “ascendancy of culture”? There are three good reasons:
- Most “strategic planning” done today is BAD strategic planning.
This is, perhaps, the worst of the lot. The strategic planning process is incredibly important and valuable. Because it’s difficult to pick out bad strategy when you are in the middle of it, it’s also easy to think you are doing good strategic planning when, in fact, you are doing easy strategic planning. Many, many companies have made the mistake of taking short cuts in their planning by avoiding the most difficult and uncomfortable parts of the process – and many strategy consultants are only too happy to skip the hard-nosed, data-driven questions that yield the best answers.
- Companies that are successful with a good strategy invest their greater resources in culture.
People who shout about the value of culture inevitably cite examples of companies that have done very well over the years – companies that have already achieved a strong level of strategic competency that will guarantee a strong market share for years. The problem with this approach is that they end up spending a lot of time looking at very large companies that are already making a lot of money. If you have billions on the bottom line, it’s much easier to spend millions on culture. If you want to see what really works, take a look at what these companies did in the early years, when resources were tight. Chances are, there was excellent strategy, and any ups and downs you’ve seen in the history of such companies hinged more on their adherence to a good strategy than on culture.
- There are far more people who claim expertise in culture than strategy – and these people write a lot of articles.
In scientific research, people talk about the “file drawer problem” – which happens when the results of your research don’t support your theories. The problem comes in when the research, instead of being published, ends up in the bottom of a file drawer somewhere. Because of this issue, we end up not reading the exact truth of the research, but rather handpicked studies which support the conclusions researchers are trying to determine in their work. Business articles aren’t usually written by researchers (though there are exceptions, like the excellent work done by Jim Collins). They are, however, written by people who have an axe to grind. One axe that isn’t very popular is the one that I’m grinding here (and yes, I’m being self-serving): good strategy is hard work that requires real analysis, answering difficult questions and having a willingness to discard parts of your business that aren’t working. This isn’t an easy idea to sell – and it’s not going to generate a ton of content written by people with limited business skills.
Obviously, these are just my ideas, taken from observation of dozens of companies. Based on this, I’d invest in a company with a great strategy and a bad culture before investing in a company with a bad strategy and a great culture. What do you think?
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Robert Bradford is President/CEO of the Center for Simplified Strategic Planning, Inc. He can be reached at .