Culture does not eat strategy.

Many of you have heard the quote “culture eats strategy for breakfast”, typically attributed to Peter Drucker. As it turns out, there is no evidence that Drucker ever wrote or said this, nor is it a helpful analogy for strategists. Nevertheless, “culture matters because it is a powerful, tacit and often unconscious set of forces that determine both our individual and collective behavior, ways of perceiving, thought patterns, and values. Organizational culture, in particular, matters because cultural elements determine strategy, goals, and modes of operating” (Schein, 2009, p. 19).

One definition that captures this concept quite well was coined some 40 years ago by Deal and Kennedy: “Culture is the way we do things around here”(Kennedy & Deal, 1982). Edgar Schein offers a more academic definition: “Culture is a pattern of shared tacit assumptions that a group learned as it solved its problem of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems” (Schein, 2009, p. 27). This is visualized in the Iceberg Model of Culture.

https://mitsloan.mit.edu/ideas-made-to-matter/5-enduring-management-ideas-mit-sloans-edgar-schein

My colleague at IMD, Daniel Denison , was one of the first researchers to measure culture's impact on organizational performance (Denison, 1997). His research showed that culture has an impact on business performance in four main ways (Denison, Hooijberg, Lane, & Lief, 2012, p. 2, here is the link to the book https://amzn.to/41tHyEp):

·       Creating an organization’s sense of mission and direction.

·       Building a high level of adaptability and flexibility

·       Nurturing the involvement and engagement of their people

·       Providing a consistency that is firmly rooted in a set of core values.

This understanding leads to a multi-year research study that “measures what counts.”

External focus (adaptability and mission). An organization with a solid external focus is committed to adapting and changing in response to the external environment. It constantly monitors the marketplace and firmly understands where it is headed. A strong external focus impacts revenue, sales growth, and market share.

Internal focus (involvement and consistency). An organization with a strong internal focus is committed to the dynamics of the internal integration of systems, structures, and processes. It values its people and prides itself on the quality of its products or services. A strong internal focus has been linked to higher quality and employee satisfaction.

Flexibility (adaptability and involvement). A flexible organization can change in response to the environment with a strong focus on its customers and people. A flexible organization is typically linked to higher levels of product and service innovation, creativity, and fast response to the changing needs of customers and employees.

Stability (mission and consistency). A stable organization can remain focused and predictable over time. A stable organization is typically linked to high return on assets, investments and sales growth, and substantial business operations.

There are also two significant dynamic tensions that a successful organization must negotiate. The first, tension between Top-Down and Bottom-Up Management, represented by the Mission and Involvement traits, is essential for organizations to understand. An organization must be able to link its mission, purpose and goals to create a shared sense of ownership, commitment and responsibility for its employees. The second crucial dynamic tension is the link between Adaptability and Consistency. Successful organizations learn how to balance the dual challenges of external adaptation and internal integration and consistency. In all cases, it is not an either/or proposition. Our experience tells us that the most successful organizations have a balanced profile.

In my view and practical experience, "strategy does not eat culture." Instead, strategy thrives within the fertile grounds of a well-cultivated organizational culture. A successful organization recognizes and navigates the dynamic tensions between top-down and bottom-up management and between adaptability and consistency. In this realm, strategy and culture need each other, each shaping and being shaped by the other. This coexistence ensures that strategies are not only conceived with clear purpose and direction but are also resilient and responsive to the ever-changing external and internal landscapes.

Robert Hooijberg (he, him, his) Nancy Lane Colleen Lief