Who Eats Whom for Breakfast—Culture or Strategy?

It's the eternal chicken-and-egg problem.

A CEO of a fast-growing company confessed, “I know organizational culture is essential, and it is on my list of priorities. But it is around 10th on the list, right after growing sales in target markets, ensuring quality service for my clients, managing logistics costs, and other more immediate priorities.”

“I do see myself and my co-founders as the evangelists of our culture, always talking about how values x, y, and z are nonnegotiable in our company,” he added. “I wish I could find a way to prioritize thinking about culture.”

I told him, “I can see how thinking about culture may seem like your 10th priority, but while you are executing on priorities 1–9, you are already shaping your culture.”

Of course, he is right. If you do not have clients and incoming cash flows, you do not have a business. Culture discussions cannot exist in a vacuum.

Here is the deal, though: many, perhaps most, executives equate culture with vision, mission, and values statements. This perception is superficial, however.

Putting it in business terms: equating stated values to culture is like saying your pitch deck is your sales force, or the drawing on your packaging is your product.

Written value statements have their place. They can help tell a story to current and potential employees, customers, and investors. They can serve as a communication system to align approaches to strategy execution and be used as decision criteria for hiring, firing, and rewarding employees.

Organizational culture is much more than this, and before we try to manage something, we need to understand what it is that we are working with.

Definitions of organizational culture range from simple ones, such as “the way we do things around here,” to more elaborate ones, such as “a complex web of tacit beliefs, understandings, assumptions, boundaries, common language, and shared expectations that have been developed and maintained over time by the members of an identifiable group and that influence the behaviors of those members.”

Here is another, more business-y view, which is nevertheless just as vague: “Organizational culture is an important determinant of how members deal with customers; how members treat one another as fellow members; and how leaders and managers of the organization motivate, reward, and develop members.”

One mental model I find useful describes culture as a dynamic system, a Culture Web. It was developed by strategic management scholar Prof. Jerry Johnson in 1992. Here is a short video about the concept.

Image source: UK Department of Education: Culture web as a practitioner tool.

Culture is intangible, but it has interrelated tangible components, such as power structures and stories, that we can observe and mold to our needs (or not).

So, what comes first, organizational culture or strategy?

An organization’s culture will exist regardless of its stated strategy. People will continue executing by going to work, producing widgets or intellectual content, and interacting with each other, their bosses, clients, and suppliers. The outcomes of their work, however, may have nothing to do with the expectations of the company’s leadership, even if said leadership created a beautiful mission, vision, and values statement.

In turn, leadership’s strategic choices will affect the existing culture. Successful execution will reinforce results-oriented behaviors. Failure can cause demotivation and infighting.

Pushing employees too hard to meet client needs may lead to short-term business success, but also longer-term losses because of turnover or unethical behavior. Pushing too little may lead to stagnation and a failure to innovate.

The bottom line: explicit or not on the part of the CEO, culture continues to exist through the behaviors of the members of the organization.

Now it is your choice whether you want to take the role of an organizer or a passive participant in the party.

What do you think?