Drucker taught us that “Culture eats strategy for breakfast.” If they’re not aligned, the practical behaviors, relationships, attitudes, values and environment of your culture win out over your theoretical strategy every time. Forget “sink or swim.” Think “sync or lose.” What makes this so challenging is that your organization and ways of working get in the way. The only successful approach is to align strategy, culture, and organization, and operations all at the same time.
Do this by aligning around a single overarching strategy and clear strategic priorities first. Then choose and create the culture, organization, and operating approach most appropriate for that strategy. This is a key and perhaps the key to leading through a point of inflection.
Single overarching strategy
“Strategy” is one of the most miss-used words in business. Different people define it differently. For the purpose of this conversation, let’s define it as the creation and allocation of resources to the right place in the right way at the right time over time – essentially, how to win. The most effective organizations have a single overarching strategy that all understand. That guides strategic priorities/resource allocation.
Choice #1 is where to play. Choose a market or set of target customers for which you can create differential value. Ideally you’ll find the clear blue water of an unmet need in an addressable target market that no one else is serving. More likely you’ll have competition. In either case, choose to play in a place you can win.
Choice #2 is where to play across the value chain. Customer needs get satisfied by people that design, produce, deliver and service things. Taking out marketing and selling because everyone has to do those, choose the one thing at which you’re going to be best-in-class. Then clarify how you’re going to that. That’s your overarching strategy.
Flowing from that are your strategic priorities. These lay out at which things you are going to be:
- Best-in-class (A superiority claim – top 10%)
- World class (A parity claim – top 25%)
- Strong (Read “above average” – top 50%)
- Good enough (simplify or outsource to meet minimum acceptable standards.)
As I’ve written before, culture is the only truly sustainable competitive advantage. Choose the behaviors, relationships, attitudes, values and environment that define your culture. And make sure they line up with your single overarching strategy.
- If you choose to win through design or invention, everything must inspire and enable independence, learning and enjoyment (and flexibility) per Groysberg et al’s “The Culture Factor“.
- If you choose to win by producing, your culture must be marked by stability, results and authority (and independence).
- If you choose to win through delivery or logistics, your culture needs to support interdependence, order and safety (and stability).
- If you choose to win by providing superior customer service and experience, the key will be flexibility, purpose and caring (and interdependence).
Get this wrong and culture will overcome your strategic choice. For example, trying to get people to invent things in a highly disciplined culture with a bias to command and control is not going to work.
Companies tend to move from everyone doing whatever it takes to succeed, to a more specialized organization, to a hierarchy, to decentralization, to a matrix as they grow. Instead, choose the structure that best supports your overarching strategy.
- Organizations looking to encourage innovation in driving design and invention do best with specialization to cherish and support the innovators.
- Organizations persevering with disciplined manufacturing do best with a hierarchy.
- Organizations trying to foster collaboration for delivery or logistics often find matrices most helpful.
- Organizations looking to give flexibility to those accountable for delivering superior customer experiences do best when decentralized.
Finally, make sure the way you work is aligned with your strategy and culture. Specialists working to invent and design need freeing support. Command and control works well in a disciplined hierarchy. Shared responsibilites are the key to making a matrix work. Guided accountability is required in a flexible decentralized organization.
Net, make sure your strategy, culture, organization and operating bias are in sync. Easy to say. Hard to do. Follow this link for more on the CEO’s role.