Rethinking your business strategy? Do NOT ignore culture.

The impact of Covid 19 has been the catalyst that has forced many businesses to reassess, and in some cases, pivot their go to market model.  While everyone knows they should regularly revisit their strategy, we were busy growing and putting out fires.  Until the world stopped and we found ourselves in a crisis; forced to take this opportunity to reimagine everything about the way we conduct our businesses.

At the same time, we have several high profile and passionate movements driving critical attention to inclusion and diversity in business. The shift toward a more inclusive economy is being called stakeholder capitalism and means companies must pay attention to the broader set of constituents or stakeholders.  Who are these stakeholders?  They are naturally the shareholder, but they also include the employees, customers, suppliers, partners, community interest groups and others.  This movement will require strategic thinking to include more longer-term focus.  Gradually and steadily, this new model is replacing the creed of short-term shareholder primacy that has ruled the private sector for decades. 

Never has there been a better time for you to test and validate your reason for existing as a company.  The goal is to emerge stronger.

As you re-think everything from your purpose to your business model, you will need to start at the beginning by reconsidering the Why, What and How questions with a current lens. For this “re-boot” you may end up having to redefining your purpose, vision, strategy and execution plans.  Be sure to check the plan for what matters to your stakeholders (not just your shareholders) such as Diversity & Inclusion, Environmental, Social and Corporate Governance (ESG) and are you thinking far enough into the future? 

These terms tend to be used interchangeably.  Here are some simple definitions:  

PURPOSE answers WHY we exist

VISION answers WHAT we aim to achieve

MISSION answers HOW we plan to achieve this vision

 STRATEGIES are a series of ways of using the mission to achieve the vision.

Personally, I like the way John Chambers, former CEO of Cisco Systems and Venture Capitalist, distills these into 4 key responsibilities for successful leadership in his book “Connecting the Dots”.  He emphasises it is the role of the CEO to define the Vision, build the Strategy to support that vision, create a Culture that will enable the vision and then sets it all in motion by communicating with clarity.  He has been recently suggesting the latter two arguably become even more important during times of crisis.  

Once you have completed the refinement or redefinition of your purpose and vision, and you have identified the critical components of the strategy, now you have to consider your corporate culture. Does the culture align with the vision and strategy? Have you defined the culture?  Is it accurate or aspirational?  If it needs to be transformed, is there a plan? How do you implement, foster and maintain this?

Culture is commonly considered a “soft skill” and its impact on results are very often underestimated.  

Have you ever had those moments where you are thunderstruck by something?  I had one of those moments, years ago in a strategy course I was taking at Queen’s School of Business. Professor Tony Dimnik said, “the only sustainable competitive advantage is people and how they work together”.  What he was describing is the corporate culture that will either successfully enable or impede the strategy. This was a game changer for me, along with Peter Drucker’s famous “culture eats strategy for breakfast” quote. Coming from the Tech Sector where disruption and pace of change was always super intense, I can attest to the validity of these points.

Corporate culture refers to the beliefs and behaviors that determine how a company's employees and management interact and handle outside business transactions.

"Company culture is powerful: it can impact sales, profits, recruiting efforts and employee morale, whether positively or negatively. A great company culture attracts people who want to work or do business with a company. It can inspire employees to be more productive and positive at work while reducing turnover."

Leaders play an instrumental role in defining and maintaining the corporate culture.  

The tone is set at the top.  Leaders are the ones who hire the management, including the HR team, who will build the systems to implement and reinforce the desired culture.  It is critical that the leadership team lead by example.  A great culture takes patience to build and nurture.  It requires transparency and authenticity with clear and consistent definition, demonstration, reinforcement and communication.  

In my last article, Digital Transformation: People make I.T. happen - Part 4, I talked about the importance of having the Purpose, Vision and Strategy determined and documented in a “playbook” (example in the article), as a requirement before you can successfully transform the business.  The “playbook” is a critical component of the communication plan because it spells out the reason the company exists (purpose), the vision, how you will achieve the vision (strategy), how you will win and how you behave, but it doesn’t end there.  It must be reinforced and supported by the people, process and systems you put in place to enable success. This includes the way people are measured and held accountable. In this article I was talking about Digital Transformation, but these are requirements for any business transformation to succeed.  Digital is simply one element of executing the strategy.  

One of the best examples of a high-profile business case that emphasized transforming the culture to match the strategy is the story of how Alan Mullaly saved the Ford Motor Company.  The details of how he accomplished this turnaround from crisis, as an industry outsider, is documented in the book, American Icon, by Bryce G. Hoffman. There are also some excellent podcast interviews with Mullaly, such as this one with Patrick Lencioni of the Table Group at where he gives examples of how he personally reinforced the culture.

In the book and subsequent interviews, Mullaly describes how he answered the Why, What and How and outlined it all in a Playbook.  This was communicated, reinforced and emphasized with consistency across the entire company.  Mullaly describes the use of “joyful accountability” to demonstrate and reinforce the “tone at the top” and ensure everyone understood the type of behaviors that were required and expected from the team. This is a powerful example of reinforcement communication and behaviors.

The impact of successfully clarifying, documenting and communicating your “Why, What and How” have been found to have a direct positive impact on performance.

a study of over 1000 companies with top quartile cultures found they posted a return to shareholders 60 percent higher than median companies and 200 percent higher than those in the bottom quartile.

While great cultures take time to build and foster, they can be quickly destroyed by those who don’t understand or underestimate the value. Culture is a leading indicator of growth and should be measured using one of any number of tools available.  This will allow you to keep your eye on the temperature and know when to pivot or intervene, avoiding long lasting and costly devastation.  Social media has enabled potential issues to brew and bubble very quickly in an organized way. You want to make sure you are not ignoring concerns that are important to your stakeholders.  Employee engagement is just one element of culture and therefore engagement surveys are not a holistic measure of culture.