Strategy or culture first?

In answer to a question on LinkedIn: Strategy or culture first?

It is like the hen or egg question. Drucker wrote that culture eats strategy for breakfast and Schein wrote that you will not understand the culture until you try to change it.

Culture can lead to the failure of strategy. Cultural change without strategic direction is a waste of time and energy.

So in a sense the first step is considering ideal long term strategy, where do we want to be in 7-10 years. What are the cultural impediments? Which steps can we take within the existing culture? Which cultural strategies do we need to pursue over time so as to create the preconditions necessary for reaching the long term strategies.

Many years ago I worked with a CEO working with culture and direction. Over three years three distinctive steps were made in organisational structure as the organisational culture matured. The banner goal of the company was developed early on and was not changed. But strategy evolved over time.

Culture is like fish in an aquarium. Most fish tanks have fresh eater, are oxygenated, regularly cleaned etc and the fish thrive. Some aquariums are in a dire state and the fish are sluggish if not dying. But they do not come knocking at the glass drawing your attention to the problems.

I have been in many organisations where people are aware that culture is in the walls, but they cannot diagnose the culture and definitely not identify any changes needed. Many changes in strategic intent fails as top management does not understand the importance of the social processes and actually do not know how to build a strategy for the strategy and implement it.

So what the heck is strategy anyway?

I often feel exasperated over the multitude of definitions of what strategy is. My colleague Martin just defined Strategy as that which we afterwards know was successful. Just look at all these books on Strategy, particularly among the business books at the airport. Broadly they fall into two categories, templates or methods to follow or success stories which imply that you should emulate them for success.

The most dramatic personae in the field is probably Gary Hamel, with his battle cry ”If it isn’t revolution, then it isn’t strategy”. The word strategy seems to be used for anything between that extreme position of uniqueness to the more mundane ”what is our strategy for buying a new photocopier?”. I usually claim that there are at least as many definitions of what strategy is as there are academics and consultants in the field.

Is strategy an organisation or a person thing? Organisations seem to do strategy in some sort of strategic planning process. But as Henry Mintzberg points out in the Rise and Fall of Strategic Planning, it is possible, or even usual, to go through a strategic planning ”process”, without strategy actually emerging. Mintzberg focuses on how Strategic Thought emerges.

What do we want to achieve by having strategies? Creating meaning for employees? Creating new direction? Revolutionising business? Surviving? Ensuring long-term viability? Risk minimisation? Starting something entirely new?

In one of his books Tom Peters tells about Bob Eaton, when he stepped in as CEO of Chrysler. At a meeting with many managers he read newspaper cuttings about the bad times Chrysler was in. Everybody thought they were about the present. Bob Eaton read out the dates, and they were about ten years apart. He then said that his job was to ensure that the same situation did not occur after another ten years.

It did not turn out that way, but he was probably right. I use Requisite Organisation Theory, also known as Stratified Systems Theory to understand the difference in work at different levels of the organisation. One of the differences has to do with time consequence. The job of Bob Eaton was to build the structure and set stuff in motion so that the company would be successful and profitable in ten years.

If we want to call that job Strategy, so be it.

What we do know is:

  • There is no way of being certain of the outcome in ten years time, so handling uncertainty comes into it.
  • Strategy probably has to do with being able to manoeuvre through unexpected change.
  • Most probably there is a significant difference between the present state of operations and that which will be in place in 10 years. So whatever needs to be done has to be built on the existing in some sort of mix between bottom-up planning and top-down strategy/vision.
  • Some sort of balance between risk-minimisation and maximum opportunity utilisation needs to be found.
  • Strategy has different meaning for a start-up and an industrial giant with a huge investment in plants.

One of the most important strategy books of the decade

”The Strategy Paradox” is one of the most interesting books on strategy for about 10 years. I have worked with strategy and planning issues in a managerial role with large international companies and as a consultant. I plow through reams of books every year. Most of them disappointing with the occasional nugget hidden in an overflow of business speak muzak. Many have tales about how the CEO made an early commitment to what turned out to be a successful strategy. Rarely a word about the corpses, of failed commitments, in the ditches along the road.

In ”The Rise and Fall of Strategic Planning” Mintzberg virtually demolished the concept of strategic planning, stating that strategic thought, does not necessarily occur in a planning process. He also stated that most CEO stories on how they and their company successfully achieved their strategies are flawed as they are written with hindsight and does not show how strategic thought developed.

Raynors book ain’t your standard recipe book on how to create instant strategies. For those who seek instant gratification on how to find the great strategy and how to commit and persevere, this is not the right book.

Edison is quoted as saying “Opportunity is missed by most people because it is dressed in overalls, and looks like work.”. Unfortunately he is right. Raynors main point is how to cope with uncertainty and the multitude of possible outcomes. Instead of stubbornly committing to one set of strategies, win or lose, he suggests working more by handling a portfolio of strategic options.

After Shell’s success with scenario planning in the 70’s many have tried to emulate the method. Several failed as they picked the scenario that they liked best and did not bother about the rest. Raynor positions options theory as what to do when you have done the scenarios. Shell used scenarios to build general awareness among managers about multiple future directions. Raynor suggests building strategies around each scenario and treating them as options to “cash in”, as appropriate futures emerges.

I often think that “uncertainty” seems like a dirty word in our hero worship, macho, management culture. Strong commitment and focus on “execution” is what counts. Raynor suggests that the higher corporate management have to cope with uncertainty in time perspectives of 5-20 years. It is their job to make sure that the company is viable in that time frame.

Handling long time uncertainty does in no way clash with commitment in time frames shorter than 3-5 years. Raynor points out that if each level in the organization does their work, then divisions and operational units will have more flexibility in how to succeed with their commitments than if corporate HQ keep detailed control all the time.

Raynor attempts to move “uncertainty” from something abhorrent to being what corporate management actually should be working with. He gives a framework for how to position useful methods in doing this. His book is definitely one of my best reads for a long time.

My rating:
5 stars