As Peter Drucker once said, culture eats strategy for breakfast. Of course, he doesn’t mean it in the literal sense. Rather, Drucker’s argument is that no matter how great your strategy is, without the right culture, you’ll never be able to outperform your competitors, let alone deliver on your strategy.
In this article, we are zooming in on the culture challenge when it comes to executing a strategy. Why is Company Culture is Critical to Delivering on Strategy?
Organizations with strong cultures aligned to their business strategies are 14x more likely to outperform their competitors. That’s because culture bridges the organizational values and beliefs with achieving objectives, and aligns them. When that happens, employees can stay focused on the task at hand, and work collaboratively towards achieving the desired outcomes.
In a recent Harvard Business Review article, Hubert Joly found that organizations with strong cultures that reinforce their strategies and purpose are more likely to meet or exceed their performance goals than those without such alignment. In his words, “purpose, strategy, and culture work as a triangle: Each angle connects with and shapes the other two, and if one changes, the other two must evolve and adjust to maintain balance and shape, or the triangle breaks and falls apart.”
Here are 5 ways company culture can help employees execute strategy:
1- Clear Communication
A strong culture that emphasizes clear communication is crucial to strategy execution. Companies with excellent communication practices have a 47% higher total return to shareholders compared to those with poor communication. When employees are aware of the strategic objectives and their role in achieving them, it reduces confusion and misalignment.
For instance, when Netflix transitioned from being a DVD rental service to a streaming service, they communicated their strategic vision to their employees effectively. They shared a 127-page presentation (we recommend having a condensed version, or a Loom* recording) explaining the changes and their reasoning, which was made available to all employees. This helped to build alignment and clarity around the strategic direction of the company.
*P.S: Get a free two-week for Loom via loom.com/cosmiccentaurs!
2- Collaboration
Valuing collaboration and teamwork is essential to breaking down silos, and encourages employees to work together towards common goals. When employees are working in a collaborative environment, they are empowered to share ideas, solve problems together, and support each other towards the achievement of strategic objectives.
For example, at Google, employees are encouraged to share their work, ask for feedback, and collaborate on projects. This collaborative culture enabled the company to develop products like Gmail, Google Maps, and Google Drive, which were the result of cross-functional teams working together towards a common goal.
3- Innovation:
Companies in which organizational culture is highly aligned with their innovation strategy experience 30% greater enterprise value growth, and 12%
faster enterprise value growth. Generally speaking, when employees are encouraged to think creatively and come up with new solutions to problems, it can lead to breakthroughs that can drive the success of the organization.
In her webinar “Want innovation? Start with culture.”, our Founder & CEO Marilyn shared her insights on how innovation starts with culture, and shared the different types of culture that promote it. For example, flexible “clan” cultures do because they value cohesion, participation, communication, the work being personal place like a family, mentoring, and nurturing tight social networks. You can learn more about the topic by watching her video.
For instance, Zappos' clan culture fosters a strong sense of community, teamwork, and employee empowerment, which in turn led to innovation in a number of areas, including marketing. Their innovations in marketing allows them to stand out in a crowded marketplace, and build a strong brand identity.
4- Learning and Development
Prioritizing learning and development ensures that employees have the skills, knowledge, and resources they need to execute the strategy effectively. In fact, companies that invest in employee training and development have 218% higher income per employee than those that don't. When employees are equipped with the necessary skills and resources, it reduces the risk of inadequate resources hindering the implementation of the strategy.
For example, at Cosmic Centaurs, we prioritize learning in our culture in many ways. One with them is Grow Day. It’s a day we dedicate to focus on learning and growth, and without any meetings, e-mails, or work. We have the freedom to choose which way we want to learn (online course, a book, spending time working on creative tasks)…What counts is that this learn contributes to our development at work. After Grow Day, we have a session where we retrospect and share what we learned on a Miro board with the team.
5- Accountability
A culture that values accountability is essential for employees to take ownership of their roles and responsibilities, and work towards achieving the strategic objectives. When employees are held accountable for their actions, it reduces resistance to change, and they become more invested in the success of the organization.
For instance, when Delta Airlines set out to improve its customer service, they introduced a culture of accountability across the organization. They made it clear that every employee, regardless of their role, was responsible for providing excellent customer service. This accountability culture helped to build a shared sense of purpose and alignment toward the strategic objective of improving customer satisfaction.
By emphasizing clear communication, collaboration, innovation, learning and development, and accountability, organizations can build alignment and enable employees to execute the strategy more effectively. This helps drive better business outcomes and enables the organization to stay ahead of the competition.