Culture Vs. Strategy Is A False Choice

Strategy seems to have fallen on hard times. In his recent Fast Company piece “Culture Eats Strategy for Lunch,” author Shawn Parr joins a long list of commentators, psychologists, authors, and consultants who’ve used that dietary line to argue that company culture is a greater determinant of success than competitive strategy.  

A strong culture is important, and for all the reasons Parr mentions: employee engagement, alignment, motivation, focus, and brand burnishing. But is it the most important element of company success, as the more ferocious of the culture warriors assert? Is long-term success, as Parr writes, “dependent on a culture that is nurtured and alive”? If history is any guide, the answer to both questions is no.

Certainly, Southwest Airlines has a great culture and funny flight attendants. Employees seem genuinely enthusiastic about their employer. But Southwest also has a great strategy: no-frills service, a young fleet with a limited number of planes flying mostly short-hops from formerly secondary airports, and inexpensive and flexible labor agreements relative to other airlines. And if that strategy ever stops paying off, the jokes will likely go sour and the culture south. Pan Am, too, had a great culture, but was strategically unprepared to deal with oil shocks and a decline in demand for air travel.  

Parr attributes the success of Zappos to a culture that is “inclusionary, encouraging, and empowering.” Customer service representatives write zany emails and company leaders have often affirmed their belief that if you get culture right, success follows. But Zappos also has fast delivery, deep inventory, a 365-day return policy, and free shipping both ways. That’s a strategy—not a culture—and if weren’t competitive with catalog sellers and mall shoe stores, all the culture in the world would make little difference. Pets.com and Webvan, two companies that appeared at about the same time as Zappos, didn’t disappear because they had weak cultures. They simply had unworkable economic models.    

Businesses are economic as well as human entities, and need to be built on a solid base of sustainable competitive advantage. Culture can reinforce strategy, as it does Zappos’ strategy of customer convenience. But it can’t prevail if a strategy is poorly conceived or the company faces competitors with superior strategies, resources, and positioning. As Damon Runyon wrote, “the race is not always to the swift nor the victory to the strong, but that's how you bet."

In the business world, it’s easy to take a handful of current winners, give them a backstory about their cultures and conclude, like Parr, that “authenticity and values always win out.” Always? Walmart is the winner in retail. McDonald's serves more meals than anyone else. And yet they're hardly praised as paragons of superior culture. American manufacturing has moved overseas to Asia, and I don't see anyone writing positive articles about the culture at Foxconn.

Parr is correct that the culture of the U.S. Marines has few parallels in terms of its strength, depth, and the commitment to mission it engenders. But ask any Marine commander which he would prefer to go into battle with—superior morale or superior strategic position—and he would tell you he wanted both.  

Ultimately, the culture versus strategy question is a false choice. It's like asking whether you would rather back a great poker player with weak cards or an average player with great cards. You’re more likely to win when you have both: a great player and great cards. The same goes for culture and strategy. You don’t have to choose. Culture doesn’t eat strategy, and the company that lets culture do so is likely to starve. 

—Author Bob Frisch is the author of Who’s in the Room? How Great Leaders Structure and Manage the Teams Around Them (Jossey-Bass) and managing partner of The Strategic Offsites Group. Previously he was a Managing Partner at Accenture, held leadership roles at Gemini Consulting and The Boston Consulting Group, and headed corporate strategy for Dial and Sears. He earned degrees from Tufts and the Yale School of Management.

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38 Comments

  • Yuvarajah

    As a HR person coming from the Eastern world side, I have to support the finding that Culture does eat Strategies. No one is arguing which is important. The point is Culture eventually consumes and even sabotages the strategic execution. All strategies, in one form or another involves planned change, right. You can have the best lad strategic plans, yet fail on track in implementation? Why. Perhaps, someone can tell me why do you need to bring in external consultants to "roll-out" strategic execution. Why can't the top gun and the highly paid management team pull it off?. Even the consultants will tell you you need to address the unseen side of the iceberg (culture) to make good of whatever strategies you can come up with. Just last weekend, I facilitated a short talk on corporate culture. And, take-away lesson on the biggest influencer on culture is, top leadership direction and commitment. It corresponds to the speed of decision making required to make strategies into 'walking the talk" effects. Many participants asked me on the Transformation Program that kicked of 4 months ago. I had no answer. We can blame it on lack of communicationt or transparency, but the causality of it is deeply rooted in Culture, more so if it is shaped by fear and apathy. When employees can't question why leaders are not walking the "strategic" talk, what do you call that?. I call it culture.      

  • Dianne Crampton

    These are not mutually exclusive concepts. Both are required. Strategy, however, that torpedos culture  frequently produces devistating outcomes.

    As a consultant I am seeing this now in the change efforts of a large mobile devise company. Perhaps we will see a buy out in the next year or so to clean up the mess of strategy that went sidewize to culture.

    And, this is exactly the arena we are entering into as we move forward into recovery.

     If the past is any predictor of the future, we can look to the 90's as an example of what is to come. HBR studied the commonalities between then and now showing progressive companies as noted in the post by Janet Boulter as coming out ahead in most scenarios over less employee empowered organizations that opted for stragey at the expense of culture.

    This includes going into the recession with downsizing strategies that destroyed trust. Attracting new talent with that track record was very difficult in the past resulting in massive business closures, buyouts and mergers.

    Strategies, however, that are championed by employees (which by defualt requires employee empowerment to enter the conversation at the beginning of strategy development) get implimented remarkably fast. Since this is our arena, there are many good stories to tell.

  • janet boulter

    As a business consultant I work with company leaders on both their strategy and their employee empowerment as they both contribute to the bottom line.  You can't foresake one aspect of your organization to focus exclusively on the other.  Without a well designed and executed strategy- your company won't grow and without growth- you won't have a culture to worry about.  Your company culture should be in alignment with your company's strategy- they need to work together and both are equally important.

  • Mary

    There is a symbiotic relationship between culture and strategy.  A bit like Chicken and Egg, they come together.  But which comes first?  Which leads the other? That is very tricky to determine.  However it is impossible to have a strong strategy without a strong culture and Culture is rarely vivid without a coherent company strategy.  So I agree that the premise of 'one versus the other' is a false one.  They come as a package and our best efforts to deconstruct them will lead to bettern insights in how to influence and manage them.

  • Bruce Johnson

    Fascinating discussion, but one piece that seems to be left out (besides the fact that this is not an either/or but a both/and discussion) is that every company has both present all the time (and has since the inception of the company). You can't have one without the other. You can have a bad or unintentional strategy (but it's still a strategy) and you can have a bad or unintentional culture (but it's still a culture). Trying to ague that one is more important is ridiculous.

    If someone forces another person to think linearly, then strategy would have to come first since it doesn't matter how fast you're going if you're headed in the wrong direction. But what good is a great future destination, if you can't execute and deliver on that strategy? 

    Personally, I'm a strategy consultant. But I also just finished writing a book on culture. Why? Because, as I've worked with companies (as someone else pointed out), most know they're supposed to be intentional about their strategy, but they aren't abou't their culture. And the reason why their strategies haven't worked out is because they haven't built the right kind of culture that can deliver them.

    Bruce
    http://www.WiredToGrow.com 

  • Amos sunder Singh

     Culture acts as a driving force to attain a common goal whereas strategy helps Organizations to be competent enough to achieve greater end results. I would say Culture & Strategy are equally important for Organizations to sustain in the rapidly changing business environment

  • Rick Mueller

    Strategy and Culture are NOT equal partners.

    Think of it as an auto race, with Strategy being like the driver, which can (and does) change and adjust during the race - and Culture being like the engine, which is permanent and relatively unchanging feature

    While it is theoretically possible to win the race with a superior strategy despite having a subpar engine, the guys with the good engines will emulate the parts of your strategy that work and power around those that are weak - so while it's an absolute imperative to have the best engine you can get, the strategy is something that you can, should, and will develop during the race.

  • Roberta Budvietas

    What is amazing is that the question even comes up. Having a team of people who are passionate and purposeful about the business means that the culture is strategy/purpose oriented. Otherwise why are they there? And unfortunately because what often happens is businesses employ people who think that the world owes them a living, they forget that to meet their needs they need to meet someone else's needs.The poker hand analogy works. Without good strategy and good culture to take a business through the highs and the lows, a business dies. We have just seen lot of death in the last 3 years - and sad to say I think that more is to come unfortunately.

  • Dale Hintz

    I would agree with the author that culture over strategy is a false choice – but I didn’t read the previous piece (Culture eats Strategy for Lunch) and conclude strategy was unimportant or falling on hard times. 
    A productive culture allows for quick and effective adaptation of strategies.  Kotter & Heskett in “Corporate Culture and Performance” conclude that “adaptive” cultures that balance all stakeholders and adjust quickly to outside influences are the ones that succeed long-term.  What’s especially cool about Kotter & Heskett’s work is it’s based on an exhaustive study of 207 firms over 11 years.  Their work certainly has opinion but it’s based on an amazing amount of facts from their study.   On one financial factor, "Net Income" the adaptive cultures produced a 756% to 1% advantage.
     In a “strong culture” if the strategy is wrong no one says the emperor (strategy) has no clothes.  A highly productive culture does two major things:  1.) it “fits” well the needs of the organizations external environment (marketplace, competitors, stock); and 2.) it “adapts” effectively and efficiently to change which is something we can all agree is inevitable to any and all organizations.  Thus think “adaptive” more than “strong”
    “Culture” is like a factor in a multiplication calculation.  A great culture multiplied by a bad strategy has a poor results and similarly a great strategy multiplied by a bad culture has a poor results.  Culture and strategy are mutually dependent and both need attention to produce superior performance.   The great news is both can be improved and it’s not an “either – or” choice, it’s instead an “and” combination.
    To improve culture generally takes an “outsider’s view”.  Those with an “outsider’s view” quickly see and then help others self-discover that there’s a problem with the emperor’s wardrobe.  The “outsiders view” can cut thru the issues, concerns, turf and history that limit what insider’s see.  So the culture can be improved but it will likely require a trained mechanic with the right tools – maybe Mr. Goodwrench???

  • Lynn C

    I would argue that culture creates the environment in which strategy emerges.  How we define culture is critical.  Culture, in my opinion, is defined by the balance of risk vs. caution, collaboration vs. top-down communication, and other elements that determine how decisions are made.  Real culture is not defined by "bring your dog to work" policies and the like, though companies perks and benefits are another outcome.  Strategy is an outcome.  Good strategy can come about despite poor culture but it is unlikely to be sustained.  Culture dictates how we think and work together, and without doing this well the best we can do is get lucky with our strategy.

  • Brian Gordon

    Great post.  I think Frisch's analysis is right.  A high performance culture can enhance firm performance when the firm has a good strategy, but it is neither necessary nor sufficient to drive performance in and of itself.  My take on Parr's post: Strategy is more important than culture - http://bit.ly/zHLzqb

  • Celestine McMullen Allen

    I applaud organizations that have a good strategy in place.  For we all understand that businesses exist  to make money, to provide a service or a product.   As well, we understand that the success depends upon the external customer.  So, we have a good business model, we have competition, and we have a workforce that is expected to deliver; at whatever cost necessary.  It is incumbent on the organization to seek the best practices in their industries to stay competitive, analyze the trends, monitor expenses, and implement "procedures and processes " that are strategically aligned to accomplishing their goals.  Oftentimes, the performance indicators are not realistic of the people that work within the organization nor the environment.  

    Start reviewing some of the internal factors of success.....How about  performance evaluations?  How about an attendance record?  How about the number of disciplinary actions that have to be managed? How about turnover?  How about the complaints about poor management skills that are often not addressed?  How about the employee that does just enough to stay off of the radar? What about the number of grievances that are filed?  

    For me, business strategy and culture make a perfect alignment and cannot be viewed independently.

  • Andrew Poliakoff

    I agree with the first article and with this well meaning and inclusive 'rebuttal'. But Isn't the finer point that having a business strategy is sort of a given? Some are good and some aren't but in today's Conceptual Economy your company's culture is what distinguishes you. Certainly culture won't save a sinking ship, but it provides the organizational health and resilience necessary to outmaneuver your rivals.

  • Glenna Utz

    Culture is very important but to succeed there must be a thought- out strategy.  Discussion is also important to get the best ideas put out there to come up with a final decission.

  • Peter

    Interesting piece - Indeed, a debate that has been around for a long time. One thing to add...(& yes, an obvious statement) both of those traits in a "successful company" only come into play IF you have a solid product or service offering. You're more likely to win with a product that people want regardless of strategy or culture. Often times, strategy is the result of consumer want & culture is the by-product of success. Still, a thought provoking piece...& many of the comments seen here are spot-on.

  • matt gurin

    Unfortunately I think the point has been missed.  Strategy developed independent of culture is the unfortunate practice of the past decade(s?)  that has resulted in so many "cultural repasts."  Strategy firms have held sway with their analytics, while reducing execution to a high achievers epithet of "just do it."  I encourage all readers to go back to Edgar Schein and Peter Drucker who did get it right...decades ago.

  • NW Gauthier

    I feel like I've just taken a trip down to the farm and walked into the barn where a chicken and an egg were having a lively debate about who came first. I know it's a classic that we never seem to get tired of hearing, but who's really listening? I'm with the chicken on this one. You see, he makes a good argument that when he decided to be an independent egg dealer, he had some clear thoughts about creating a different kind of culture than the one he grew up in. He envisioned a chicken coop culture that supported independent thinking that also valued accountability and teamwork without being subjected to the constant frustrations of group think. He knew that if he hired the right kind of chickens who demonstrated these attributes along with the leadership he was capable of, he could be the next Purdue! Since he had the experience of moving from one coop emvironment to another, he knew that size would eventually effect the strength of the culture if the chickens did not understanding that culture and strategy occupy the same status at the table. How else would the coop be able to manage the egg that is the change that constantly threatens the coop's ability to become the next Perdue....

  • Kathy Moses

    I would add that an organization must first deliver on the basics. Neither strategy nor culture can compensate for not executing well.

  • nosheen noor

    i think strategy is like an invisible hand for a company that points out towards  destination of company and culture smooths the path for reaching to that destination.strategy drives culture and culture should be in agreement with strategy.so both goes hand in hand

  • suzy goodwin

    I think the key point has been missed here.  I doubt the intention of the original article was to suggest companies choose one or the other.   Rather that the need to focus on a company's culture is often overlooked while the need to develop corporate strategy is rarely ignored. 

    A good strategy needs to be embedded in every aspect of an organisation to work well and the culture needs to be one that will underpin that strategy.