Business Culture versus Strategy: Which would you eat for breakfast?

You may have heard the phrase “Culture eats Strategy for Breakfast” first coined by entrepreneur Peter Drucker, but what does it mean and is it actually true? Business culture and strategy are both vitally important but does one supersede the other?

If you looked at the amount of time dedicated to each matter by a company’s board, I dare say that strategy would be deemed considerably more important. Boards in general will spend far more time on setting its business strategy than considering its culture and employee welfare. Maybe because that is what they do best, or maybe because they do not understand the significance of culture and its ability to materially contribute to the company’s success and bottom line…

It is becoming increasingly evident that a positive company culture leads to a strong and well-performing organisation. It follows that a weak or broken culture leads to less success and in some cases can even be a leading factor in driving a company to closure.

So, should we move focus from business strategy to culture? Here is how a strong culture help:

Unique Selling Point

In such a competitive world, how do companies differentiate from their competitors? In this fast moving, technology-driven environment, products and services can easily and quickly be replicated by others.

So, what drives us towards some brands when the same service is available from countless other providers? What makes us choose Google, Amazon and John Lewis? Yes, their products and services are often the best in their field, but this arguably is down to the strong culture created within their businesses. John Lewis makes all its employees shareholders of the business so that the personal performance of an employee directly links to the company’s performance, resulting in a direct financial reward to the employees as shareholders. Developers want to work for Google and Amazon (among other market leaders) because of their company culture – they know that their ideas will be given the room and support to grow and develop. The culture rather than the product or service, therefore becomes the company’s new USP.

The best people

If you ask a cross section of your employees what they’d rather eat for breakfast in terms of business culture and strategy, you’ll find that culture is the likely choice. People care about the culture that they work in – whether their fellow employees are like them; whether they are given the freedom and encouragement to voice their ideas and innovations; whether they are well supported by their colleagues and management; whether they can raise problems and concerns in a safe environment; and most importantly whether they want to stay.

On the other hand, many employees wouldn’t be able to recite the company’s strategy or give it much thought outside of their own work objectives. The question “why do you like working for the company?” is unlikely to be answered with “because I agree with the company’s business strategy.” But may very well be met with “because it’s a great place to work.”

Paying particular attention to creating a strong clearly defined company culture will allow your company to attract the most talented individuals, and perhaps more importantly, keep them.

Increased profits

It can be difficult for Boards to give sufficient time to areas where results are less tangible. Many directors feel that ‘business culture’ cannot easily be quantified into ‘profits’ leading it to fall down the Board’s agenda or off it altogether.

If your company has a strong culture it is less likely to suffer from a high staff turnover, saving thousands on recruitment, training costs and halts in service provision.

In addition, there is plenty of evidence emerging that companies with positive culture are those that are more successful and profitable. Happy employees are guaranteed to have a better work output leading to innovation, excellent customer service and increased profits.

How do we improve culture?

Culture is not something that can be created or changed overnight and so the Board and management will need to prepare to be in it for the long haul. It can start at the very basic level of an employee’s terms and conditions: Are they fairly rewarded? Do they know what is expected of them and what they can expect from the company? Is the management structure supportive? Is there adequate training in place for staff and management? Is sufficient thought given to employee welfare?

A clear vision supported by strong values that are in line with what the company hopes to achieve can also help guide decision-making and unify employees.

So where does Strategy sit?

Obviously, a coherent well thought out strategy is still vital for any business, but only a strong company culture will help deliver that strategy and realize the company’s maximum potential.

If you need any advice relating to improving business culture and strategy, or assistance with any of your governance needs, please contact us.

Sources: “Why Culture Eats Strategy for Breakfast”, Jacqueline Zhou, June 2015; “Culture Really Does Eat Strategy for Breakfast”, Daniel Patrick Forrester, August 2014