Excerpt from Transformative

At the end of the day, organizations are human enterprises. An organization is a group of people trying to optimize how they work and work together to achieve a defined outcome at a high level of performance. Great leaders recognize that a strong and positive organizational culture is one of the best ways to achieve high performance and overcome challenges. Therefore, they focus on the question of how to build a culture that will aid their organization in creating advantages now and adapting to the future.
 
We’ve all heard the phrase, frequently attributed to Peter Drucker, that, “Culture eats strategy for breakfast,” a saying that denotes how strong an influence culture can be, even to the point of overpowering a company’s objectives and plans. It’s a decidedly pessimistic view on organizations’ ability to effectively change or pursue a course of action without significant, often fatal, subjection to the inertial, momentum-killing attribute of culture. Unfortunately, it’s an observation that is widely upheld by empirical observations.

While strategy is set from above and includes one or more goals and conscious decisions of what to focus on, culture—that set of accepted values, customs, beliefs, and norms—is constantly active at the individual level, in hundreds, if not thousands of choices and actions made each day by every employee. If those choices and actions don’t support the strategy, it never be accomplished. In this case, culture trumps strategy, and the strategy will never be enacted.

So while many companies treat culture as a nice-to-have, define it as a good “family atmosphere,” or point to a set of perks and benefits that attract talent, transformative organizations approach culture as the underpinning of the organization’s performance and the driver of success. While Netflix, for example, broadly acknowledges that “culture is how a firm operates,” it emphasizes that it is the key to the company’s performance and future, stating that culture is “the best chance of continuous success for many generations of technology and people.”

Companies are successful due to various factors, including strategy, capabilities, culture, timing, and some luck. While many of these factors seem manageable, organizations often fail at culture because, while strategy can be documented and capabilities can be built, culture is seemingly less tangible and more challenging to manage.
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Let’s be clear, when I talk about a strong culture, I mean specifically an organization’s ability to use its values, customs, beliefs, norms, and expectations on how to act in a way that unifies the organization to support a common set of strategic goals and actions. A strong culture also aids the organization in anticipating when it needs to adapt and adjust to changing conditions. Without a strong and driving culture, it is impossible to innovate to win.

Explore this and other topics in the upcoming book Transformative.