Should culture trump strategy? It’s no contest

Forget Alton Towers away days – values do not change overnight.

 

The baseball team, the club, the academy and the fortress – four categories of corporate culture outlined by Yale’s Jeffrey Sonnenfeld in 1988. Is your firm a group of well-rewarded star players, prone to moving on to better opportunities (the baseball team)? Or does it feel more like a city under siege, concerned with survival at all costs (the fortress)? 

 

Whatever the answer, it’s likely that your employer has at some point tasked the marketing team with sitting down and listing adjectives the company would like to be associated with. Goldman Sachs, for example, calls itself “a meritocracy built on the belief that collaboration, teamwork and integrity create the right environment for our people to deliver the best possible results for our clients.” Vodafone apparently takes great pride in its “can-do” culture, dedicating a whole page to the subject on its careers site, while PwC’s oddly-named consulting practice Strategy& is mysteriously described in its Twitter bio as “a global team of practical strategists committed to helping you seize essential advantage.” 

 

Google’s Ngram charting tool, which tracks the usage of words and phrases in books over time, shows a huge surge for “corporate culture” from the 1980s onwards – a sentiment management guru Peter Drucker summed up when he said that “culture eats strategy for breakfast.” Even the most promising business plan, the theory goes, could be wrecked if a company doesn’t have a clear set of values and working culture to match. Recognising the legal personhood of corporations doesn’t seem to be enough any more – businesses must have their own personality as well.

 

There’s been much ridicule (arguably deserved in certain cases) of some of the more contrived attempts to shake-up office cultures. Do costly corporate away days at Alton Towers really add much value at around £50 per adult? Others think that the exercise could serve as a dangerous distraction, and consultant Ken Favaro (of Strategy&, ironically) has argued that “no culture, however strong, can overcome poor choices.” 

 

He points out that General Electric, widely believed to have had one of the “most productive cultures in the world” under former chief executive Jack Welch, was nonetheless thrown off course by its acquisition of Kidder Peabody. “The impact of culture on a company’s success is only as good as its strategy is sound,” he says.

 

But it would be folly to ignore the impact of company culture altogether. In extreme cases like Enron, it’s easy to see how a failure to set the right tone at the top did little to prevent what would later be proved to be criminal activity. 

 

And a report released this week by the New City Agenda has linked recent bank fines with an apparently deep-seated “toxic” and “aggressive” culture in the City. Progress is being made in changing this, the report argues, but it will still take “a generation” to change things. Whether or not this is a fair characterisation, the report’s authors are surely right that corporate cultures don’t change overnight. But it’s probably wrong to set the question up as a contest between strategy and culture. As Favaro says, “don’t let culture eat strategy for breakfast. Have them feed each other.”

 

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