Organizational culture is complex, and it can play a powerful — and sometimes destructive — role that is too often overlooked when new strategies are devised and launched.
In a new global survey by the Economist Intelligence Unit (EIU), the most frequently cited barrier to implementing strategy was culture. This is a huge roadblock: In the survey, supported by the Brightline Initiative, 90 percent of respondents admitted that they fail to reach all of their strategic goals because they don’t implement well, and more than half said that weakness in delivering strategy puts them at a competitive disadvantage.
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Companies in the survey cited several different cultural barriers that have impacted their strategic implementations. Thirty-three percent blamed a failure at the top: Corporate leaders did not understand the challenges facing employees and the impact of new strategic shifts.
That was closely followed by recognition that many corporate cultures had not developed the agility and flexibility to transform: 29 percent said the culture could not absorb all the changes coming from strategy implementation. Another 28 percent blamed parts of the organization for a lack of understanding of what new strategies would demand. Many leaders in the survey also said that their employees did not have the buy-in necessary to invest in the changes that a new strategy demanded. At least 30 percent said their employees did not find it worth “putting up with much hassle” to help implement a new strategy. Another 28 percent said their organization did not believe there is a pressing need for significant strategic change.
The importance of culture is magnified during a new strategic implementation, says Hilton Romanski, CSO of multinational technology company Cisco, because companies and their employees are moving from a comfort zone to an uncomfortable, uncertain future.
“A lot of mature companies have business models that have been optimized for a certain set of circumstances,” Romanski says in the EIU report. But when circumstances change, the business model must shift as well. The resulting strategy might require new incentive structures, different people, and even finding out whether “there is a new operating model you can get your arms around,” Romanski continues.
In the survey, of the companies that reported the most success with achieving strategic objectives, 70 percent stated that their corporate cultures supported rapid strategy implementation. This group saw their culture as a positive force in reaching their strategic goals.
Not surprisingly, communication emerged as a key component of implementation: The companies in the survey that emerged as leaders in implementation were much more likely to report that the two-way flow of information between top executives and people lower in the organization is very effective.
“Vertical communication within the business cannot fall into the trap of flowing one way — from the top,” says David Kamenetzky, chief strategy and external affairs officer at brewer Anheuser-Busch. Instead, it is actually about tapping expertise throughout the organization. “You have to do a certain element of consultation and even co-creation,” he explains. “It is about making sure the strategy is and remains right. Often people with operational experience, if you make them part of the strategic conversation, give good insights in[to] how to drive things the right way.”
The leaders are even further ahead of others in maintaining better communication across senior levels of the company. This, too, is essential, according to Benoit Claveranne, group chief transformation officer at France-based multinational insurer AXA. “Business transformation, in its very essence, cuts across the departments of the organization,” he says. “That means department heads must interact and collaborate with their peers rather than remain within the walls of their fiefdoms.”
Among Brightline’s 10 Guiding Principles for turning strategies into results, the five principles below underscore the way that leaders can connect C-strategy design, culture, and delivery:
1. Acknowledge that strategy delivery is just as important as strategy design. The importance of active and visible leadership cannot be overstated.
2. Dedicate and mobilize the right resources. Inspire and assign the right people to get the job done. Actively balance “running the business” and “changing the business” by selecting and securing the right resources for each.
3. Promote team engagement and effective cross-business cooperation. Beware of the “frozen middle.” Gain genuine buy-in from middle and line managers by engaging and activating them as strategy champions rather than just as managers and supervisors. Don’t just assume your people will “get it.” Govern through transparency to engender trust and enhance cross-business cooperation in delivery.
4. Develop robust plans but allow for missteps — fail fast to learn fast. Empower delivery teams to experiment and learn in an environment where it is safe to fail fast. Discuss challenges openly. Learn to reward failure or at least accept it as valuable input.
5. Celebrate success and recognize those who have done good work. Inspiring people is part of the job. While leaders have to drive accountability and focus on delivery, they also need to motivate those who do the work. Actively shape a winning culture by engaging and exciting the people responsible for delivering strategic change programs. Celebrate successes and quick wins.
For more information on the Brightline Initiative, go to Brightline.org.