The culture determines the strategy’s success – but why?

It’s an evergreen tune, and yet 70% of strategies fail – most because of the culture. If you want to know why and see how culture can improve your bottom line, keep reading.

Jes Graugaard

Albert Einstein once said “Insanity is doing the same thing over and over again and expecting a different result”. Perhaps he would say that this is what happens when we implement new strategies. We make the same mistakes over and over again, and that’s why all analyses of this process have shown the same results since the 1990s. The number 70% is flashing like a neon sign – and the causes are the same – people! We have been working with corporate culture for 30 years, and nearly 20 years ago we conducted our first company survey with our newly developed ‘Culture Performance Driver’. We will give you some of the documentation we’ve collected over the years as well as an understanding of how you can improve your strategy implementation and bottom line. So hold on tight.

The overriding conclusion is that there is a clear correlation between the development of the culture and of the bottom line. A better culture = a better bottom line, and vice versa.

Can that really be true? Yes – but only if you’re working with the right definition of culture. As more and more people talk about culture, the understanding of the concept is getting more and more skewed. It’s therefore difficult as a manager to see the connection between the culture and the bottom line. So let’s start by nailing down the concept. Put briefly, the culture is the collective behavior of a company. To add a little more to that, it’s the thoughts and feelings that create the behavior. That’s why it should now begin to make sense that there’s a clear and unambiguous link between our culture and our success.

CULTURE = WHAT WE THINK/FEEL/DO = OUR COLLECTIVE BEHAVIOR

That’s why culture is involved everywhere and in everything we do in the company. What we think, feel, and do about our strategy. What we think, feel, and do about our finances, customers, products, and processes. And the same applies to management, teams, individuals, and, not least, our guidelines in our mission, vision, and values.

Culture & bottom line
Culture is everywhere and is not just – as many believe – what our job satisfaction or engagement surveys show! That’s only a very small part of the culture.

For the past 20 years, we have performed culture analyses for a large number of companies on more than 300,000 people. Across industries, we have discovered a 95% correlation between the culture and the bottom line.

When we beat the competition, is it because we have better products, better processes, more talented people, better marketing? Not really. It’s because we have a better culture overall.

Companies with a strong and healthy culture in all areas are simply invincible – and while our strategy, products, marketing, and processes can be replicated, it’s virtually impossible to replicate the culture. That’s why your strongest competitive parameter is a strong culture.

When we’re among the 10% of companies that get more out of a strategy than expected – unlike the 70% who fail – is it because our strategy is better? No. It’s because we have a culture – that is, a performance-enhancing behavior – that supports the strategy instead of working against it.

Culture & change
Change is always challenging for people – or rather, for the brain. From cognitive research, we know that people who are subjected to change experience a strong increase in the activity of the brain’s survival center. This means that they produce a vast amount of stress hormones. But the experience of change differs. Employees in a high-performance culture strive for change – and employees in a low-performance culture fear change.

All strategies have a strong element of change, otherwise there would be no need for them. This requires a new behavior/culture – and that is the biggest and hardest part of strategy implementation.

This requires that we, as top management, understand how to produce the right thoughts, feelings, and actions in ourselves, our manager, and our employees. How do we get them to understand and care about the strategy we want to implement? How do we create ownership? How do we get the managers to work with the strategy in the right way? How do we measure whether our culture is changing in the right direction, so that we’ll succeed with the strategy?

The culture determines the strategy’s success – but why?

It’s an evergreen tune, and yet 70% of strategies fail – most because of the culture. If you want to know why and see how culture can improve your bottom line, keep reading.

Jes Graugaard

CULTURE = WHAT WE THINK/FEEL/DO = OUR COLLECTIVE BEHAVIOR

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