Does your culture align with your strategy?

“Breakfast cultural strategy” has been one of the most enduring aphorisms in business. This phrase is so enduring because it accurately and vividly describes a common problem: trying to pursue a strategy for which the organization is not ready. However, although this phrase summarizes the problem nicely, it is harder to find a solution.

Success requires understanding – and measuring – the potential disconnect between an organization’s culture and the strategy under consideration. Cultures can change, but they don’t change completely in the short term. If a leadership team can determine in advance the size of the gap between culture and strategy, they can set the right level of ambition for that strategy — and increase its likelihood of success.

Start with data

First, you need to understand the company’s culture – the identity of the organization. A lot of CEOs think they have this insight, but that’s often on a high level, based on impressions and anecdotes (and, of course, CEOs don’t always get the full and unfiltered view). ). Even when companies conduct formal research, they tend to focus on employee engagement, asking if employees are satisfied coming to work, their work is getting done. , or whether they would recommend the company to a friend. Those methods are valuable, but they answer a different question: whether employees feel positive or negative about different aspects of their workplace experience. They don’t define what culture really is.

To fully understand a company’s culture, you need to go beyond those emotions. That requires a comprehensive survey of the organization, one that is more than just employee engagement. Questions need to be structured to pinpoint the salient features of an organization and how they can impact its ability to deliver on its strategic goals, as well as the workplace experience. that the organization provides to its employees. It’s a challenging task, because culture — the unwritten rules of how a company operates on a day-to-day basis — is often invisible.

For example, Diagnosing PwC Culture Traces Ask employees a series of questions about their company, each with a set of binary options, such as:

• Are there unique points of accountability, or are decisions made by consensus?

• Do interactions tend to be polite and friendly, or accept conflict?

• Does the organization focus on specific priorities or is it open to new opportunities as they arise?

• Is your organization risk-averse or risk-averse?

• Is your organization comfortable with formal processes, or does it encourage improvisation?

By aggregating these responses from all employees, companies can aggregate them into a single set of core cultural characteristics of the organization — and quickly identify elements of their own culture. can be leveraged as strengths, along with the elements that need development most. This analysis can also highlight nuances in corporate culture, or aspects in which one business unit has a slightly different culture than another, or the overall organization. With this in mind, you can be much better prepared to see if the culture aligns with the company’s target strategy — and this is where things get interesting.

Measure the fit between culture and strategy

A client in the financial services industry recently adopted this approach. The company has been through a period of high employee turnover and management wants to transform to become more innovative and customer-centric. That’s a common goal for so many organizations today, driven in part by the acceleration of technology. But the diagnostic results suggest that the company’s culture is highly hierarchical and process-focused, with a cautious approach to change. That kind of culture has long been significant in the financial-services industry, which is tightly regulated and rewards adherence to predefined processes. However, such a culture does not easily accommodate innovation and customer-centricity, which makes it difficult for customers to achieve those goals.

Another notable finding was the disparity between the way management talked about the company’s culture and the reality of the culture revealed in the data. Before making a diagnosis, management often describes the company as having respectful and balanced leadership. But as a result, the company’s hierarchical culture became clear and obvious. That disconnect has created a sort of inconsistency that affects the workplace experience. It’s a common problem: managers see and say one thing; employees experience something different.

Remarkably, there is no such thing as a good or bad cultural trait. Conversely, any trait can include both strengths and weaknesses. For the financial services company, another cultural trait that emerged was that many employees had a “get it done” mindset. That can be an organizational strength: team members can rally together during difficult times, and they have a penchant for action, flexibility, and speed.

But this trait can also pose challenges. Feelings of constantly dealing with pressure can cause stress and burnout (a major source of employee turnover). Similarly, the company’s get-togethers mindset means that employees often find clever solutions to processes, never stopping to see how inefficient the processes themselves are. . (Diagnostics also show that financial services company employees are more likely to fix problems than to prevent them — less than ideal in a regulated industry.)

Close the gap

What to do when there is a gap between the current culture and the target strategy? Leadership teams are sometimes tempted to take on a major initiative to radically change the culture, but that would be a mistake. Culture is self-sustaining and hard to change. Instead, leaders should identify elements of the existing culture that support the company’s strategy and are a source of pride, and exaggerate these factors.

No cultural trait is good or bad. Conversely, any trait can include both strengths and weaknesses.

In addition, leaders can identify a Criticize some behavior to develop specific elements of the particularly problematic culture. The key here is focus: instead of trying to make a wholesale cultural revolution, successful initiatives prioritize specific pieces. For example, the financial services company has identified behaviors that affect cross-functional collaboration and transparent communication. It establishes an advisory board on which a small group of non-management employees can provide unprepared feedback to the leadership team. This broke the overly hierarchical culture at the company and helped the company achieve its goal of becoming more innovative and customer-centric.

Other organizations with large cultural and strategic gaps may try different solutions. With regard to innovation, for example, an organization might create a new business unit that serves as a hub for new ideas, with teams clearly tasked with moving fast and working. in new ways.

But none of these options will be viable until companies systematically and quantitatively evaluate their current culture and determine how well it supports those needs. how they operate in the future.

Author Biography:

  • Alice Zhou is a practitioner and thought leader at the Katzenbach Center. Based in Philadelphia, she is the director of PwC US.
  • Mara Kelly is a practitioner and thought leader at the Katzenbach Center. Based in Boston, she is the director of PwC US.
  • Christopher Hannegan specializes in change and transformative cultures and is a member of the US leadership team at the Katzenbach Center, a global institute for organizational culture and leadership at Strategy &, the strategic consulting firm of PwC. Based in Chicago, he is the principal of PwC US.

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