Nutshell: Yes, culture still eats strategy for breakfast

Our organisation’s culture is its personality, expressed in its everyday norms and values. How can we ensure it is strong, healthy and productive – and supports the behaviours we need to excel?

“If you want to build a ship, don’t drum up the people to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea,” wrote Antoine de Saint-Exupéry in his 1943 novella The Little Prince.

Five decades on, he might have been surprised to find his poetic words guiding employee culture at Netflix, one of the world’s leading entertainment services, and winner of Comparably’s ‘Best Company Culture’ award in 2021.

“Adultlike” is how Netflix sums up its philosophy, advocating “freedom and responsibility” and “people over process” in an approach that avoids rules but demands excellence. Employees must be highly collaborative (sharing information “openly, broadly and deliberately”) and “extraordinarily candid” – ready to disagree overtly. Holiday entitlement may be limitless but so are expectations. “Adequate performance gets a generous severance package” is one of Netflix’s mottos.

“It takes a certain kind of person to work there,” admits Professor Erin Meyer, co-author of Netflix and the Culture of Reinvention ­– but that’s partly the point. Having a strong and intentional culture means that it’s not going to suit everybody.

What is organisational culture?

There’s no inherent ‘right or wrong’ in company culture – what works for Netflix may not work at Mailchimp (which pledges “only to hire weirdos… and to let them fail all the time”). But it can certainly be positive or negative.

A healthy culture is one that is aligned with purpose and strategy (encouraging behaviours that help our business to thrive) and embraced by staff from the top to the bottom of the organisation. It provides a ‘glue’ that integrates people around a set of common values. The opposite leaves people feeling adrift, unhappy and unproductive.

Culture can also be strong or weak. “A strong culture is one that people clearly understand and can articulate. A weak culture is one that employees have difficulty defining, understanding or explaining,” write Eric Flamholtz and Yvonne Randle, authors of Corporate Culture: The Ultimate Strategic Asset.

Getting it right is important because a strong, healthy culture is integral to achieving a consistent internal and external identity, attracting, engaging and retaining talent, and unifying people towards a common goal. It can act as a moral compass, guiding decision-making and behaviours – and directly affects the bottom line.

“Culture eats strategy for breakfast,” asserted management guru Peter Drucker – by which he meant that even the most effective strategy can be derailed by a negative culture. For example, an organisation that requires experimentation and innovation but is intolerant of failure may fatally undermine creativity.

Sticking one’s head in the sand is not a viable option, because culture exists whether or not we understand or define it, evolving dynamically. Its essence resides in the reality of “how we do things around here” and is borne out in the norms and values that shape behaviour. As Aristotle pointed out: “We are what we repeatedly do”.

Types of culture

No two organisations have the precise same culture (just as no two people have the exact same personality); each has a unique combination of objectives, people and internal and external influencing factors. The latter range from the sector our business is in, and the society it is part of, to its overall structure and history.

However, patterns have been noted that can provide insights into the forces at play. For example, in the 1980s, philosopher and organisational behaviour guru Charles Handy identified four main types of organisational culture. He categorised these according to their structure and power distribution, and described them using four archetypal Greek gods as helpful metaphors. According to his model:

• Zeus represents leadership by trust in the ‘power culture’ where power is concentrated in the hands of a few key decision-makers. These organisations (often led by a charismatic entrepreneur) can respond quickly to events and make speedy decisions as there are few rules, committees or procedures to adhere to. However, they revolve around (the moral compass of) their leader and work may feel directive. At their worst, such companies can become dictatorships.

• Apollo rules through bureaucracy in the ‘role culture’ where well-established rules, processes and standardisation mean that employees know exactly what is expected of them and enjoy security and stability. But this comes at the expense of speed and adaptability. Organisations with ‘role culture’ tend to be large and unwieldy – for example, local government, and may frustrate ambitious and agile workers.

• Athena is the goddess of problem-solving in a ‘task culture’ found in project-orientated organisations, with matrix structures, where team members report to multiple leaders. Here, flexibility rules and the emphasis is on getting the job done through teamwork. Power lies in expertise rather than position, and influence is more widely dispersed than in any of the other cultures (making control a challenge). Effective team dynamics are essential, but these cultures work well in fast-moving, competitive environments. 

• Dionysus is the god of individualism, presiding over ‘personal culture’ where power is held at an individual level and the organisation exists to serve and assist the people within it – for example, barristers working in chambers. However, teamwork may be a struggle since individuals put their own interests first.

Another popular model (developed by Kim Cameron and Robert Quinn from the University of Michigan) divides organisations according to their competing values:

• Clans are family- or tribe-like cultures which are people-orientated and friendly (but can be homogenous and cliquey).

• Adhocracies are dynamic, flexible and entrepreneurial cultures which prize innovation (but also risk-taking – and can lack structure).

• Hierarchies are formal, traditional top-down cultures (stable but rigid and slow to adapt to market forces).

• Markets are results-orientated cultures which are highly competitive (maximising profit but potentially causing burn-out).

While none of these models entirely captures the true intricacies of organisational culture, they can help us to understand the forces at play, and to gain a better understanding of our company’s prevailing norms.

It is common to identify more than one of these ‘types’ within our organisation – particularly where divisions are structured differently or there are sub-cultures by geography, department, function, hierarchy or team. Sub-cultures need looking at in relation to the overall dominant culture, but are not necessarily negative. In fact, they can foster cohesion and belonging – as long as they do not become ‘counter-cultures’ or impede cross-functional co-operation.

Identifying and changing culture

Being intentional about shaping organisational culture means investigating our current reality, reflecting on how we would like things to be, and identifying the differences between the two. We then need to pinpoint the changes we must make in order to get from one to the other.

Though culture forms gradually over time, and is a difficult organisational attribute to change, it’s generally possible to nudge, influence and even overhaul it if we follow the right process and bring our people with us on the journey.

Buy-in from the majority is non-negotiable. “There is no culture unless the group owns it,” asserts former MIT professor Edgar Schein, whose research in this field underpins much of today’s thinking. His three-level model depicts the essence of culture as lying not in an organisation’s ‘observable artifacts’ (such as its policies, offices, dress code or rituals) nor in its stated mission and values, but in its ‘basic underlying assumptions’: those intangible beliefs that guide everyday decisions and behaviours. Without addressing these, we will only change things at a superficial level.

“I like to think of culture being like the lily pond,” explains Schein. “On the surface, you’ve got leaves and flowers and things that are very visible; a visitor would see them. That’s the ‘how we do things around here’; but the explanation of why we do things in that way forces you to look at the root system, what’s feeding it and the history of the pond, who planted what. If you don’t dig down into the reasons for why we do things this way you’ve only looked at the culture at a very superficial level and you haven’t really understood it.”

Using the Cultural Web to change how we do things

Helping us to map our existing and future culture in a practical way – and to work out how to move from one to another – is a framework created by strategy experts Gerry Johnson and Kevin Scholes in 1992.

Known as the Cultural Web, this describes the ‘paradigm’ (or lived reality) of an organisation, using six interlinked elements which together create an overall picture:

1. Stories and myths are the collective memory of the organisation and relate to the narrative we use to describe it. They encompass the history of the company, its external reputation and the legends we share with new joiners. What our business says about itself, and the heroes it celebrates, shines a light on the values and behaviours we prioritise.
   
   
2. Rituals and routines comprise the behaviours that we expect – or accept – within our organisation, and the actions that are valued by management. It boils down to whatever constitutes ‘normal behaviour’ day to day (rather than what’s necessarily optimal).
   
   
3. Symbols refer to the visual representations of the company – the image it presents to its employees and the world. These include its branding, purpose statement and values, plus its offices, décor and dress code.
   
   
4. Organisational structure encompasses the formal hierarchy and reporting structure – as well as the unwritten lines of power and influence.
   
   
5. Control systems govern how control is exerted within an organisation. They include financial systems, quality control, performance management, and rewards and benefits and how these are measured and distributed.
   
   
6. Power structures denote where the real power lies within the company. It may be in the hands of a single leader, a handful of key decision-makers, or even a department. Who has the greatest influence over decisions, operations and the strategic direction of the organisation?
   

To use the Cultural Web as a tool for change, we can use a three-step process:

First, we need to analyse each element in turn, asking pertinent questions to gain an honest overview of our culture as it currently stands. For example:

• What stories do we use to describe our business – and what do these communicate about us?
  
• Do our logo and purpose statement reflect what we do?
  
• What behaviours do we need to drive our strategy and are these the ones we are modelling and rewarding within our organisation?
  
• Is our structure flat or hierarchical and who can challenge what?

When we have unearthed the realities of our existing culture, we then redo the exercise in an aspirational light, reimagining it as we would like it to be – through each of the interlinked elements.

By comparing our reality with our vision, we can then map the differences and consider how to broach these by tackling the different areas of our culture. Where do our strengths lie and which factors need reinforcing or adjusting? Which elements need a thorough rethink and how can we go about this – and with whose help or authority?

For example, if we want to embed ‘teamwork’ as a routine behaviour, we might need to role-model it within our power structure, add it explicitly to our values, and reward collaboration over individual success in our performance management system. We could reinforce it by sharing stories of team triumphs from throughout the organisation’s history.

In practical terms, our office layout may need changing to prevent siloed working, and efforts may be needed to include remote workers in meetings and social events. Most importantly, we’ll need to communicate our plan widely and ensure people are on board with it and understand the reasons behind it.

In this way, we can use our insights to create an action plan for change, including the main issues to tackle, ways of doing so, how to track and measure progress, whose involvement is integral to success, and precisely how we envisage culture change reaping tangible benefits.

Supporting culture change

Even with an in-depth understanding of what we need to address, it’s not easy to change an organisation’s culture – and it certainly doesn’t happen overnight. After all, we will almost inevitably face resistance to change from some quarters and have to unpick engrained habits. Every element of culture is interlinked, as demonstrated in the Cultural Web, and there are sub-cultures within most organisations.

But change is achievable with determination, communication and a clear strategy behind it.

For example, at Ford, former CEO Alan Mulally transformed the car giant’s culture from excessive internal competition to co-operation, by way of his ‘One Ford’ ideology. In uniting all of Ford’s employees under one global team – and behind his mission to save the ailing company – he spurred innovation and discouraged in-fighting, creating a safe space for openness and collaboration.

Communicating values

Spelling out our culture transparently, in writing, communicates our expectations to every member of our current (and potential) workforce. Clear and consistent values are essential to framing ‘how we do things’, representing core principles and ideals upon which our entire organisation exists; culture, in effect, is the way we implement our values.

Values may be chosen by senior leadership or, ideally, through wider brainstorming – perhaps by selecting representatives from each team or department or level to take part. They must be realistic – because they need to be lived – helping us achieve our purpose.

To this end, they should reflect what’s truly important to the company, what guides us when making difficult decisions, and what we might willingly ‘hire and fire’ on. For example, there’s little benefit in championing ‘ideas over hierarchy’ if we actually prefer our people to adhere to traditional power structures.

Values also need to be described in relation to actions and behaviours. Common values chosen by organisations include ‘integrity’, ‘accountability’ and ‘passion’ – but what each company means by these terms may differ, so we need to clarify what they constitute within our environment.

First published in 2009 (but constantly refined and updated), Netflix’s ground-breaking Culture Deck remains a shining example of a culture manifesto – upfront about what it stands for and the behaviours it holds dear. The company’s nine core values are clearly expressed and put in context; for instance, in explaining integrity, Netflix says: “You only say things about fellow employees you say to their face.”

As part of its manifesto, Netflix also shares the responsibility for upholding its values with every member of the organisation, stating: “We want everyone to help each other live the values and hold each other responsible for being role models. It is a continuous aspirational stretch.”

This speaks to the fact that values are meaningless if not lived and breathed – and that managers are integral to monitoring and nurturing them within their teams. Whether or not they are embedding change, high-performing organisations proactively manage their culture – which can be swayed by a wide array of disrupting factors; for example, the overnight normalisation of remote working during the COVID-19 pandemic.

Hiring for culture add

Where we have achieved a healthy and well-defined culture, recruiting for ‘culture fit’ may be a tempting proposition: why rock the boat with ‘difference’ when we know we can source people who seamlessly blend in?

However, prioritising easy team cohesion over the benefits of diverse thinking can undermine crucial innovation, support dangerous ‘groupthink’ – and conflict with stated values around creativity and inclusion (not to mention the possibility of falling foul of equality or discrimination legislation).

Besides, hiring for ‘culture add’ doesn’t mean bringing in people likely to cause conflict and discord, but is about attracting those who respect our existing standards, while bringing something fresh in terms of their skills, perspective or experience. The effort we put into integrating these people into our teams will be reaped in a variety of other ways.

Hiring for ‘values fit’ is perhaps a better way to look at it, as articulated by Atlassian, an Australia-based provider of team collaboration and productivity software.

“Focusing on ‘values fit’ ensures we hire people who share our sense of purpose and guiding principles, while actively looking for those with diverse viewpoints, backgrounds, and skill sets,” explained its former global head of D&I, Aubrey Blanche. ‘We’re trying to build a healthy and balanced culture, not a cult.”

This makes the point that a healthy culture is not about exercising rigid control over our employees’ thinking and behaviour – but about providing them with a guiding framework that fosters belonging and enables excellence. Culture may be set out by C-suite, but it’s owned, shaped and enacted by us all.

Test your understanding

• Outline two of Charles Handy’s types of organisational culture.

• Describe the three-step process we can undertake to change elements of our culture.

What does it mean for you?

• Reflect on the strengths and weaknesses of your organisation’s culture – and any elements that might need rethinking.

• Consider the values that underpin your culture at work and whether these are implemented in practice. What two-three things could you do to embed them into your team?