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27 July, 2022  Pramod Dhalwani

Your Corporate Culture could be the Reason for your Strategy Failure

Your Corporate Culture could be the Reason for your Strategy Failure

Well-designed processes and strategies are crucial for a company’s growth and success. Yet, any strategy could fail if the corporate culture does not support or work towards it. Hence, organizational culture has the ability to destroy or accelerate any strategy.

There are distinct types of corporate cultures that could adhere well with different strategies:

1) Clan culture – This refers to a ‘family’ like culture, that encourages collaboration, open-door policies, strong bonds, and loyalty. This culture is adapted by several companies like Google and Zappos.

2) Adhocracy culture – This refers to a culture that is inspired by motivational and innovative leaders. These leaders constantly challenge the status quo and introduce change combined with nimbleness. Adhocracy is adapted mostly by technologically inclined companies, such as Facebook.

3) Hierarchy culture – This refers to a culture where the leader believes in monitoring employees and ensuring that they follow the processes designed by the firm. Public sector usually adapts to this culture.

4) Market culture – This refers to a ‘target’ and ‘goal’ oriented culture. Employees are constantly in competitive environments and work towards increasing the company’s market share. Organizations like Amazon usually adhere to market culture.

Leadership can strongly determine the culture of organizations. Whether one adapts to transformational or transactional, there is a culture initiated by the leader, which is then perceived by employees into corporate culture.

Is your culture aligned to deliver your strategy?

There is often a gap between the strategy and the execution discipline. This gap arises due to miscommunication issues or a culture problem. Hence, it is important to understand if the company culture supports the strategies that the management is trying to implement.

It is also important to understand what company culture does the management want to adhere to. For example, if the CEO of company A, wants a culture that inspires people to constantly innovate. S/he should enhance and enforce the Adhocracy culture in company A. Relevant and effective measures shall be taken to reinforce the desired culture.

Some CEO’s let the culture evolve in their organizations instead of imposing the desired culture. This could go against the corporate culture that is being expected. For example, if a CEO expects a family-like environment in his/her company, then the management should exercise the clan culture in the organization. They should hire, conduct seminars and more according to that culture. If the management does not practice a clan culture but implements strategies that can only be supported by clan culture, then there is ought to be a disconnect.

If your company has evolved into your existing corporate culture, there may be a gap between the strategy that you have designed and the execution principle. For instance, if your company has evolved into ‘market culture’ but you expect a hierarchy, it could be quite problematic for your firm. As your strategies could be designed for a hierarchy, but the culture that evolved in your organization is ‘market culture’. Hence, there could be a huge gap between the strategy and the execution principle. Thus, the root cause of your strategy failure could be your company culture.

How many culture enhancement meetings have you had, compared to strategy meetings? Have you hired according to the culture that you want in your organization? What are you doing to exercise the desired culture in your organization?

The importance of considering culture while hiring

Several companies consider the 5 Five-Factor Personality model, where potential and current employees are evaluated on the Big 5 traits (Judge and Bono, 2000):

1) Extraversion – Analysing whether an employee is an extrovert or an introvert.

2) Agreeableness – Analysing the level of warmth and gentleness in an employee.

3) Conscientiousness – Analysing the attentiveness and dedication of an employee.

4) Emotional adjustment (Neuroticism) – Analysis of the adaptability and the emotional availability of the employee.

5) Openness to experience – Analysis of the employee’s ability to be open to new experiences.

These traits could be used to hire the right people according to the culture and strategy that an organization is trying to establish. If a call center is hiring people, they might want someone who scores high on agreeableness and emotional adjustment. Whereas, a company that has a strategy of aggressive sales and marketing, may want to recruit someone who scores high on the extraversion scale.

You could have an issue if your strategy is focused on networking, while the employees in your company are introverts. If you want an engaging culture, hire extroverts! Similarly, if you are a tech company that encourages the culture of innovation and creation, hire people who score high on agreeableness, conscientiousness, and openness to experience.

If the culture of an organization is broken, strategies can’t be played out as desired. If there is a gap in your corporate culture, it can be fixed by introducing different types of leadership styles, HR policies, and seminars. Culture can make and break an organization, hence it is important for companies to ensure that it is well maintained.

Is your breakthrough strategy backed up by a strong corporate culture? Engage with me through comments and/or personal message if you have more questions relating to this rather interesting topic.