Creating a Strong Fit between Strategy and Culture

1. It is the strategy maker’s responsibility to select a strategy compatible with the sacred or unchangeable parts of the organization’s prevailing culture. It is the strategy implementer’s task, once strategy is chosen, to change whatever facets of the corporate culture hinder effective execution.

2. Changing a Problem Culture: Changing a company’s culture to align it with strategy is among the toughest management tasks because of the heavy anchor of deeply held values and beliefs. The single most visible factor that distinguishes successful culture-change efforts from failed attempts is competent leadership at the top.

CORE CONCEPT: Once a culture is established, it is difficult to change.

3. The menu of actions management can take to change a problem culture includes the following:

a. Making a compelling case for why the company’s new direction and a different cultural atmosphere are in the organization’s best interests and why individuals and groups should commit themselves to making it happen despite the obstacles
b. Repeating at every opportunity the messages of why cultural change is good for company stakeholders
c. Visibly praising and generously rewarding people who display newly advocated cultural norms and who participate in implementing the desired kinds of operating practices
d. Altering incentive compensation to reward the desired cultural behavior and deny rewards to those who resist
e. Recruiting and hiring new managers and employees who have the desired cultural values and can serve as role models for the desired cultural behavior
f. Replacing key executives who are associated with the old culture
g. Revising policies and procedures in ways that will help drive change

4. Symbolic Culture-Change Actions: Managerial actions to tighten the culture-strategy fit need to be both symbolic and substantive. Symbolic actions are valuable for the signals they send about the kinds of behavior and performance strategy implementers wish to encourage. The most important symbolic actions are those that top executives take to lead by example. Another category of symbolic actions includes the ceremonial events organizations hold to designate and honor people whose actions and performances exemplify what is called for in the new culture. The best companies and the best executives expertly use symbols, role models, ceremonial occasions, and group gatherings to tighten the strategy-culture fit.

5. Substantive Culture-Changing Actions: The actions taken have to be credible, highly visible, and unmistakenly indicative of the seriousness of management’s commitment to new strategic initiatives and the associated cultural changes. There are several ways to make substantive changes. One is to engineer some quick successes that highlight the benefits of the proposed changes, thus making enthusiasm for them contagious. Implanting the needed culture-building values and behavior depends on a sincere, sustained commitment by the chief executive coupled with extraordinary persistence in reinforcing the culture at every opportunity through both word and deed. Changing culture to support strategy is not a short-term exercise. It takes time for a new culture to emerge and prevail.

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