Culture eats strategy

Russ Kathrein

Company culture, like a society’s culture, is what drives behavior and serves as a directive for all major decisions. If nurtured and focused on the right things, it can create a company that rarely fails because all decisions are reinforced by its culture. If ignored, it can take on a life of its own that can actually run counter-productive to the health of the company. In his TED Talk, Simon Sinek called this the organization’s Why. Leaders who have established a clear reason for why the company exists and why its members do things the way they do, can exceed all reasonable expectations of success. Sinek frequently cites Apple and the focus that Steve Jobs put on the individual and challenging what society considered the norm, as a company that was very successful in answering why the company exists.

In societies, look at the ancient Greek city states of Sparta and Athens. Both had strong cultural whys that drove their actions and decisions. Sparta was a warrior state where everything from the day a baby was born was focused on creating the best warriors to defend Sparta. Athens focused on the arts and learning, which in turn led to them creating the first democracy. Both were very successful and influential. Athens ultimately fell to Sparta in the Peloponnesian War due to Sparta having the stronger focus on military fighting. There were other Greek city states at the time, but none had strong cultures like these two, so they faded into obscurity.

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As leaders within companies, we are tasked with setting the strategic path of that company. Many strategies that on the surface looked promising, have often failed because the leadership failed to take into account the company’s culture. If a company has a highly paternalistic culture where employees are nurtured and underperforming employees are moved to another job or just tolerated, how well would a competitive strategy of aggressively going after market share succeed?

When I was at ProBuild we had a company that was created from many smaller companies, but in reality, had six strong and distinct cultures. One culture was very entrepreneurial and risk taking, while another was very conservative and risk averse. One was very sales driven and dominated by performance, while another was very operationally innovative and encouraged out-of-the-box thinking. All were successful in their own right, but when the Great Recession hit and leadership decided we needed to combine into one company and one culture, the initial reaction was like Baskin Robbins taking 31 flavors and boiling it down to one common flavor—vanilla. With employees of the stronger more focused cultures, the need to change fell on deaf ears or was outright challenged. Where employees came from less defined cultures the change was accepted, but by this point the “why” of the new ProBuild culture was so watered down and unfocused, it just became another initiative from corporate that people failed to understand or embrace that ultimately failed.

Before embarking on a new strategy, a leader must first understand the culture of the company that they work within. If it is strong and definable, then it may be possible to answer the why question for your company and then establish a strategy that is defined by and plays to that culture’s strengths. Chances are your company’s culture is either hard to define or it fails to lead you easily to the answer of why the company exists. That’s okay. It just means you have to do a lot of listening, spend a lot of time planning and preparing, and then make difficult changes in people and the business in order to create the proper environment to change the culture to something that can focus on a clear direction and be guided by the basic principle of why your company exists. Most companies are not ultimately successful at this, but even if your company’s Why is not as compelling as Apple’s, if it permeates throughout the organization and everyone is marching to the same tune, then the right strategy will effortlessly be adopted by the culture and it will be successful. If not, it more than likely will end up sounding like a brass section playing a piano concerto. You will understand the tune, but it just doesn’t sound right.

Russ Kathrein is the former president and CEO of Aurora, Ill.-based Alexander Lumber. He is also chair-elect of the National Lumber & Building Material Dealers Association. Reach Russ at russ.kathrein@gmail.com.

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