The critical connection between organisational culture and strategic success.

🟤 Strategy & Leadership

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Nick Mackeson-Smith
Nick Mackeson-Smith
Chief Curiosity Officer, Founder and Director

In today's rapidly changing business environment, it is more important than ever for boards and executive teams to deeply understand their organisational culture - and the impact it has on their long-term viability and performance.

Culture influences employee motivation, engagement, and performance, making it crucial for boards and executive teams to deeply understand it.

While annual culture or engagement surveys can provide valuable data, they are often limited in their ability to provide a comprehensive picture, and rarely offer anything beyond an observation at a static point in time. These surveys can provide data on employee perceptions, but they do not capture the nuances of the culture or provide insights into the underlying causes of issues - or the aspirations and dreams of an organisation’s employees.

To truly understand an organisation's culture, it is necessary to combine this survey data with unbiased observations and analysis.

“There’s clearly a need for a deeper and more fundamental understanding of organisational culture”.

There are numerous articles highlighting the importance of organisational culture, such as The Leader's Guide to Corporate Culture,  Creating a Purpose-Driven Organization, and Paloma Medina’s excellent work on the 6 core needs (or the BICEPS model). The common theme within this work (and others) is that culture is a key driver of employee engagement, productivity, and overall performance.

Organisational culture is an integral aspect of any business. It is the foundation upon which a company's values, beliefs, and behaviours are built. Understanding an organisation's culture is essential for creating a positive work environment and engaged employees. Additionally, it has a significant impact on the successful implementation of organisational strategy.

Misalignment of culture and strategy makes misery

When culture isn’t directly aligned with enabling the organisation’s strategy, bad things can happen.  

As a child, I took great pleasure in the 45-minute round trip to our nearest Blockbuster video shop to choose a movie on VHS tape (and then later DVD) to rent for 2 nights. In the time of Netflix and Disney+ and AppleTV+ and Neon and PrimeVideo (and the list goes on)… Blockbuster has become a distant memory. Their failings were many, but with hindsight, we can see that core changes in their culture could have had a massive impact on what their strategy was AND how their strategy was executed.

Ultimately, their culture simply didn’t:

- value the shift in customer behaviour towards digital media and streaming

- value new ideas and approaches, or insights from frontline team members

- adopt mindsets or behaviours supporting innovation and adaptation

- enable frontline employees to make changes to their products and services to serve their local demographic

- have mechanisms or processes for feedback back customer insights to senior leadership

- value or measure much more than sales numbers and revenue

Culture makes the world go ‘round

In contrast, organisations that invest time, energy, and effort in understanding and aligning their culture towards the attainment of their strategic aspirations can see positive impacts on their performance. Apple's culture of innovation and creativity is an excellent example of how culture can drive success - sometimes even beyond what the strategic plan had envisioned. It’s widely known that Apple has a culture that values new ideas, risk-taking, and collaboration. This culture has enabled the company to develop and launch new products that have revolutionised the tech industry, such as the iPhone, iPad, and iPod, . They are unafraid to take risks, determined to innovate (even when the customer isn’t quite ready for those innovations, like removing the headphone jack and replacing it with Bluetooth headphones!), and are fiercely committed to delivering the best possible experience for customers and their employees. If you’ve ever unboxed an Apple product (and there are literally MILLIONS of videos on YouTube of such unboxing), you’ll know the pleasure of feeling every single drop of love, care, innovation, design effort, and joy that went in to making the product.

“Culture MATTERS. It matters SO MUCH. It’s not something that can be discussed once a year at a half-day offsite for the executive team. It can’t be consigned to an agenda item on the weekly team meeting. Culture is EVERYTHING. It’s what we do - all day, every day”.

At Five, we believe that running an annual culture or engagement survey is not enough to help organisations understand and act upon the key levers for change. Qualitative and quantitative methods, such as real-life unbiased observations are necessary to gain deeper insight. By conducting real-life observations within organisations, we can maintain safety, confidentiality, and ensure non-attribution of comments, allowing employees to speak freely and openly about their experiences.

This approach provides a more complete picture of an organisation's culture, identifying both strengths and areas for improvement.

It’s crucial to ensure that employees are engaged in an ongoing conversation about culture and more importantly to involve them in the process of culture change itself. Simply gathering insights on observed behaviour is interesting, but playing back these observations and insights to the people who are the architects of the culture can spark something quite remarkable - the power of people within the organisation to mobilise and begin to make positive changes to their own organisation's culture by themselves. This cannot be underestimated.

People make the culture - investigating where it can be improved or enhanced, and then giving employees a chance and a choice to do something about it often results in significant improvement. This doesn’t mean that organisational leadership can abdicate responsibility for culture to everyone else - it means it should be a team activity. This is hugely important. It’s notably different when people provide feedback in the annual engagement survey where people have provided feedback and then expect leaders to make changes for them.  

Engaging everyone in the conversation makes it everyone’s responsibility.

Ownership is abundant, and change happens more readily and painlessly. Not everything can or should be changed at the same time within an organisation, as too much instability can be unsettling or confusing. Instead, a simple scorecard from Five New Zealand's deep culture discovery can help leaders make informed choices about where and how to improve their culture and where to prioritise effort, energy and resources. This scorecard provides a snapshot of an organisation's culture, highlighting areas where change is needed and identifying specific actions that can be taken to address those issues. The things that matter most will be the things that get tackled first.

Behavioural science as a foundation for action

Culture is complex. We’re big fans of simplicity, so we love Paloma Medina’s, BICEPS model which makes human behaviour easy (…. well perhaps not easy…. perhaps easier) to understand. The model highlights six key aspects of organisational culture: belonging, impact, choice, equity, predictability, and safety. By assessing the extent that these aspects are seen, experienced, felt (or otherwise), organisations can gain valuable insights into their culture - even down to the individual team level - and determine areas for improvement.Another critical aspect of organisational culture is the importance of understanding action-intention gaps. An action-intention gap is when something is intended to happen, but then doesn’t happen in the way expected - for any number of reasons. When these reasons are external (like someone else failing to follow through on a commitment, or a system failing to work as expected) it can cause frustration and disengagement - even resentment over time. When these reasons are internal (like a person wants to do something but their own behaviour gets in the way of them following through) it can lead to sadness, personal dissatisfaction, and potentially low feelings of self-worth.

When employees experience these gaps on a regular basis, it can have long-term impacts on their feeling, motivation, engagement, and performance. Therefore, it is essential for organisations to take proactive steps to understand and then bridge these gaps and create a culture of trust and transparency.

Moving beyond the engagement survey

It really is true that culture eats strategy for breakfast, lunch and dinner, so it’s time to push beyond the survey and discover what makes your organisation tick. It’s been shown time and time again that the companies that succeed in aligning their culture with their strategic goals drive innovation, improve employee engagement and performance, and ultimately achieve and sustain long-term success. It’s too important for you not to dig deeper.

Photo by Shridhar Gupta on Unsplash

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