In the light of accelerating change, digitalization and agile organisational structures, concepts such as culture, satisfaction and wellbeing are increasingly gaining focus among decision-makers. And with it the question how to tackle challenges and work together in order to be successful together. Trust is the key to success. So where does strategy come in?
Transformation processes - a question of culture and strategy
As consultants for workplace culture, we have been accompanying our clients in strategic transformation processes for years. Our job is mostly to positively shape the collaboration for jointly achieving corporate goals. Globalisation, digitalisation and, more recently, the COVID-19 pandemic lead to the following focus areas: New Work (or: how flexibly can employees shape their working environment themselves?), Agility (or: how quickly can we react to changes in a customer- and result-oriented way?), Purpose ( or: what positive impact does our business activity have on our stakeholders - currently especially with regard to ESG issues?), Diversity & Inclusion (or: how do I shape collaborative environment in which all employees can contribute in their own way?), Digitalisation (or: how do I use the possibility of transparency for our innovation processes?).
Not every company is the same and a universal "right" and "wrong" is difficult to define. Nevertheless, there are indicators that can favour the success of such changes in the long run.
The Golden Circle: WHY, WHAT and HOW
- The WHY: An organisation's purpose defines its raison d'être. For inspiration, this is in many cases defined by a vision and mission.
- The WHAT: Strategy defines the goals of an organisation and how they are to be achieved. It determines which aspects of an organisation are in focus (these can be products and services, but also internal focus areas)
- The HOW: Culture determines the behaviours of how an organisation will achieve the goals and objectives defined in the strategy. It shapes cooperation and communication between employees.
In general, successful organisations are able to address complex issues holistically by aligning their purpose (The WHY), strategy (The WHAT) and culture (The HOW). Only when corporate purpose, strategy and culture are addressed as a whole and there is a common understanding that strategy and culture cannot be viewed separately from each other, is the way paved for a successful transformation. This integrative approach to organisational culture is defined by Edgar Schein as follows:
“Organizational culture is a pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.”
(edgar Schein, 2004, p.17)
Organisational culture is more than after-work beers and ping-pong tournaments
"Motivated, dynamic team with flat hierarchies and the opportunity to actively be involved and thus make a valuable contribution [...] and in the breaks we like to organise ping-pong tournaments and chat with each other at our monthly after-work beer."
If you have come across any job advertisement in recent months or years, you have almost certainly seen similar formulations. Talk about culture in the workplace and it doesn't take long for "team-building" activities to come to the fore. And while it is exactly activities like these that can strengthen the sense of belonging and lead to more identification with the organisation, this is only one (and important!) aspect of culture.
To shed more light on the connection between culture and strategy, let's take another look at Edgar Schein's definition of culture:
External adaptation relates to the strategic topics of the WHAT. Central to this are the following questions:
Mission: What is our understanding of our primary task?
Goals: What goals do we need to achieve in order to fulfil the mission?
Means: How can the goals be achieved (structure, leadership, ...)?
Key success criteria: How do we know that we are on the right track?
Adaptability: What do we do if we are not on the right track?
Internal integration targets the cultural aspects of the HOW:
Identity and belonging: who belongs to us and who does not?
Authority: How is power and status defined and distributed?
Trust and openness: How openly do we treat each other?
Appreciation and punishment: How do we acknowledge good performance and poor performance?
Uncertainty: How do we deal with uncertainty?
Culture and Strategy eat breakfast – together
By defining organisational culture and its aspects of external adaptation and internal integration, it becomes clear that cultural considerations in the organisational context always have a strategic perspective (no HOW without WHAT). But strategic issues are also always integrated into a cultural context (no WHAT without HOW). From this perspective, the well-known statement "Culture eats Strategy for breakfast" should read "Culture and Strategy eat breakfast - together". In other words, culture can determine strategy and, at the same time, strategy can shape organisational culture.
Since strategy is integratively linked to culture, it affects all employees of an organisation. In times of continuous transformation, it is no longer sufficient for top managers to define the strategy and then cascade it down through the organisation for implementation. To be able to face change quickly and successfully, it must be clear to employees what their contribution is to the achievement of the company's goal and how they can provide it.
Trust as binding link
Our global studies have shown that employees in organisations develop their full potential (and make a high contribution to value creation) when, on the one hand, they know what contribution they are making to the overall goals (WHAT - communicating strategy as part of leadership quality) and, on the other hand, it is clear to them how they should make this contribution (HOW - lived values as part of the organisational culture). However, for this interplay between culture and strategy to work in lived collaboration, trust (or psychological safety - a term coined by Google) is needed. It is about employees (with and without a leadership function) feeling safe, guided by the values and oriented towards the goals of an organisation, to do things as they deem right through their competences. The result is a high level of innovation and increased value creation.
This interdependence forms the basis of our FOR ALL model, with which we evaluate the culture of organisations and accompany their transformation process. At the centre is trust.
Leadership competencies and anchoring values as areas of action
With mutual trust, rapid change and continuous transformation can be perceived as an opportunity. However, this requires leaders who are able to reflect on their contribution to the achievement of corporate goals together with their employees at eye level. And it needs guiding values that are anchored throughout the various programmes and processes of an organisation and thus show what the expectations are for the behaviour and cooperation of the employees. The strategic WHAT and the cultural HOW are thus integrated in the sense of increased value creation.
Find out how we can support you in creating a trusting environment for your employees!