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In the wake of accelerating change, digital competitiveness and agile organizational structures, concepts such as culture, satisfaction and wellbeing are increasingly becoming the focus of decision-makers. And with it the question of how to tackle challenges and work together in order to be successful. Trust is the key to success. But why do we need a strategy at all?
Transformation processes - a question of culture and strategy
As consultants for workplace culture, we have been supporting our clients in strategic transformation processes for many years. Our mission is usually to positively shape collaboration for the joint achievement of corporate goals. Due to globalization, digitalization and the COVID-19 pandemic, the focus is usually on the following topics: New Work (or: how flexibly can employees organize their working environment themselves?) Agility (or: how quickly can we react to changes in a customer and results-oriented manner?) Meaningfulness (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 create a collaboration in which all employees can contribute in their own way?) Digitization (or: how do I use the possibility of transparency for our innovation processes?)
Not every company is the same and it is difficult to define a universally valid "right" and "wrong". Nevertheless, there are indicators that can favor the success of such changes in the long term.
The Golden Circle: WHY, WHAT and HOW
- The WHY: The corporate purpose defines the raison d'être of an organization. This is often defined by a vision and mission for inspiration.
- The WHATThe strategy defines the goals of an organization and how these are to be achieved. It determines which aspects of an organization are in focus (these can be products and services, but also internal focus areas).
- The HOW: The culture determines how the goals defined in the strategy are to be achieved in an organization. It guides cooperation and communication between employees.
Generally speaking, successful organizations manage to tackle complex issues holistically by aligning their corporate purpose (the WHY), strategy (the WHAT) and culture (the HOW). Only when corporate purpose, strategy and culture are approached holistically and there is a common understanding that strategy and culture cannot be viewed in isolation from one another is the path to successful transformation paved. Edgar Schein defines this integrative approach to organizational culture 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
Organizational culture is more than after-work beers and ping-pong tournaments
"Motivated, dynamic team with flat hierarchies and the opportunity to get actively involved and thus make a valuable contribution [...] and during the breaks we like to organize ping-pong tournaments and exchange ideas at the monthly after-work beer."
If you've read a job advertisement in the past few months or years, you've most likely come across a similar phrase. When talking about culture in the workplace, it doesn't take long for "team-building" activities to come to the fore. And while it's activities like these that can strengthen a sense of belonging and lead to greater identification with the organization, this is just one (important!) aspect of culture.
To shed more light on the interplay between culture and strategy, let's take another look at Edgar Schein's definition of culture:
External adaptation
The external adjustment relates to WHAT's strategic topics. The focus is on the following issues:
- Mission: What is our understanding of our primary task?
- Goals: What goals do we need to achieve in order to fulfill the task?
- Means: How can the objectives be achieved (structure, leadership, ...)?
- Criteria for success: How do we recognize that we are on the right track?
- Adaptability: What do we do if we are not on the right track?
Internal Integration
Internal integration focuses on the cultural issues of the HOW:
- Identity and belonging: who belongs to us and who doesn't?
- Authority: How is power and status defined and distributed?
- Trust and openness: how open are we with each other?
- Appreciation and punishment: How do we recognize good performance and poor performance?
- Uncertainty: How do we deal with uncertainty?
Culture and Strategy eat breakfast - together
By defining organizational culture and its aspects of external adaptation and internal integration, it becomes clear that cultural issues in the organizational 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 be used to define strategy and at the same time shape organizational culture through strategy.
Since strategy is integratively linked to culture, it affects all employees in an organization. In times of continuous transformation, it is no longer enough for top management to define the strategy and then cascade it down into the organization for implementation. In order to be able to adapt to change quickly, employees must be clear about what their contribution is to achieving the company's goal and how they can make it.
Trust as an interface
Our global studies have shown that employees in organizations 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 - living values as part of the organizational culture). However, for this interplay between culture and strategy to work in practice, trust (or psychological safety - a term coined by Google) is required. It is about employees (with and without a management function) feeling safe to do things the way they feel is right based on their competencies, guided by the values and oriented towards the goals of an organization. The result is a high level of innovation and increased value creation.
These correlations form the basis of our FOR ALL model, which we use to evaluate the culture of organizations and support their transformation process. The focus is on trust.
Leadership skills and anchoring values as fields of action
Through mutual trust, rapid change and continuous transformation can be perceived as an opportunity. However, this requires managers who are able to reflect on their contribution to achieving organizational goals together with their employees on an equal footing. It also requires guiding values that are anchored in the various programs and processes of an organization and thus show what expectations are placed on the conduct and cooperation of employees. The strategic WHAT and the cultural HOW are thus integrated in the sense of increased value creation.
