Building a Successful Corporate Culture

Building a strategy-supportive corporate culture is important to successful strategy execution because it produces a work climate and organizational esprit de corps that thrive on meeting performance targets and being part of a winning effort. An organization’s culture emerges from why and how it does things the way it does, the values and beliefs that senior managers espouse, the ethical standards expected of organization members, the tone and philosophy underlying key policies, and the traditions the organization maintains. Culture thus concerns the atmosphere and feeling a company has and the style in which it gets things done. Very often, the elements of company culture originate with a founder or other early influential leaders who articulate the values, beliefs, and principles to which the company should adhere, and that then get incorporated into company policies, a creed of values statement, strategies, and operating practices. Over time, these values and practices become shared by company employees and managers. Cultures are perpetuated as new leaders act to reinforce them, as new employees are encouraged to adopt and follow them, as stories of people and events illustrating core values and practices are told and retold, and organization members are honored and rewarded for displaying cultural norms.

Building a Successful Corporate Culture

Company cultures vary widely in strengths and in makeup. Some cultures are strongly embedded, while others are weak and fragmented. Some cultures are unhealthy; these are often dominated by self-serving politics, resistance to change, and inward focus. Such cultural taints are often precursors to declining company performance. In fast-changing business environments, adaptive cultures are best because people tend to accept and support company efforts to adapt to environmental change; the work climate in adaptive-culture companies is receptive to new ideas, experimentation, innovation, new strategies, and new operating practices provided such change are compatible with core values and beliefs. One significant defining trait of adaptive cultures is that top management genuinely cares about the well-being off all key constituencies-customers, employees, stockholders, major suppliers, and the communities where it operates-and tries to satisfy all their legitimate interests simultaneously.

The philosophy, goals, and practices implicit or explicit in a new strategy may or may not be compatible with a firm’s culture. A close strategy-culture alignment promotes implementation and good execution; a mismatch poses real obstacles. Changing a company’s culture, especially a strong one with traits that don’t fit a new strategy’s requirements, is one of the toughest management challenges. Changing a culture requires competent leadership at the top. It requires symbolic actions and substantive actions that unmistakably indicate serious commitment on the part of top management. The stronger the fit between culture and strategy, the less managers have to depend on policies, rules, procedures, and supervision to enforce what people should and should not do rather, cultural norms are so well observed that they automatically guide behavior.

Because each instance of executing strategy occurs under different organizational circumstances, a strategy implementers actions agenda always need to be situation-specific-there’s no neat generic procedure to follow. And, as we said at the beginning, executing strategy is an action-oriented, make-the-right-things-happen task that challenges a manager’s ability to lead and direct organizational change, create or reinvent business processes, manage and motivate people, and achieve performance targets.

Healthy corporate culture are also grounded in ethical business principles, moral values, and socially responsible decision making. Such standards connote integrity, “doing the right thing,” and genuine concern for stakeholders and for how the company does business. To be effective, corporate ethics and values programs have to become a way of life through training, strict compliance and enforcement procedures, and reiterated management endorsements. Moreover, top managers must practice what they preach, serving as role models for ethical behavior, values-driven decision making, and a social conscience.

Successful managers do a number of things to exercise strategy-executing leadership. They keep a finger on the organization’s pulse by spending considerable time outside their offices, listening and talking to organization members, coaching, cheer-leading, and picking up important information. They take pains to reinforce the corporate culture through the things they say and do. They encourage people to be creative and innovative in order to keep the organization responsive to changing conditions. Alert to new opportunities and anxious to pursue fresh initiatives. They support champions of new approaches or ideas who are willing to stick their necks out and try something innovative. They work hard at building consensus on how to proceed, what to change, and what not to change. They enforce high ethical standards and insist on socially responsible corporate decision making. And they actively push corrective actions to improve strategy execution and overall strategic performance.

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