“Culture eats strategy for breakfast.” Even though this business quote is cited often, organizations still seem to struggle with making practical sense of it. All too often, leaders undervalue the importance of culture to their overall success. In our experience, a good strategy without a strong complementary culture runs the risk of falling short of expectations — or, even worse, failing altogether.
Culture is a business strategy enabler. Without it, a strategy is like a sailboat without a breeze. And with the wrong culture, attempting to implement a strategy is like sailing into an invisible wind. When intentionally designed, culture is a key component to strategy activation and organizational success. Nevertheless, business leaders continue to find defining, cultivating and investing in culture a challenge. Maybe it’s because it seems “squishy” and difficult for traditionally trained, highly analytical leaders to grasp and measure. There’s little doubt that business leaders spend significant effort in designing the perfect strategy without giving as much thought to the culture that is required to ensure its success.
While culture is a competitive weapon overlooked by many, it is often a natural consideration for family-owned companies. We believe that culture can be more easily cultivated in family firms due to their patience, long-term perspective and loyalty to employees and customers. Several recent studies have shown that family firms generate superior long-term returns because they display values that matter, have enormous employee and customer loyalty, and manage for the long run (Miller and Miller, J. Baron). These aspects of business often reduce profits in the short-term but have significant wealth creation impact.
We all agree that running an organization full of disengaged, burnt-out employees is certainly no way to win in business. Gallup notes in their 2023 State of the Global Workplace Report, employees who feel connected to their company’s culture are 3.7 times more engaged, 5.2 times as likely to strongly agree they would recommend their organization as a great place to work. They’re also 68% less likely to report burn out at work. This is evidence that culture is key.
If culture’s so important, what is it exactly and how do you harness its power? We like this common definition: “Culture is what it’s like to work ‘here’ from the employees’ perspective.” Culture is the distinctive way an organization lives out its company purpose and mission to customers and employees. It is no wonder then that a well-aligned positive culture can be competitive advantage in the marketplace when paired with a solid strategy. We have both served family firms with inspiring purposes and missions with cultures that are well-aligned with them. When this happens, competitive advantages emerge, and even inspirational strategies become reality.
To start, we suggest you answer these two critical questions: what is the current state of your culture and what do you want it to become over time?
Building Culture to Support Your Strategy
Every business has a culture, even if you have not taken the time and effort to define it or intentionally build it. To understand the current state, start with listening to your employees and customers.
Through employee surveys, focus groups, customer feedback and other direct listening strategies, the story of your culture will emerge. Look for patterns to gauge how well your employees understand your mission and strategy. Do they understand the needs of the customer? How adaptable are they when changes need to be made? Do they understand how their role fits into the big picture and how they have an impact to the bottom line? What are the ways differences are resolved? Can teams from across the organization work together to get work done? What behaviors do leaders display and reward? These are a few examples to probe further to define the current state of your culture.
Once you have defined the current state, turn your attention to developing the ideal or future state of culture that will be the catalyst to activating your corporate strategy. Focus on gaps that, if closed, would give you a competitive advantage. For example, if your strategy has a strong innovation component, key in on creating an environment where employees feel psychologically safe to experiment and fail and are rewarded for such behavior.
One last important mention: measurement is a required component of understanding how clear and aligned your culture is over time. Regularly checking in on how well the pillars of your culture are delivering on employee and customer expectations and overall business performance is paramount to leveraging culture. Key to organizational alignment, which results in the whole being greater than the sum of its parts, is having measures that are meaningful at all levels (often non-financial) and clearly reflect strategic direction.
Culture exists in every organization, and there is no “correct” culture. It all depends on fit with the company’s purpose and direction. In our experience, culture is the secret sauce that often distinguishes successful family-owned firms from others. With focus and intentionality, you can ensure your culture is a strategy enabler, setting up your family’s firm for long-term success!