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Why Culture Eats Strategy for Breakfast

Culture, or a lack thereof, is one of the reasons why most businesses fail at innovation. Organizations are starved of fresh and promising ideas on a daily basis because they have failed to lay a strong foundation where those ideas can grow, develop, and produce market growth innovation.

Most of us have all heard the phrase “culture will eat strategy for breakfast!” a term first coined by Peter Drucker. We’ve witnessed it ourselves and found that it happens because of three key reasons:

1. Culture Delivers Competitive Differentiation

Anyone who has been in business for even a short while can tell you that there’s always someone out there who can and will copy your product or service. Especially with the the acceleration of technology – mimicking other products becoming easier and easier. Successful businesses are those who have been able to capitalize on what makes them different in order to define themselves as a brand (as the CEO of Zappos Tony Hsieh once said, “You culture is your brand”) and to make themselves truly unique, even in an industry that’s already teeming with similar companies with similar offerings.

Let’s take the business card company MOO for example. There are hundreds if not thousands of fully capable companies out there offering business card printing services, with several of these companies allowing for complete customization of those cards. Customization is no longer a strong differentiator, so MOO took a different angle. When one purchases business cards from the MOO brand, they aren’t just buying any old business card, they’re investing in the celebration of stunning art and visually engaging photography. You can see this in their Facebook page which is full of posts on celebrating different artists and photographers. When people buy MOO products, they not only buy high quality business cards, they buy into MOO’s culture. MOO’s competitive advantage is culture.

2. Culture Is the Ultimate Recruiting Tool

Ask most employees of any company if they care about the company’s strategy and you’ll either be met with a blank stare (“What strategy?”) or a resounding “nope.” There are an alarming number of disengaged employees in the majority of workplaces today who are light years away from caring about what an organization’s business strategy is. What they do care about, however, is company culture.

People want to work with others who are like them or have similar interests. Having a clearly defined company culture allows potential recruits to quickly determine whether or not they will be a good fit within your organization. This will save you a lot of time and company resources while helping you build a company.

But culture doesn’t only help recruits eliminate themselves from the hiring pool. Organizations with a strong and desirable culture are also the ones who attract the most talented individuals. For example, Facebook, Google or Amazon are the most coveted employers for developers because of their company culture. These are the employees who will inspire the forward thinking and innovation your company needs to succeed.

3. Culture Has a Significant Impact on Your Future Bottom Line

As mentioned in the last segment, people enjoy being around like-minded individuals. Companies with a clear and favourable culture are able to better retain their employees simply because the staff enjoys who they work with. This is important, particularly as the cost of replacing an employee can be twice (if not more) their annual salary.

But apart from reducing employee turnover, companies that boast an enviable culture are those that are more innovative and therefore more effective. Employees will actively seek new opportunities for your business to expand into new markets while upping their game and improving the way they work. They’re engaged, which increases productivity, which—you guessed it—is a real financial win for any organization.

“When Strategy and Culture Collides, Culture Will Win”

So when times get tough, it isn’t strategy that will pull your company through, it’s culture. Take Southwest Airlines, for example. When the fuel price crisis hit in the early 90s, many airlines were on the verge of going under and had to use the strategy of making a number of drastic pay cuts to make ends meet. Southwest Airlines did the same—only the pay cuts weren’t forced. The employees stepped up and volunteered to have their wages slashed and reduced to save the airline.

Company culture is stubborn, tough, and resilient, and it inspires employees to take action. As well thought out as any strategy may be, it’s a company’s culture that will take that strategy to where it needs to go and give your organization that much needed competitive advantage in today’s tumultuous marketplace.

Harness the power of employee ideas.