Constructive Culture, Strategy Implementation and Change 

Nowadays leaders recognize that culture is as critical to success as business models and strategies. Thus, the question has changed from whether culture affects strategy to what type of culture facilitates strategy implementation and strategic change. Research carried out by Professor Andrew Klein on more than three hundred organizations shows that, regardless of the business strategy, constructive cultural norms are more strongly related to desired outcomes than are defensive norms.

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Klein concludes that constructive norms give organizations an intangible competitive advantage in qualities such as trust, reputation, collaboration, and teamwork that are valuable, rare, and difficult to imitate and that lead to better strategy implementation and organizational performance. Concurrently, research has also demonstrated the positive relationship between constructive cultures and trust within organizations. High trust and coordination across units diminish ‘silo effects’ and explain why some organizations outperform others with respect to strategy execution and, more generally, change implementation. Despite such findings and other writings that highlight the importance of collaboration and agility to business strategy, implementation continues to be the phase at which strategy stumbles.

 

Underlying reasons for this phenomenon are proposed (Sull D. et al., 2015), based on their study of over eight thousand managers in more than 250 organizations. They conclude that coordination and collaboration are rarely recognized or rewarded in organization and are not typically emphasized in hiring and promotion decisions. This is consistent with findings which showed that many organizations fail to reward individuals with constructive personal styles (which promote collaboration) and instead reward aggressive/defensive styles (which work against collaboration). As result, it is not unusual for managers to find themselves stymied by colleagues in other departments and unable to make the real-time adjustments necessary to be agile - as findings (Sull D. et al., 2015) confirms. Furthermore, they note that those problems persist even when formal or structural remedial fixes such as cross-functional committees and centralized project-manager offices are put into place. As we have learned from research and clients’ experiences, the existing behavioral norms and expectations will simply be played out within any new strategy, formal system, or structure when other key factors  - such as reward systems and habits, skills, and personal qualities of leaders and managers - are not properly addressed.

 

Constructive cultures support better communication and coordination, these norms which likely enabled members to more quickly and effectively carry out the assigned tasks, address problems, minimize errors. Constructive cultures not only support strategy implementation but also organizational learning. INSEAD Professor of strategy and organizational design Phanish Puranam points out that when implementation doesn’t work, leaders can’t assess whether the failure is due to a strategy that is poor to begin with. In contrast, when implementation of a strategy is effective, leaders can learn about whether the strategy itself worked, which can help them to improve their decisions. Given that strategy failure rates are “considerably higher than would be desirable” (ranging anywhere from 7-10 percent to 80-90 percent, depending on the study), organizational learning - which is facilitated by constructive cultural norms - is particularly important.

 

Source: ‘Creating Constructive Cultures; Leading People and Organizations to Effectively Solve Problems and achieve Goals, by J. L. Szumal and R.A. Cooke.