Company Culture Impacts Business Strategy

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How Company Culture Impacts Business Strategy. As author and speaker Simon Sinek says, “Company culture matters. How management chooses to treat its people impacts everything for better or for worse.”

And this is the bottom line – everything in a company is impacted by its culture, and not only the strategy but the success of its implementation will be affected.

Consider, for example, a hard-driving top-down culture. In this environment, strategy is determined by the leadership with input from those lower down the ladder neither sought nor listened to. The leadership believes it knows best (whether a single owner-manager, or a top team). The strategy is announced and the employees are instructed to implement it as laid down. Failure to achieve stipulated goals will result in consequences.

Will this company succeed? Will it be as profitable as the leadership believes it should be?

Frankly, it’s unlikely, for a number of reasons:

  • The strategy may well not suit the customer profile or market conditions – as it’s unlikely leadership would have taken input from customers, or their front-line workers.
  • The strategy is unlikely to evolve with changing market and competitor conditions and the leadership will keep to the original course.
  • People who work under constant fear and threat never perform at their peak.

In fact, failure of the company is not out of the question.

Underscoring this, a 2019 study of UK businesses by Equality Group found that 60% of professionals believe bad bosses are the main reason for business failure, with the same study showing 63% believe they are the number one reason for most people quitting their jobs, and 49% saying they have quit a job because they felt unsupported.

How Company Culture Impacts Business Strategy

So, what makes for a successful business strategy environment?

  1. Information. Without information, nobody can develop a successful strategy. And the information needs to include all sources – customers, suppliers, competitors, and staff at all levels. The company culture should encourage people to express opinions and feed back information from their sources, too.
  2. Clarity. This is clarity of company vision. Not just the long-term vision, but where it is now and the intermediate goals to achieve the longer-term goal. It’s about ensuring the team and wider stakeholders understand the current, intermediate and the longer-term goals and future envisaged. Without this clarity and understanding, a strategy will fail.
  3. Simplicity. Lawrence Bossidy, former Chairman and CEO of Honeywell said that if you can’t describe your strategy in twenty minutes, simply and in plain language, you don’t have one. Even the most complex business can be described in this way – if necessary describe an overarching goal and then divisional ones that feed into this.

With an open accountability culture a company will gather the necessary information, have clarity and simplicity, while being alerted to changes in conditions that enable the strategy to be refined as appropriate and having a happier, more engaged workforce.

These companies exceed the growth rates, are more profitable and exist longer than the average.

How does your business compare?