Strategy – Structure – Culture

I hear a lot of business leaders, especially at small companies, say they are going to introduce one new thing and, in doing so, change the culture. Whether it’s an instant messaging system for collaboration, putting everyone in an open space rather than offices or cubicles, or adding a slide to get from the second floor to the first instead of taking the stairs (I’m not kidding about that one), they are sure they have found the one thing that will change their organizational culture.

The reality is that there is never one single thing that will change your culture, and even though technology and office design can play a role, they are not the first thing you need to address. Simply making changes to the work environment does have the potential to affect your culture, but in unpredictable ways. You want to maintain some control over how your culture changes, because if it goes in a direction you don’t want, it’s hard to change it back.

During my doctoral research I came across a culture change concept that I refer to as Strategy – Structure – Culture. In the years since then I have seen this methodology play out at organizations in different countries, and it seems to be provide more potential for positive changes and more control over the ultimate culture than anything else I have seen.

The idea is fairly simple: since organizational culture is a set of commonly understood values and expectations, then you first need to know what those values and expectations are. Identifying your priorities and core values is the Strategy piece, and it can be difficult because it requires putting sometimes-fuzzy concepts into words. Once you know what you want your organization to accomplish, you put policies and processes in place to make that happen; that’s the Structure. When people see these policies and processes they know what the organization expects from them, and assuming these expectations line up with the values you expressed earlier, a strong Culture emerges.

This process is useful because it helps keep everything aligned. Let’s say you are a small domestic company and you want to expand into other markets. Your priorities, then, might be to identify new customers in all the countries in your region, for example, in ASEAN. You tell everyone this, then set about to make it happen by perhaps increasing your travel budget, hiring sales team members with other languages, and offering bonuses and rewards based on customers signed and new countries opened up rather than on revenue numbers. Your employees hear what you say and see what you do, and a culture emerges that focuses on behaviors that support overseas growth rather than purely on domestic revenue: sales teams learn how to travel effectively, presentations are tailored for international audiences, managers look for new recruits with the appropriate skills, people read The Economist instead of just the local news…your company now has a culture that supports overseas expansion.

Some organizations try to go straight to culture; they want to be collaborative, for instance, so they start by finding a messaging system for collaboration and assume that will do it. But if you have traditionally valued individual expertise, and if bonuses are paid based on individual performance, then nobody is in the right frame of mind to collaborate, nor do they have any incentive to do so, no matter how much technology you throw at them. Technology can facilitate their desire to collaborate, but only if they have that desire in the first place.

It’s also common for companies to state a set of values as a strategy, but then fail to provide the structure that supports them. Telling your design teams that you want them to be innovative, and then criticizing people when their designs don’t work out, encourages them to not take risks and instead stick with what has worked before. As we have talked about before, the only way to have a strong culture is to have alignment between what you say, what you do, and what your employees see in the real world.

Cultural change does not happen quickly, but it also does not have to take the passing a generation, with the older people getting out of the way so new ideas can take over. There’s a common misperception that you have to get rid of everyone who remembers the old way before you can get people to think in a new way, but if you communicate your intentions clearly and put a structure in place that supports them (and also try to smooth out any problems in transition) you can create a pretty strong culture with the people you have. I once worked with a Hong Kong bank that was using Strategy-Structure-Culture to blend their culture with that of another bank they were acquiring, and they planned three years for the process; that sounded about right.

A strong culture is valuable to your organization. It helps people do the things that really add value, and it cuts out a lot of duplication of effort and unnecessary oversight. Changing that culture takes more than the CEO simply saying “Do things differently!” If you are about to add a slide to get from the second floor to the first, make sure it’s the result of a process that makes sense rather than the result of a sudden whim.