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Wed 12 Aug 2020 09:54 AM

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Hidden conflict within: Is your structure killing your strategy?

As companies seek to navigate these turbulent times, any new or retooled strategy will inevitably collide with organisational culture. Reconciling them is no easy matter.

Hidden conflict within: Is your structure killing your strategy?

Solveig Nicklos, an expert in operational start-up, turn-around and on-going management with a speciality in organisational culture and performance.

Over US$1bn! That is how much it cost Samsung when it failed to implement their strategic transition from an original equipment manufacturer (OEM) to an FMCG organisation. How does an organisation of that size, with seemingly unlimited resources, fail at a transition so strategically important? The answer: lack of alignment between culture, structure, and strategy.

Is your organisation just as likely to do the same with your next key strategic implementation? That depends on how you answer the following question: Did you spend any time during your last strategic retreat or planning session focused on structure and culture?

It wasn’t lack of planning or resources that caused Samsung to fail, it was a complete lack of structural and cultural alignment. Organisational levers, structure, communication, signals and messages from leadership, and the skills required to execute such a radically different business model, are all essential for success – and they must start in the C-suite during strategic planning conversations.

Culture is often reduced to “the way we do things around here”. That definition can feel fuzzy, difficult to quantify, and therefore make it hard to change. In reality, a root-cause analysis of your current outcomes and behaviours – both good and bad – will lead back to the organisational structure, policies and procedures, rewards and punishments etc. In any system, outputs are driven by inputs, and staff behavior – i.e. culture – is no different.

This realisation can have a profound impact on results, whether or not an organisation is going through a major strategic shift. According to Deloitte, 82 percent of executives view culture as a strategic differentiator, only 28 percent of companies truly understand their culture well, and only 19 percent believe they have the “right” culture. Samsung is not the only example of this: 70-80 percent of mergers and acquisitions do not deliver on their intended objectives and fail to realise full value due to cultural conflict – yet most organisations ignore culture during due diligence.

Can’t this wait?

“We can’t worry about this now,” I hear people saying, “the world is in total chaos and no one knows what is going to happen.” To which I respond, “Fortunes are made when bombs are dropping in the harbor, not when violins are playing in the ballroom.”

Change is the new status quo. Innovation and agility are not just fundamental skills related to future proofing organisations and the fourth industrial revolution, they are key to survival during uncertainty. During times of transformation, we tend to cling to what we know at the exact moment when we need to question our assumptions and evolve.

There is no organisation or industry that won’t experience change at a fundamental level due to the current pandemic. COVID is providing the perfect opportunity to have these difficult conversations and really question our assumptions. Treating symptoms isn’t good medicine and it isn’t good business. Focusing only on bottom-line results is a lazy and ultimately ineffective way to grow a business because it is frequently ignoring the drivers of much larger issues.

Finding the right culture

As a consultant, I am asked a lot about what is the “right” culture, competency model, value set, strategy, goal, or way to future proof an organisation etc. The response I give is that there is no right answer. The “right” culture is about what aligns to the organisation’s strategy. The Netflix “Culture Manifesto” is highly regarded as a roadmap for the culture of the future. It has been downloaded over 12 million times and, according to Harvard Business Review, it has helped reinvent HR.

It is an excellent example of how an organisation is using culture strategically and is very successful as a result. Their willingness to share this innovative approach shines light on this important topic and elevates the public discourse.

It also emphasises that culture is only an asset if it is aligned with an organisations’ unique goals and strategy. No one else will be able to take that model and simply implement it in another context. It is a brilliant example of culture as a strategic differentiator but an equally brilliant example of how there are no short cuts. Each organisation must go through the process of building and aligning the culture that works for them.

Solveig Nicklos, an expert in operational start-up, turn-around and on-going management with a speciality in organisational culture and performance.

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