Culture is often described as “how we do things around here” — a passive reflection of legacy norms and behaviors. It’s more helpful to think of culture as the nervous system of an organization. In biology, the central nervous system is the pathway by which thoughts in our brains are translated into actions by our muscles, and how our experience of acting in the world updates our brain’s understanding of the world. In organizations, this means thinking of culture as the transmission mechanism by which a company both communicates its intended strategy to the front lines and receives feedback and intelligence from the field about whether the strategy is achieving the intended outcomes in the market.
This nervous system metaphor illuminates the factors behind two of the most common reasons given for business failure: “We had a great strategy but failed to execute it” (a failure in the communication from the center to the field) or “Our leaders surrounded themselves with people who were afraid to tell them how the business was really performing” (a failure to relay important feedback and intelligence from the field). Both are examples of the failure to create an effective transmission mechanism from thought to action and back again.
A strategic approach to culture involves an active effort to create the environment and infrastructure to promote the necessary information flow between strategy and execution — treating them as complementary components of purposeful doing. These tools can include town halls, customer site visits, postmortems on lost bids, employee engagement surveys and any number of other mechanisms that facilitate the exchange of valuable information about what is (or is not) working. These tools nurture a culture of contextual awareness and adaptability that enables the business to perform better in its current environment and to prepare for future success.
Different change objectives require different choices about culture.
There are certain aspects of culture that are universally desirable and others whose value is more context-dependent. When Donald Sull and Charles Sull analyzed 1.4 million employee reviews on Glassdoor, they identified four key factors that contribute to a positive corporate culture (respect, leadership, compensation/benefits, and job security). But when organizational change is the imperative, this requires deliberately adding context-dependent factors to the culture.
The importance of adaptation has been the defining theme of our earlier articles
The Strategy of Change
To develop effective strategy amid constant change, leaders must hone their ability to determine which changes will boost their organization’s competitiveness. This series examines data from companies worldwide to provide practical insights for business leaders seeking advantage as they navigate complexity and change. More in this series
ABOUT THE AUTHORS
Jonathan Knowles is the founder of advisory firm Type 2 Consulting. B. Tom Hunsaker is a clinical professor of strategy and leadership at Arizona State University’s Thunderbird School of Global Management. Melanie Hughes is the former chief HR officer of Moody’s, American Eagle, and Tribune Media.
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