It was a classic David vs. Goliath situation. We were part of a larger company but in our market, we were a distant second in terms of organizational size and market share. Our competitor had dominated the market for many years with legacy brands and tenured sales and operations teams. As we evaluated our options during strategic planning, becoming number one seemed daunting.
Fast forward two years and we’ve taken an additional 2.5% in market share out of an approximately $165M market, much of that at the expense of Goliath. We had begun to attract some of their key talent and began winning head-to-head competitions for some key customers – and not because of price. So, how did we accomplish all of that in just two years?
One word … culture!
Culture Eats Strategy for Lunch
Peter Drucker, often thought of as the founder of modern management, is credited for coining the phrase “culture eats strategy for lunch”. Drucker asserts that the foundation of a strong or weak culture will have a much greater impact on company performance than will the quality of a strategy. My experience would give this a hearty “YES!” I’ve seen both sides of this coin, good and bad.
I’ve seen an engaged team of people drive great results by embracing and executing a strategy that was, in my opinion, good but not great. Conversely, I have seen a strategy created by some of the brighter business minds in the corporate world fall flat because leadership failed to nurture a healthy business. In both cases, the center of how a culture impacts performance is people.
In business, people often talk about culture as this nebulous, mystical thing that is tough to wrap our arms around. However, once we clarify and simplify, we can start using culture as a tool for driving performance. Merriam-Webster describes culture as “the set of shared attitudes, values, goals and practices that characterizes an institution or organization”. Even with a very clear definition, a certain level of ambiguity can still exist. I tend to take it a step further by identifying 5 very specific elements of a business.
- Core values are an enduring set of beliefs that define who we are as an organization. They are arguably the most important element.
- Mission or purpose of an organization defines what the organization believes
- Process, or how we engage with our people and our customers as well as how we do the work that we do
- Goals, including specific and measurable performance outcomes as well as the …
- Strategy around how to achieve those goals
What Can I Do?
Implementing an operating model can significantly help an organization define its culture and drive its performance forward. An operating model is the structure and language of your business and is different than a business model, which is how your organization makes money. The Entrepreneurial Operating System® (EOS®) is a great example of a simple but powerful operating model that has helped hundreds of small businesses connect the dots between culture and strategy.
In his best-selling book, Good to Great, Jim Collins writes about a commonality found in his research of companies that were able to transition from good organizations to great organizations. He found these businesses employed an engaged group of people with shared values and beliefs. Company leaders not only focused on finding and attracting the right people but were proactive in moving the wrong people out. Tough people decisions take courage and they are not easy. Many companies are stuck in a bad place because of an inability to get beyond this.
It’s no simple task to build a strong, healthy culture and it’s definitely not something that can be accomplished overnight. It takes a commitment of leadership and resources, both time and money. With that said, it is not an impossible mountain to climb. Many companies before yours have accomplished this and many more will in the future. These organizations have and will continue to face the same constraints you do. But, they manage to find a way to get it done regardless. It takes the commitment and resolve of leadership to build a healthy organizational culture.