Management Theory Review: Corporate Culture and Leadership - Keys to Effective Strategy Execution

Online MBA Management Theory Handbook

Strategic Management Revision Articles - Chapter Summaries of Strickland and Thompson's Book (Top 25 of the Blog)

Based on Chapter of Thompson and Strickland

Assessing the Current Culture and Modifying it to Fit Strategy

The beliefs, goals, and practices called for in a strategy may be compatible with a firm’s culture or they may not. When they are not, a company usually finds it difficult to implement the strategy successfully. A close culture-strategy match that energizes People throughout the company to do their jobs in a strategy-supportive manner adds significantly to the power and effectiveness of strategy execution.

When a company’s culture is out of sync with what is needed for strategic success, the culture has to be changed as rapidly as can be managed. A sizable and prolonged strategy-culture conflict weakens and may even defeat managerial efforts to make the strategy work.

A strong culture and a tight culture-strategy alignment is a powerful lever for channeling behavior and for influencing employees do their jobs in a more strategy-supportive manner.

It is the strategy-maker’s responsibility to understand the company culture, and select a strategy compatible with the “sacred” or unchangeable parts of prevailing corporate culture. He also has to foresee how he is going to change the culture to support the strategy that he is proposing. During the strategy implementation, once strategy is chosen, it is an important task to change whatever facets of the corporate culture that hinder effective execution.

Changing a company’s culture and aligning it with strategy are among the toughest management tasks--easier to talk about than do. Thompson and Stickland advocate that managers have to talk openly and forthrightly to all concerned about those aspects of the culture that have to be changed. The talk has to be followed swiftly by visible actions to modify the culture-actions that everyone will understand are intended to establish a new culture more in tune with the strategy.

What makes a spirit of high performance come alive is a complex network of practices, words, symbols, styles, values, and policies pulling together that produces extraordinary results with ordinary people.

What is Culture?

The meshing together of stated beliefs, business principles, style of operating, ingrained behaviors and attitudes, and work climate define a company's corporate culture.

What to Look for in Identifying a Company's Corporate Culture?

The foundation of corporate culture is the organization's beliefs and philosophy about how its affairs ought to be conducted. It is logic or reason why it does a thing the way is does. A company's culture is publicly stated in the values and business principles by many companies. The management practices, policies and procedures, its revered traditions, oft repeated stories are also part of culture. The attitudes and behaviors of its employees, the peer pressures that exist to correct some behaviors, its approaches to people management, problem solving, relationship management practices with suppliers and customers, are also part of culture. The chemistry and the personality of various employees that permeate the work environment are also part of culture. Some of these sociological factors are readily apparent while others operate quite subtly and have to be observed and identified with special effort by trained behavioral specialists.

The role of stories: A significant part of a company's culture is transmitted through the stories that get told over and over again to newcomers to explain the value and commitment of the company.

Characterization of Corporate Cultures

Strong cultures

Three factors contribute to the development and existence of strong corporate cultures.

1. A visible genuine concern for the well-being of the organization's three biggest constituencies - customers, employees and shareholders.

2. The founder or other strong leader establishes values, principles, and practices that are consistent and sensible in light of customer needs, competitive conditions, and strategic requirements. Strong culture is established when its practices lead to considerable organizational success.

3. A sincere, long-standing company commitment to operating the business according to the traditions established during its extremely successful period doing incremental changes as required based strategy that is set according to the established culture. It means the company culture is more structured and is considered when strategies are decided.

Weak culture

In companies with weak culture, it is difficult to identify a company wide cultures. There are more visible subcultures extending to some limited persons.

Unhealthy culture

The following three traits are present unhealthy cultures.

1. A highly politicized internal environment. Decisions are made top man and coterie of people. There are other groups that try to take care of their personal needs. What is best for the company is not the criterion for the decisions. It is the benefit of individuals and limited groups of people.

2. There is hostility for change.

3. People are not willing to look around and find new ways of working.

Adaptive Culture

In adaptive cultures, employing are willing to accept change and take on the challenge of introducing and executing new strategies.

10 Things Your Corporate Culture Needs to Get Right

Knowing what elements of culture matter most to employees can help leaders foster engagement as they transition to a new reality that will include more remote and hybrid work.

Donald Sull and Charles Sull

September 16, 2021

https://sloanreview.mit.edu/article/10-things-your-corporate-culture-needs-to-get-right/

Build a high-performing organizational culture

https://www.gartner.com/en/human-resources/insights/organizational-culture

3 Culture Conversations Every CEO Must Have With Their Head of HR: How heads of HR and CEOs can better partner to build a culture that performs

https://www.gartner.com/en/human-resources/trends/3-culture-conversations-ceo-must-have-chro

https://hi.hofstede-insights.com/organisational-culture

https://www.mckinsey.com/business-functions/organization/our-insights/the-organization-blog/culture-4-keys-to-why-it-matters

https://www.strategy-business.com/feature/10-Principles-of-Organizational-Culture

Organizational Behaviour - Google Corporate Culture in Perspective

Stephan Weber

GRIN Verlag, 2008 - 68 pages

https://books.google.co.in/books/about/Organizational_Behaviour_Google_Corporat.html?id=uv5Ke9aVNqYC

Organizational Culture and Leadership

Edgar H. Schein

John Wiley & Sons, 27-Dec-2016 - Business & Economics - 416 pages

https://books.google.co.in/books/about/Organizational_Culture_and_Leadership.html?id=l2jpCgAAQBAJ

Organizational culture - a note

Strategy For Success Needs to be Supported by Culture - Research report by Booz and Company

Leading the Strategy Execution Process

1. Monitoring Progress, Finding out issues which are challenging the progress of strategic activities and coming up with solutions.
2. Putting constructive directing effort to achieve good results.
3. Keeping the organization focused on operating excellence - Effectiveness and Efficiency.
4. Supporting the development of stronger core competencies and competitive capabilities.
5. Displaying ethical integrity and leading social responsibility initiatives.
6. Implementing corrective actions to improve strategy execution and achieve the planned results.

1. Communication, Monitoring Progress, Finding out issues which are challenging the progress of strategic activities and coming up with solutions.

Develop a broad network of formal and informal sources of information
Talk with many people at all levels
Be an avid practitioner of MBWA (Management by Walking Around)
Observe situation firsthand
Monitor operating results regularly
Get feedback from customers
Watch competitive reactions of rivals

2. Putting constructive directing effort to achieve good results.

Support people who are willing to champion
Innovative ideas and products
Better services
New technologies
Promote continuous adaptation to changing conditions

3. Keeping the organization focused on operating excellence - Effectiveness and Efficiency.

Encourage people to be creative and imaginative to improve operating excellence.
Tolerate mavericks with creative ideas
Promote lots of tries and be willing to accept failures (most ideas don’t pan out)
Use all kinds of organizational forms to support experimentation (venture teams, task forces, “skunk works” and individual champions)
See that rewards for successful champions are large and visible

4. Supporting the development of stronger core competencies and competitive capabilities.

Responding to changes requires top management intervention to establish new organizational capabilities, resource strengths and competencies.

Senior managers must lead the effort because it involves planning to support current strategy as well as anticipated future strategy.

It involves significant investments in training, experimentation and trail and error attempts to produce components, products or services using the new knowledge and skills to develop the competence.

Capabilities reside in combined efforts across departments, requiring integration. New processes have to be authorised and created to provide the necessary intermediate or final products or services using the new capabilities.

5. Displaying ethical integrity and leading social responsibility initiatives.

Having “family friendly” employment practices
Operating a safe workplace
Taking special pains to protect the environment
Taking an active role in community affairs
Interacting with community officials to minimize impact of
Layoffs or
Hiring large numbers of new employees
Being a generous supporter of charitable causes and projects that benefit society

6. Implementing corrective actions to improve strategy execution and achieve the planned results.

Requires both reactive adjustments and proactive adjustments
Involves reshaping long-term direction, objectives, and strategy to unfolding events and promoting initiatives to align internal activities and behavior with strategy