The famous phrase by a legendary management consultant Peter Drucker, “Culture eats strategy for breakfast,” remains a common denominator in modern-day strategy execution and implementation.
The gravity of organisational culture is often taken for granted, perennially left to go unchecked and diluted into a soft enigma that has no effect. Organisational culture has been the death knell of some brands we used to know .
On the flip side, some have risen to prominence due to their culture. Culture in any organisation sets the tone on how both the internal and external environments are manoeuvred. In his earliest works, Gerard Hendrik Hofstede , a Dutch social psychologist, IBM employee, and Professor Emeritus of Organisational Anthropology and International Management at Maastricht University, defined culture “ as a collective programming of the mind that distinguishes members of one group or category of people from others”. Hofstede developed a framework (Cultural dimensions) to understand the differences in culture across countries. His theory describes the relationship between culture, society and individuals through dimensions of power distance, uncertainty avoidance, individualism-collectivism, masculinity-femininity, short vs. long-term orientation and restraint vs. indulgence.
I shall not delve much into the dimensions as I have previously written on this. The general rule in business is that strategic intentions of any given organisation should be a continual search of competitive and comparative advantage. Succinctly put, the basic task of strategic management is to build and maintain competitive advantages of an enterprise. The cultural DNA of an organisation must be the main catalyst in enabling this.
Looking back into time, David Ricardo in his book published in 1817, “The Principles of Political Economy and Taxation,” coined the term “comparative advantage” and defined it as the economy’s ability to produce a particular good or service at a lower cost than its trading partners. Factors such as natural endowments, availability and use of technology, knowledge and human capital, as well as specialisation, are some of the sources of comparative advantage. Michael Porter’s theory of competitive advantage is also very key to this discussion. He defines it as what sets a company apart from its competitors seen through the eyes of its consumers. Porter argues that competitive advantage can be achieved through cost leadership, differentiation and Focus strategies.
My standpoint is that to a certain degree, both competitive and comparative advantages are products of a prevailing culture. Let’s take natural endowments out of the equation, then everything else is an output influenced by stakeholders in an organisation. The actions and decisions of the stakeholders are determined by the prevailing culture. In uncertainty avoidance where the extent to which a society, organisation or group relies on social norms, rules, and procedures to alleviate the unpredictability of future events, if the culture does not encourage a “fail safe” atmosphere , no one would dare take risks.
If individualism is more prevalent than collectivism, “rock stars” are likely to be the thing in that given organisation. It can be okay to have rock stars but they need to be kept in check without limiting their creativity. The rather reserved ones should not be upset either. However, two minds are always greater than one, hence collectivism always wins but as long as everyone is clear on the goal to be achieved.
It is rather a relative affair in classifying culture as poor, bad , or great. Those within an organisation would normally deem their culture more preferable and superior to the next one, even more so when the actors have never had any experience in any other organisation, while a pair of eyes from outside may have a different view altogether. However, great organisations will balkanise cultural elements that prohibit maximisation of profit , business growth , positive customer experience and high employee engagement indexes. These cultures are nothing but anathema. It is only businesses that are fast movers that gain competitive and comparative advantages. Followers may salvage something but late adopters will get nothing.
The current status quo requires proactiveness, open-mindedness, being switched to the value chain needs and preferences, innovativeness and taking calculated risks. A more enabling, engaging energising culture would guarantee better success.
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LinkedIn: Gomolemo Kololo Manake