Culture Vs. Strategy Is A False Choice

Strategy seems to have fallen on hard times. In his recent Fast Company piece “Culture Eats Strategy for Lunch,” author Shawn Parr joins a long list of commentators, psychologists, authors, and consultants who’ve used that dietary line to argue that company culture is a greater determinant of success than competitive strategy.

A strong culture is important, and for all the reasons Parr mentions: employee engagement, alignment, motivation, focus, and brand burnishing. But is it the most important element of company success, as the more ferocious of the culture warriors assert? Is long-term success, as Parr writes, “dependent on a culture that is nurtured and alive”? If history is any guide, the answer to both questions is no.
Certainly, Southwest Airlines has a great culture and funny flight attendants. Employees seem genuinely enthusiastic about their employer. But Southwest also has a great strategy: no-frills service, a young fleet with a limited number of planes flying mostly short-hops from formerly secondary airports, and inexpensive and flexible labor agreements relative to other airlines. And if that strategy ever stops paying off, the jokes will likely go sour and the culture south. Pan Am, too, had a great culture, but was strategically unprepared to deal with oil shocks and a decline in demand for air travel.

Parr attributes the success of Zappos to a culture that is “inclusionary, encouraging, and empowering.” Customer service representatives write zany emails and company leaders have often affirmed their belief that if you get culture right, success follows. But Zappos also has fast delivery, deep inventory, a 365-day return policy, and free shipping both ways. That’s a strategy--not a culture--and if weren’t competitive with catalog sellers and mall shoe stores, all the culture in the world would make little difference. and Webvan, two companies that appeared at about the same time as Zappos, didn’t disappear because they had weak cultures. They simply had unworkable economic models.  
Businesses are economic as well as human entities, and need to be built on a solid base of sustainable competitive advantage. Culture can reinforce strategy, as it does Zappos’ strategy of customer convenience. But it can’t prevail if a strategy is poorly conceived or the company faces competitors with superior strategies, resources, and positioning. As Damon Runyon wrote, “the race is not always to the swift nor the victory to the strong, but that's how you bet."

In the business world, it’s easy to take a handful of current winners, give them a backstory about their cultures and conclude, like Parr, that “authenticity and values always win out.” Always? Walmart is the winner in retail. McDonald's serves more meals than anyone else. And yet they're hardly praised as paragons of superior culture. American manufacturing has moved overseas to Asia, and I don't see anyone writing positive articles about the culture at Foxconn.

Parr is correct that the culture of the U.S. Marines has few parallels in terms of its strength, depth, and the commitment to mission it engenders. But ask any Marine commander which he would prefer to go into battle with--superior morale or superior strategic position--and he would tell you he wanted both.
Ultimately, the culture versus strategy question is a false choice. It's like asking whether you would rather back a great poker player with weak cards or an average player with great cards. You’re more likely to win when you have both: a great player and great cards. The same goes for culture and strategy. You don’t have to choose. Culture doesn’t eat strategy, and the company that lets culture do so is likely to starve.


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