Understanding how and when to proactively design your organizational culture is a stumbling block for many leaders.
Most leaders understand that their people are their biggest assets and that organizational culture is important to achieving company objectives. But, in their pursuit of growth or strategic priorities, many let organizational culture fall by the wayside and avoid proactively creating one. Other leaders overly prioritize culture and sacrifice business strategy. It seems that few leaders are hitting the mark when it comes to designing and executing their company culture.
Understanding the Role of Culture in Company Strategy
Dr. Jennifer Chatman, an award-winning professor of management at UC Berkeley-Haas and faculty director of Leading Strategy Execution through Culture, has devoted the last 30 years of research on the subject of leadership and organizational culture.
Chatman says that leadership teams tend to misunderstand the role of culture. Culture is not created through “perks” like staff lounges or pizza Fridays. It’s a system of shared values the organization has determined to be critical for success. Leaders make a mistake when they don’t proactively cultivate and codify their culture, because “no matter what leaders do, or don’t do, a culture will form,” says Chatman. “It’s inevitable.” Leaders do have the choice on how and whether that culture can achieve their objectives.
Culture as a Strategy Engine
So how can leaders begin to think about designing their culture to serve their strategic objectives? Chatman has boiled it down to three criteria:
Culture must align with business objectives. Leaders must, first and foremost, define a clear organizational strategy: they need to have a solid business model, understand the company’s place in the market, and have a clear plan of action for its bottom line and growth goals.
Once those strategic objectives are in place, leaders must begin identifying what core values and attributes are right for achieving those objectives. For instance, if part of a company’s competitive strategy is providing the highest quality customer service, they must include cultural values around service to others, going above and beyond positive attitudes.
“Culture is your strategy execution engine,” Chatman says. “I encourage leaders to define their strategy first, and once those strategic aspirations are defined, then think clearly about the most important behaviors and values that are going to enable the company to achieve its strategic objectives.”
Make it real. Cultural values can’t be platitudes on a coffee mug or discussed once a year at staff retreats. It’s something people need to feel deeply about and apply to their work every day. “Culture must be internalized by your people, enough that they are willing to act upon and”—most importantly, says Chatman—“something they are willing to take risks on behalf of.”
Design for adaptation. Chatman recognized this important factor after researching the cultures of 60 of the largest high-tech firms over six years.The companies that are the most successful have a codified set of values geared toward embracing change. “Organizations won’t grow, won’t change, won’t meet their financial objectives, unless they are chronically prepared to adapt, that is, they have the built in capacity to change that culture over time as external circumstances shift.”
Through her research and consulting with hundreds of Silicon Valley companies, Jennifer Chatman is shaping the debate on how to design organizational culture for maximum performance. Learn more from her in the classroom at Leading Strategy Execution through Culture.
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