12 Reasons Culture Eats Strategy
for Lunch Joe Tye, CEO and Head Coach Values Coach Inc. Joe@JoeTye.com Copyright © 2013, Values Coach Inc.

Adapted from the Values Coach
Cultural Blueprinting Toolkit www.CulturalBlueprint.com

We’ve all heard, and many
of us have affirmed, that culture eats strategy for lunch (first attributed to Peter Drucker). Of course, the reality is that culture and strategy interact, and in the ideal case they are mutually reinforcing. This presentation shares 12 reasons why culture really does eat strategy for lunch, each illustrated with real world examples. - Joe Tye

Each of the 12 reasons
is coupled with a question that can help you focus on building a stronger culture in your organization.

Reason #1 People are loyal
to culture, not to strategy

Southwest Airlines didn’t earn the
highest loyalty in the industry with its bags fly free and fuel price hedging strategies

Be loyal to earn loyalty.
“We’ve made a commitment to our staff that there will be no layoffs related to this [lean] work.” J. Michael Rona, (then) President Virginia Mason Medical Center

Question #1 How is bilateral
loyalty expected and reflected in your culture – and what can you do to enhance that loyalty?

Reason #2 Culture provides resilience
in tough times

A resilient culture was more
important than new strategies in saving Starbucks

That which will kill an
organization with a weak culture will make an organization with a great culture even stronger. With apologies to Nietzsche

The mortal struggle to bust
the AT&T monopoly forged a resilient culture at MCI – and the company literally changed our world forever.

The corrupt culture of WorldCom
caused the company to collapse under its own weight when the pressure was on.

Question #2 How tough and
resilient is your culture? Would people be with you in a crisis the way the Starbucks baristas were?

Reason #3 Culture is more
efficient than strategy

During the fuel price crisis
of 1991, Southwest Airlines didn’t have to execute a strategy of pay cuts – employees volunteered for it.

Nordstrom people don’t go above
and beyond the call of duty because it’s in a policy…

This is the Nordstrom policy
manual in its entirety…

Question #3 How can you
foster a higher level of alignment with your operational and customer service strategies?

Reason #4 Culture creates competitive
differentiation

Les Schwab sells the same
tires you can buy anywhere else – but no one can compete with their culture

“Advertising is a tax you
pay on having an unremarkable culture.” Robert Stephens, Founder of Geek Squad

Your culture is your brand!
- Tony Hsieh

Question #4 What one sentence
would your people use in response to the question: “What is the cultural brand of your place?”

Reason #5 Culture can spark
a contrarian business strategy

When I was an MBA
student at the Stanford Graduate School of Business, if I’d written a paper proposing a business that gave away one pair of shoes for every one we sold, I would have flunked out! Blake Mycoskie, Founder of Toms Shoes

Toms Shoes has become a
cultural icon – creating a level of success that could never be attained by strategy alone.

From a Glamour magazine article
– NOT a paid ad! “Celebrities from Kristen Bell to the Jonas Brothers to Heather Graham have all pledged to go barefoot tomorrow -- will you embrace your inner hippie for a truly worthy cause, too?”

You cannot buy publicity like
that at any price – you earn it with a great mission and a powerful culture.

Question #5 How can you
inspire your culture to get behind something that no one else is doing?

Reason #6 A brittle culture
can doom even a great organization (or product)

As witnessed by one of
the most highly publicized funerals of our time…

The fingers are all pointing
in the wrong direction

What really killed Hostess was
a culture of labor- management hostility.

A complacent culture can blind
an organization to external threats

These dedicated, hardworking people might
be more dangerous to the future of USPS than email is.

Question #6 What is your
greatest cultural vulnerability?

Reason #7 When strategy and
culture collide, culture will win

Nardelli’s hard-fisted GE strategies increased
sales, profits, and stock price…

At the cost of violating
its people-centric values and ability to compete for the best talent.

He got booted for trashing
a great culture* * Which might have been his strategy all along, since he got paid a quarter billion dollars just to go away…

Question #7 What is the
greatest cultural resistance you can expect to your business strategies?

Reason #8 Cultural miscues are
more damaging than strategic ones

Not fixing Dave Carroll’s guitar
cost United $millions

Not to mention the damage
to the company’s already bad reputation for customer service…

And the airline’s already troubled
employee relations (they are the ones taking the brunt of customer ire).

Within four days of the
video being posted more than a million people viewed it and United’s stock price dropped 10%, costing shareholders $180 million.

Dave has since done two
more United Breaks Guitars videos* and written a book. * Now with more than 20 million views

In his book Dave asks
a great question…

“Why is so much time
and energy being invested in showing product differentiation instead of sharing who the company is and their unique story? To me that defines an opportunity lost.” Dave Carroll: United Breaks Guitars

Question #8 If (when!!!) you
have a social media crisis will your people come to your defense or join in the attack?

Reason #9 Strategies can be
copied but no one can copy your culture

All the major air carriers
copied the Southwest business model: but they all failed the culture test.

Hundreds of people tour Zappos
every week but no one can copy the Zappos culture

Getting a job at the
Zappos call center is more competitive than gaining admission to Harvard

That’s why a great culture
is the ultimate recruiting tool People don’t go to work for Patagonia because they love stuffing down coats into boxes!

Question #9 How does your
culture enable you to create competitive distinction (and related benefits like premium pricing)?

Reason #10 Culture provides greater
discipline than disciplinary action does

We don’t need to tell
people they can’t smoke in our buildings or discipline them when they do – coworkers will take care of that

People too young to remember
these days hardly believe it when you tell them about it.

Question #10 How does your
culture enforce attitude and behavioral expectations?

Reason #11 Culture provides a
level of risk prevention that cannot be attained with strategy alone.

Wal-Mart’s culture of low price
at any cost has come at a huge cost to the company.

Wal-Mart has spent over $100
million on the investigation of these ethical scandals.

And become the butt of
cartoonist jokes everywhere…

Sam Walton would be rolling
over in his grave!

Question #11 Would the founder
of your organization be cheering on the sidelines or rolling over in his or her grave?

Reason #12 Culture will have
a significant impact on your future bottom line.

Your bottom line next year
will largely be determined by your current strategies; your bottom line in the following years will be more influenced by your current culture.

“Every organization has a culture.
Unfortunately, many, if not most, cultures develop by happenstance...” Pamela Bilbrey and Brian Jones: Ordinary Greatness: It’s Where You Least Expect It... Everywhere

Question #12 How can you
enhance the economic impact of your culture?

Your organization has a strategic
plan – but do you have a culture plan?

The Cultural Blueprinting Toolkit features
6 one-hour webinars and a 180-page workbook that will help you create a blueprint for the Invisible Architecture™ of your organization (the Blueprint Behind the Blueprint™). www.CulturalBlueprint.com