Strategy Execution and Cultural Change

Culture both affects organisational performance and vice versa. When companies start change management programs and strategy execution, managers need to understand how they can manage the cultural change in order to compete successfully.

The following figure illustrates how to manage cultural change within companies:

Culture and strategy execution

Culture, step 1: this is the main values, norms or beliefs of the organisation, it defines and creates the propensity to act in a certain way.

Behaviour, step 2: this is the “way we do things”, include how companies compete, how people treat each other, the extent of risk taking, creativity and innovation. How companies embrace or avoid errors, how they operate and execute.

Reinforcement of behaviour, step 3: incentives and controls guide and reinforce behaviour. This tells individuals what is important.

Organisational performance, step 4: If performance is good, there is a positive alignment of culture. Poor performance that something is not working.

Cause-effect analysis, step 5: deviations in performance, positive o negative,  must be explained, it must tell what went wrong and why. On this model, I will focus on poor performance only. Explaining poor performance is a prerequisite for organisational change. Without cause-effect clarity, learning and organisational change are not possible. Communication and information sharing is vital when changing the culture.

Changing culture, step 6: to do this “do not change culture”, first focus instead on behaviour. It is impossible to ask people to change their beliefs, values or attitudes. So how you can change behaviour and ultimately culture? the answer is by changing people, incentives, controls and organisational culture.

Overcoming resistance to change, step 7: here it is important to focus on the positive and avoid the negative aspects of change. Successful cultural change and strategy execution, demand a communication plan that stresses positive aspects of the change and informs people honestly about their options and opportunities. The active involvement or participation of key players in the planing and execution of change, can reduce resistance.   Finally leadership is central to the process of reducing resistance to change.

New culture, step 8: cultural change will not occur overnight, but will definitely happen if the need for change is well documented and communicated, and the execution focus on incentives, controls, people and organisational structure is directed toward behavioural change and new ways of doing business.

Related article: Change Management and High Jump

Further reading: Lawrence G. Hrebiniak. Making Strategy Work: Leading Effective Execution and Change. Wharton School Publishing, 2005.

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