Tuesday, September 18, 2012

Culture Beats Strategy?

It's gone viral: "culture beats strategy."  But is it true? Okay. I've been flaunting it. Patrick Lencioni's been flaunting it. Blanchard and others have done it too. Now Talent Management magazine has gotten into the act with an article by Lizz Pellet called "The Strategic Importance of Culture." She describes how successful mergers and acquisitions (M&A) incorporate cultural and human systems fit audits.

A cultural fit audit will look at:

  • organizational structure
  • executive leadership
  • values alignment
  • national culture.
Meanwhile a human systems fit audit will look at:
  • relationships
  • leadership
  • infrastructure
  • employee engagement
  • communication
  • change management
  • finance.
These elements aren't described in great detail. However, the audit is done through document analyses (engagement survey results, mission/vision/value statements, performance evaluation guidelines and job postings). However, as anyone who's part of any group knows, there's often a difference between what's said and what's done. Hopefully, like any good internal audit practice, there's observation of the actual practice compared to the documented practice. An audit should conduct interviews with lots of people to determine what's encouraged or discouraged, what behaviors are rewarded and what're punished. The level of collaboration should be assessed. The level of compromise and constructive conflict should be observed in actual staff and team meetings.

Regardless, culture is important and companies should not combine without a good fit. I still remember the conflict I had with my new boss from the acquiring corporation. After describing the extraordinary results and the world-class practices to achieve them, he still wanted us to revert to 1980's practices, because his company "bought you."  It took some more persuasion and time, but we eventually could show them a better way to operate. Did parent company locations adopt our practices? No. Their culture didn't allow it. There was little room for adaptability, agility and healthy accountability. Did the acquisition work in the long run? The parent company eventually divested of my former company at a loss. Ah, well, they went on to buy others and divest of others too.

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