Mastering the connection between strategy and culture

Ahmed Galal Ismail was impressed by the level of employee engagement in Majid al Futtaim Properties, the owner of the Mall of the Emirates—a huge shopping complex in Dubai that even boasts an indoor ski slope—when he started as CEO in late 2018. And he had big plans. Ismail wanted to build a company that delivered extraordinary customer experiences using its physical properties and digital platforms. He needed people who had the capabilities to anticipate customer expectations, rather than sit back and wait for customers to engage.

Working closely with the human capital director, he set about developing a “market shaper” culture—an organization perceived as driving the evolution of the sector—to stimulate more innovation and external orientation. At town halls with staff, he said he saw culture as a driver of transformation, and strengthening the corporate culture was one of his five Day One transformation initiatives, alongside reinforcing the core business, mastering efficiency, retuning the real estate development engine, and accelerating data-driven transformation.

The COVID-19 pandemic tested, but didn’t break, the strength of the connection Ismail was building between strategy and culture. It was straightforward to make the most urgent decisions, which were to preserve cash and to communicate more frequently with employees and stakeholders. Strategic decisions required more deliberation, given their complexity and materiality, and considering the uncertainty of the longer-term effects of the pandemic. Ismail also wanted to ensure that the steps he had taken to develop a culture that supported a mutually beneficial ecosystem with his tenants would survive. Freezing rents was a critical strategic decision that signaled this commitment. His efforts worked, and business at the mall has bounced back in 2021 to beat pre-pandemic levels.

A fresh imperative to act

Like Ismail, other leaders currently face making decisions about where they choose to play and how to win (their corporate strategy) as well as how to encourage their employees to make—and shape—that journey with them (their organizational culture) at a time of considerable change. Customers have moved further online, and competitors’ positions have shifted. Some, like the platforms, have strengthened; others have weakened or disappeared. At the same time, organizational cultures need to evolve to enable a new hybrid of virtual and physical working arrangements, and to recognize higher expectations of a better work–life balance.

In this context, it might be tempting to focus on developing strategy more than culture, or vice versa—the latter if you believe “culture eats strategy for breakfast,” a quote misattributed to Peter Drucker (it seems it was actually said by a hospital CEO). Focusing exclusively on either strategy or culture would be a mistake. A strategy that describes a “big picture” vision without specifying what it requires of the organization’s culture is destined to fail, especially if it doesn’t build from existing strengths. Likewise, evolving a culture without recourse to a clear, compelling strategic direction risks wasting effort, if not disruption; improving engagement, well-being, and productivity helps only if you’re serving the needs of your current and future customers in a way that others can’t or won’t.

The goal should be to master the connectivity between strategy and culture. They both should be anchored by capabilities—the “key activities in which you must invest disproportionately and perform distinctively to underpin your theory of competitive advantage,” according to author and CEO advisor Roger Martin. Prioritizing and investing in key capabilities must be supported by management systems and resources. In other words, the connection between strategy and culture has to be embedded in the management system and the allocation of resources, because together these support the decisions to invest in the critical few behaviors that disproportionately drive performance. Examples of capabilities: understanding customers (as in the case of Majid al Futtaim), partnering with suppliers, and building strong brands.

At the heart of this endeavor is an appreciation and incorporation of the perspectives, mindsets, and skill sets of others. Every organization faces a unique set of challenges and context. There are strategic moments in an organization’s journey that have a disproportionate impact on outcomes. Getting them right creates a multiplier effect on other activities as people learn new ways of working and increase their advocacy for the program of work. Terence Mauri, founder of Hack Future Lab, a network of technology industry leaders, calls these “imprintable” moments. They include:

• Strategy development. If you want your culture’s defining traits to be inclusivity, empowerment, and collaboration, the strategy process must reflect this desire. Opening up strategy development to participation, away from the typical top-down, closed approach, is a crucial act. It might involve running “dream sessions” in which employees envision the future of the company or contests designed to encourage participation and co-creation from customers, suppliers, and partners.

• Negotiations with important third parties (such as suppliers, partners, and agencies). If you want to encourage more curiosity as a cultural trait, negotiations should involve sufficient time spent understanding the interests of the parties involved and exploring a range of options for mutual gain.

• Recruitment of key talent. The messages imparted to recruits in the selection and onboarding process should reflect the strategic priorities (as communicated to the candidates), while the interviewers (and others involved) should demonstrate the desired traits and behaviors.

• Critical conversations with employees. There are important moments with employees—if they are new to the organization, underperforming, ambitious, or looking for a change in roles—in which it’s vital to discuss and clarify strategic priorities and expectations for performance and behavior.

source: https://www.strategy-business.com/article/Mastering-the-connection-between-strategy-and-culture

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