Corporate Culture Impacts the Success of Strategic Planning

Corporate Culture Beats Strategy

Most firms do some kind of annual strategic planning, in some form or another. The corporate culture impacts the effectiveness of that planning process, the quality of the decisions made, and an organization’s ability to implement the business strategy.

If the company does not encourage open-minded discussions, challenging the status quo, and asking tough questions, then strategic planning has effectively become futile.

Is your company’s planning event an annual two-day retreat at the country club? Do you leave the retreat each year thinking that you should have been able to accomplish more, but didn’t?

Did the team discuss anything groundbreaking? Did you explore any new, controversial topics? Or, was it a rehash of the same old topics, without reaching any decisions?

If this is what happens, you need to be concerned about your firm’s corporate culture and its impact on strategy.

Here are a number of characteristics describing a firm’s culture that can lead to weak decision-making, flawed business strategies, and poor execution.

If you recognize your firm in any of these, start thinking about how to improve the culture to create a healthier, more productive organization.

Too Much Focus on Operations

With managers too focused on operations, the company can suffer from strategic myopia. Preoccupied with day-to-day activities, they fail to see the bigger picture. It becomes difficult to adopt a strategic, longer-term perspective based on a clear understanding of the dynamics of the marketplace.

Premature implementation, well before the strategy is fully developed, is the result. In addition, these strategies tend to be incremental at best, essentially maintaining the status quo.

In addition, business initiatives are often more tactical in nature than strategic, leading to the company missing out on significant new opportunities for growth.

Departmental ‘Silos’

Strong departmental “silos” in an organization lead to poor communication between departments and insufficient involvement of key people in strategy development and decision-making. Effective planning includes key people from throughout the organization, such as Manufacturing, Engineering, Sales & Marketing, and Finance. Strategy is not just for the boardroom.

A lack of communication between departments is a major obstacle to the successful implementation of the strategy. No matter how sound and well-thought-out it actually may be. The lack of buy-in between departments severely jeopardizes the company’s ability to achieve its strategic goals.

Groupthink

If groupthink is prevalent, decisions are made with an uncritical, tacit acceptance of the common point of view. Groupthink occurs if the owner has a dominant personality, showing little tolerance for candid feedback and tough questions. In that environment, nobody expresses a contrarian opinion out of fear to be shut down. Challenging the status quo and asking tough questions are seen as career-killers.

Groupthink also occurs when there is little diversity on the management team in terms of experience, background, and skills.  As a result, the members of the planning team tend to share the same perspective. They agree quickly, without challenging anything or digging deeper.

Groupthink results in a weak, poorly thought-out strategic plan that is likely to fail.

Lack of Insight

Past successes can lead to management becoming complacent. They start taking success for granted. This leads to a failure to develop a longer-term perspective and ability to monitor changing business conditions.

Failure to develop insight into what’s happening in the marketplace prevents management from seeing new opportunities or anticipating threats to the business.

Indecisiveness

Indecisiveness leads to a drawn-out, long-winded planning process. Common symptoms are overthinking, over-analyzing, too much talking, and second-guessing everything. Setting priorities and strategic decision-making become very difficult.

The business strategy, if created at all, may never get implemented. Missed opportunities and poor performance are the results.

Indecisiveness reflects a weak management team not capable of cutting through the clutter and making decisions.

Overconfidence

Significant successes lead to overconfidence if management believes it was due to their skills and talents. However, the success may just have been plain luck, not business acumen.

Overconfidence leads to a mindset where gathering market intelligence, analyzing data, careful decision making, and considering any threats or developing contingencies are considered unnecessary and a waste of time.

An overly confident management team often produces a business strategy that is seriously flawed. Even skillful implementation is not going to save the day.

Lack of Courage

Lack of courage to make confident decisions leads to a bland, risk-averse business strategy. A culture in which people are punished for mistakes contributes to this attitude.

Often, management resists change, taking a ‘Not-Invented-Here’ approach. The lack of managerial courage may also be due to an overreaction to recent business failures.

Risk-averse strategies are usually no more than ‘me-too’ approaches or a continuation of the status quo.

Oversimplification

A management team that is impatient may oversimplify the issues in their rush to develop a business strategy.

Not sufficient time and effort is spent on properly identifying and addressing the key issues and opportunities. The planning team rushes through gathering intelligence, conducting analysis, formulating, and evaluating strategic scenarios. If they do it at all.

Oversimplification leads to a poorly thought-out business strategy and premature implementation.

Delusion

Delusion leads to wishful thinking and a pie-in-the-sky mindset. This attitude often results in a business strategy not based on reality. Managers are kidding themselves by setting unrealistic goals and expectations.

In this case, the company is likely to experience setbacks during the implementation of the strategic plan because of the overreach during the planning stage. The resulting business strategy is likely to fail.

As a result, the negative experience of this failure then further sets the tone for any future planning efforts, creating a downward spiral of failures and poor decision-making.

Inflated egos

An organization’s culture is difficult to change, but big egos in the executive suite may very well be the most difficult to deal with because it usually involves the owner/CEO.

An owner with a big ego thinks they know it all. They do not allow contrarian points of view, do not ask open-ended questions, are not open to criticism, and do not solicit input. The other executives on the planning team only play a minor role.

If the person at the top does not allow for input from others, business performance suffers. Any business decision simply reflects the owner’s opinion, right or wrong.

The business strategy is usually rather grandiose, not well-thought-out, and lacks buy-in from other stakeholders in the organization.

What to Do About a Negative Corporate Culture

Did you recognize your organization in any of these traits?

If so, be aware that these negative traits seriously limit your firm’s ability to reach its potential. You should start thinking about working with an executive coach or consultant who specializes in culture change, team building, and team communication.

Before you do any strategic planning make sure that your firm’s culture supports the process as well as the implementation of the strategic plan.

Encouraging open communication, facing facts, asking tough questions, challenging the status quo, and an ability to make bold decisions are necessary to move the business forward in a dynamic, competitive marketplace.

Don’t let your firm’s culture eat strategy for breakfast.