Strategy

“Culture eats strategy for breakfast”, a phrase famously coined by Peter Drucker and frequently quoted when discussing the topic of strategy and organizational performance to emphasize the importance of culture in formulating and implementing business strategies. Strategy is defined as a pattern of purposes, policies, programs, projects, actions, decisions, or resource allocations that defines what an organization is, what it does, and why it does it. With this definition in mind, this pattern is a manifestation of organizational culture, which is the glue that holds inputs, processes, and outputs together. This network of inputs, outputs, and processes creates a unique organizational environment that serves a crucial role in formulating and implementing strategies that create value in an organization and are difficult to imitate by competitors, thus giving organizations a competitive advantage.

Strategy is viewed as a manifestation of an organization’s mission serving as a bridge between the organization and its environment. Strategy is about choosing to be different and organizations have to elect unique activities that set them apart. The unique activities adopted comprise the core competencies, which are crucial to the success of an organization. Another feature of core competencies is that they are difficult to imitate by the competition and the research validates that superior performance of some firms results from their imperfectly imitable competencies. There are three characteristics of competencies: tacitness, complexity, and specificity. Tacitness is rooted in learning by doing, complexity is rooted in technologies, specificity arises from the firm’s transactional interrelationships, and the interaction between all these three characteristics creates barriers to imitate. Pursuing a particular strategy depends on a set of trade-offs between four organizational dimensions of structure, systems, people, and culture. While structure and systems are tangible aspects of an organization to measure performance, culture constitutes the intangible side, which is key to corporate excellence. Similar to the interaction between the core competencies, the intangible resources are difficult to imitate, thus creating a competitive advantage and value. 

Corporate or organizational culture is defined as a pattern of shared beliefs, values, assumptions, rituals and symbols that produce norms that shape the behaviors of members and groups in an organization. Furthermore, culture serves a crucial role in strategy formulation emphasizing that culture impacts how strategic issues are framed and prioritized in an organization. While strategy formulation is rooted in analysis, strategy implementation is an administrative process rooted in people. People along with organizational culture comprise the intangible resources of an organization. Research suggests that intangible resources are more likely to create a competitive advantage as they are valuable, rare, and difficult to imitate. 

The value of strategy does not necessarily rest with the idea that strategy sets a direction for the future, but rather strategy creates an intellectual and emotional framework, in which the business can effectively compete and grow. Establishing the intellectual and emotional framework for businesses to effectively compete would fall under the leadership domain. The culture of an organization and its leadership mutually impact one another. Effective organizations require both tactical and strategic thinking as well as culture building by its leaders.

Research asserts that thinking and learning strategically is a leadership competency. This, in turn, enables leaders to inspire and mobilize others to undertake collective action in pursuit of the common good. However, leaders cannot inspire and mobilize others to change unless they take the time to understand the culture, the norms, and the collective behaviors of an organization and its members. The key is to observe and understand the underlying assumptions and behaviors, which will help leaders recognize when to develop strategies that align with the culture or when to change the culture to pursue desired strategies. Considering the intricacies of an organization’s culture, leaders need to possess insights of how to balance the internal and external context to properly align the culture and strategies to achieve organizational success.