This brilliant new book emphasises the importance of a bespoke approach to large-scale change because copying and pasting ‘best practice’ ideas onto an organisation, hasn’t got the legs for the long haul. The need to make informed and correct choices about changes specific to an organisation has never been so crucial, and this rings home with Masters in Minds because we have a number of tools available to correctly identify the change required from the ‘shop floor’ to the C-suite.

Change is Constant…
I absolutely love reading what is now a multitude of ‘how to’ articles that appear on LinkedIn about corporate/culture; change/transformation; management/managing; people/managing; managers/leadership; performance……..you get the idea.

I’m super curious as to the success rate of coaching courses in the aforementioned subject matters because if we went by the number of advice pieces arriving on our screens each day we could easily be forgiven for thinking that the courses aren’t delivering or that no one is listening, or more likely the good advice given on the course is not being put into practice.

I’m not in the least bit surprised by this given that most workplace interventions require a change to happen. Something as trivial as removing free biscuits and fruit from the office can be ‘game changers’ in some people’s eyes, and these items might seem trivial to a lot of us but there’s one thing many humans don’t take kindly to, and it is change in any form, but when you think about it is very strange given that change is a constant in our lives from the day we are born. There is infact nothing more natural for a human being than change.

So, the question about change then becomes more interesting. If it’s not change per se, maybe it’s actually being the architect of the change that we find difficulty with, or lack the skills required, to make change happen. So, if change promises an escape from the mundane, from the creaky see-saw of the every-day, and is why the journey of change is embarked upon, why isn’t it fully embraced as a positive move and followed through to the end?

The Book…
To start the search for a solution I’d like to point you in the direction of a terrific new book, ‘Beyond Performance 2.0 – A Proven Approach to Leading Large-Scale Change’. Now before you accuse us of writing our own self-fulfilling prophecies and telling you how good they are, this is not a book from Masters in Minds (not yet), Beyond Performance 2.0 has been written by the consulting giant that is, McKinsey & Co – and this new book sits perfectly in their body of excellent research materials. What’s exciting about Beyond Performance 2.0 is that they really do try to address the issue of change and the all too common phenomena of executives grafting off the shelf ‘copy & paste’ change solutions onto an organisation not yet ready to accept them.

In general, a ‘copy & paste’ solution means sending staff on courses that are designed from the outside-in and so are in a general sense non-specific to the staff attending them. By incorrectly identifying the issue in the first place engages the ineffective ‘copy & paste’ solution which ultimately disengages the staff who in their eyes have been sent on a course to solve a problem that even they didn’t know they had, and now you have very stubborn resistance to change.

Beyond Performance 2.0 highlights the importance of a bespoke approach being applied to every problem and at Masters in Minds we couldn’t agree more, especially when we deploy our insight tool called the Mindset Indicator and a bespoke Discovery Lens which we have effectively used to design bespoke solutions for a wide range of clients for many years.

The authors of the book have written about the hard and soft elements of change. What they mean by those terms is this, ‘hard’ skills are the process-driven parts of business, ‘soft’ skills are the human interaction side of things (I would argue that they should be the other way around or at least not described so diametrically but that’s a whole other cultural change!) Believe it or not, these human interaction skills have up until recently been all too easily dismissed as ‘nice to haves’, ‘non-measurable’, and ‘not essential’ to running a successful business. Now, however, there’s some powerful research from McKinsey that shows a clear connection between positive effective human interactions and a sustained upswing in productivity.

According to McKinsey research, Coca-Cola were going south in the 1990s turning huge chunks of market share over to Pepsi Cola and in turn losing the shareholders large sums of money.

A new leader of Coca-Cola was brought in, Neville Isdell, and by the time he had finished, staff turnover was down by 25%; employee engagement jumped to ‘unprecedented levels’ never seen before, communication and awareness of company goals rose to 76% up from 17%, and perhaps the most important for many leaders today, employee positive views of company leadership rose by 19%.

McKinsey, in their new book, list these improvements under the title of ‘Performance’, and along with these metrics sit all of the obvious measures that all companies are measured by, operating profits, return on investment, shareholder returns, net operating costs, and countless others depending how large your organisation is….you get the idea.

Of course, these are all measurable ‘performance’ results from some sort of intervention.

What’s not so obvious unless you’re lucky enough to be in my world, are the effects had on these measurables from the so-called ‘soft’ skills. Isdell himself said it was because he put as much effort into the ‘How, as the What’, and the authors here pull the ‘soft skills’ and the ‘how’ together under the title of ‘Health’, which McKinsey defines as being, ‘about how effectively an organisation works together in pursuit of a common goal.’

They go on to say that health can be evaluated in terms of accountability, motivation, coordination, innovation, and that ‘a way to think about health-related actions is that they are those that improve how an organisation internally aligns itself, executes with excellence and renews itself to sustainably achieve performance aspirations in its ever-changing external environment.’

Let’s just take a second to understand for a moment what they are saying here, and please remember that they don’t make these claims lightly. They say that a healthy organisation, one with an equal emphasis on ‘soft’ and ‘hard’ skills, has improved internal alignment, executes everything it does at the very highest level, and constantly embraces sustainable change to stay competitive. Wow. I don’t know about you but achieving those three desirables doesn’t sound like ‘soft’ stuff to me at all, they sound more like the fundamental elements upon which to create any type and size of organisation.

To reinforce their results, it’s worth taking a moment to appreciate the scale of McKinsey’s research and the extensive data set used by them to reach their conclusions is quite staggering:

• Over 5 million data points (people like you and me)
• More than 2,000 organisations spread around the globe
• Data from 32,000 McKinsey Quarterly Surveys
• Data & Learning from more than 1,000 of McKinsey’s own clients specifically relating to Performance and Health.
• In-depth reviews of more than 9000 top-tier management books and academic journals.
• Data from McKinsey’s ‘Wave’ implementation tracking solution software used by over 600 clients.
• Learnings from over 150 change leader’s client seminars
• One-on-One interviews with CEOs

To argue against their conclusions is pretty difficult.

The Theory at Work

For the last twelve years, Masters in Minds have advocated the use of ‘soft’ skills in all of their interventions and have been leading the way with this approach. So, what does a so-called ‘soft’ skill look like in real terms in the every day, the here and now, and how do you know that you’ve got the right soft skills in play within your organisation?

At Masters in Minds, we put all our emphasis on a philosophy that is born out of thousands of years of philosophical thought, BE-DO-HAVE. This simply means, the human ‘BE’ing drives the human ‘DO’ing, and that drives outcomes/results that you HAVE. Our programmes and interventions are designed and delivered from this mindset.

There is a reason why 70% of large-scale transformations fail, and it’s because 50% of the workforce are not aligned to the change. There is probably a very good reason that this statistic exists because as I touched on at the beginning, organisations don’t place the human BEing at the starting point for all their transformation/change efforts. Remember the non-specific copy & paste solutions? They are all coming from the outside-in, instead of inside-out, i.e., the change starting point is with your people.

Some of the resistance to change initiatives stem from the perceived disruption to established power structures, long memories of tenured staff who have ‘seen it all before’, and something I call negative inertia networks (NiNs) which if you look hard enough you’ll find lurking in your silos if you have them, and you probably do.

Now I’m not saying that there’s no value in putting staff through a series of copy & paste courses, I’m asking how effective they are at delivering change, transformation, and continuous improvement.

From my experience of ‘off the shelf’ courses, they’re first and foremost enjoyable, and most of your people will come back refreshed and will wax lyrical about how the team now feels more ‘together’ (note – identifying in what way they define more ‘together’ would be a good debrief question to ask) and everyone is happy because it feels like the problem has been resolved, but not more than three to four weeks later the same old problems start to show up and before you know it the team is back to square one, or so it seems. Don’t despair, there was some good from the course. They obviously bonded, albeit for a short time and it did last, albeit for a short time – but there are kernels of hope around, that all too brief lasting bond, which means change can be delivered if handled correctly.

But what happened, why didn’t the bonding last for very long? The truth of the matter is this, it’s simply down to natural human behaviour. There’s an average of three weeks before someone gets bored with a new gadget, piece of clothing, idea, or experience. I once spilled a bag of Tablet (a very sweet Scottish confection harder than fudge and crumbly) in my new car all over the seats and the carpet, but that wouldn’t have happened in the four weeks previous to that point because I was still ‘owning’ the newness of the car and no food was allowed inside but then the ‘new’ became the business as usual because I had passed through the excitement period of ‘owning’ the new car to it now becoming just another car, the allowing of Tablet in the car emphasised the fact that the car had become just another thing in my life.

Owning something be it material or emotional, is the difference between engaging with the material on a journey and not. That ‘off the shelf’ course was just like buying someone a gift that they didn’t know they wanted, no matter that the intention was good but the truth is that the idea of what someone wanted or needed was not aligned to the reality, and lo and behold within a few weeks it’s been forgotten about in the everyday hubbub of the modern workplace. If you want any new course of learning to be effective and for it to have long-term positive impacts on your teams, the team (including yourself) have to be aligned to the goal you identified correctly at the start, which can be done with our Mindset Indicator and Discovery work.

We see this often in our line of work where a change is necessary, a transformation begun, and then a bogging down of inertia (50% not aligned with the change remember) and although the reason why it’s bogged down is probably known or can be best guessed at, what’s not known is how to shift the obstruction so the transformation can continue. We’ve discovered at Masters in Minds that the solutions companies seek to bring about effective change are already in the workforce, it’s just that no one’s thought to ask them yet, and then the journey to effect that change is another story altogether but it’s no surprise to learn that the successful ones start with the human BE-ing because the common factor in all courses, interventions, monthly meetings, daily brainstorms, etc, is us. People. The most important resource in any organisation. It’s us. It’s all about us. It always has been. That includes everyone in the organisation.

Just like the authors of Beyond Performance 2.0 we’ve found from research into our many client’s own uplift in performance, that staff attending our Mindset & Leadership Development Programmes achieve more effective results over a much longer period of time compared to the directive coaching courses which try and answer the ‘performance’ problems before the more complex ‘health’ issues are understood.

So, what does ‘Health’ look like at Masters in Minds? Well, it all starts with Thoughts, Beliefs, Purpose, Values, Attitudes, Perceptions, and Emotions. These are the factors that form your aspirations and goals. After these some key principles move the culture forward e.g., role modelling, asking questions, not being afraid to be wrong, communication, responsibility, and so many others.

The human Be-ing drives the human DO-ing to deliver you the effective Outcomes/Results that you desire – it can only be that way round.

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Concentrating efforts on the Hinge rather than the Silo might win the battle.

55% of companies still work in silos[1] which is a shocking statistic when it’s reckoned that silos cost the top 500 companies in America around $31.5 Billion a year[2]. You would think by now that organisational culture would have developed sufficiently enough that silos shouldn’t have that big an effect, but it would seem not. So, it’s clear then at least to this humble observer that silos are here to stay for one reason and one reason alone, us, the people.

We hear a lot about silos in the workplace and how they negatively impact workplace performance and culture. We also have a pretty good idea these days on how to define one as well which goes something like this :-

‘Silo mentality in the workplace occurs when people specifically conclude that it is not their responsibility to coordinate their activities with peers or other groups. With this mindset, people have little interest in understanding their part in the success of the organisation as a whole.’ [3]

I’m not however writing this to rework the old arguments about what defines a silo and what to look out for but because silos, just like us, are not created equally. Here are a couple of aspects regarding silos I think are overlooked.

I’d like to look at that invisible divide, the non-space between the silos, spaces where no one is quite sure where responsibility starts, and ownership stops. It is if you like a dystopic organisational Venn diagram of non-communication, non-responsibility, ownership issues, apathy, ‘it’s not my job’, work to rule, indifference, and in severe cases, cognitive dissonance, and where what was discussed in planning meetings fails to materialise or gets ignored completely. If you were to view these diagrams from high above in the C-suite the spaces between silos don’t seem to be there and everything is interlocked with nothing out of place but move down to a more operational hands-on level where you can see them side on, and they take on the appearance of dinner plates in profile overlapping but separated by some invisible and permanent force. This space is the hinge that both separates and connects the silos and it’s in this space that battles are won or lost. The good news is that just like a door hinge the space between silos can be folded back on itself to bring the silos into alignment.

Silos crop up anywhere and at any time.

Even when you think a silo has been reduced to insignificance through your pro-active methods, they seem to inexplicably erupt out of nowhere, but nothing could be further from the truth because there’s always a reason for them, rightly or wrongly. The reality is that despite your best efforts they are always there and it’s the degree to which you’re willing to accept their influence upon the wider work that really matters.

Whilst researching this article I was struck by the similarities between the negative effects of workplace silos and critical failures in communication on a battlefield which fall under the banner, ‘That’s not my area of responsibility, mate’. I have a couple of examples from the allied invasion (Liberation for my French friends) of Normandy on June 6^th 1944.

For those unfamiliar with the battle, it was and still is the largest seaborne invasion in the history of mankind, and it involved hundreds of thousands of little pieces coming together to form the greater whole on the beaches of Normandy, France. It was critical therefore that everyone understood their roles and their objectives on the day.

To cut a long and fascinating story short, where two invasion beaches met up there was a non-physical boundary line between Omaha Beach where half the American forces were coming ashore, and Gold Beach where some of the British were. These beaches were further chopped up into smaller areas and given names like Dog Red, Dog Green, Charlie Red, Charlie Green, and so on, and all with non-physical lines between them.

In his book, D-Day, Anthony Beevor describes a silo mentality influencing attitudes perfectly. “American and Canadian observers were amazed by the British soldiers’ expectation of regular tea and smoke breaks. On the first day of the Normandy invasion, many who felt tired after wading ashore believed that they had earned a rest on the beach simply for having survived the landing. An American liaison officer reported: ‘There was also a feeling among many of the men that, having landed, they had achieved their objective, and there was time for a cigarette – and even a brew-up – instead of getting on with the task of knocking out the enemy defences and pushing inland’.” This clear example of a misaligned priority in this particular team is a significant marker for a silo mentality.

In another startling observation on the delineation at work between silos, Beevor goes on to say, “Sappers, as a Canadian observed, did not believe it was their task to fire at the enemy when not engaged on an engineering task, and infantry ‘refused’ to fill a crater or get a vehicle out of trouble”.

Now they are extreme examples of workplace silos, in some ways they’re even a little humorous, and clearly the random refusal to go above and ‘beyond’ the call of duty during this historic moment is not going to tip the balance of power against the wider effort, but if it happened again and again and was prevalent throughout an organisation and in this case it being the allied attacking force of over 160,000 people, very quickly it would become a serious problem, objectives would be missed, and the organisation would cease to exist which in this case would mean them being thrashed back into the sea and roundly defeated. Fortunately, the Normandy landings were a one-off with a simple single initial aim, to get off the beaches and move inland and enough soldiers did eventually make it off the beaches. However, a more entrenched and fixed style of silo did become a battlefield problem 30 years earlier and would become a source of great tension within the trenches of WWI.

I would like you to imagine yourself flying above a WWI battlefield, as if you were a visiting Swallow recently arrived from the deserts of North Africa - something you would have done every summer between 1914 and 1918, what do you see? If it’s mud, rain, death and destruction, barbed wire, and rats, then maybe you’re letting your mind run too far because it’s a matter of fact that many battlefields only looked like hell on earth once the battles began. Before the Battle of the Somme kicked off with a week-long artillery barrage where 71 high explosive shells landed on every yard of enemy line; it was a peaceful and somewhat serene summer landscape (July 1^st itself, the day the battle started, was a hot summers day with a vibrant blue sky).

The ground was laid out with adversaries dug into trenches facing each other only a few hundred yards apart. The daily routine of keeping watch, mending kit and equipment ran like clockwork, and officers saw to the administration of their particular company and battalion, each and every day. It was a tried and tested routine; it was in essence Business As Usual for many. This routine was carried out day after day, week after week, and as it turned out year after year. It was only broken by the regular rotation of battalions into and out of the front-line trench which was carried out on average every four to five days.

Allied and German trenches were laid out systematically and each consisted of three roughly parallel trench lines (the Front-Line Trench was closest to the enemy, then came the Support Trench some yards back, and then yet more yards back the Reserve Trench) which stretched from Nieuwpoort in Belgium all the way down to Switzerland, this is what we know as the Western Front. The Gap between the opposing Front-Line trenches was termed No-Man’s Land.

A battalion was tasked with manning a few hundred yards of line left and right of an agreed point on the map, this was their area of control. Much pride was taken by each battalion in leaving their part of the line as clean and habitable as possible for the relieving battalion, in fact during late 1914 as the war moved from a phase of movement to one of entrenchment, battalions had competitions to see who could build the most level sections of sandbags which would be judged by the Sergeant Majors and extra rations given out as reward, a treat you could enjoy if you weren’t shot by an enemy sniper who could now clearly see any deviation along the perfectly straight line of sandbags! – to say that the British approached the early months of WWI with gay abandon would not be far off.

Very quickly the battalions cottoned on and the procedure stopped. What didn’t stop was the immense pride each battalion took in their part of the line, and where their line started and the neighbouring battalion’s line finished was very important, and it’s these illusory lines that became the problem and where we shall concentrate our focus.

These lines of control or authority existed on the maps, but there was nothing to denote it on the ground physically, in particular it was a huge problem where battalions of different national armies abutted one another, Montauban on the Somme is one such place where the British army ended and the French army began. It was hard enough to identify these areas when soldiers spoke the same language, there was practically no chance in the heat of battle when the two couldn’t understand each other.

As the individual soldiers on watch looked out across No-Man’s Land, their view across to the enemy was split into specific arcs of fire with a point in the left distance denoting one extreme edge and another point on the right delineating that edge and therefore the totality of their responsibility. Either side of the individual soldier were others which if the leaders had done their work properly, had their own arcs of fire which overlapped one another, thus giving complete and secure coverage of the opposing enemy territory.

There’s a problem however, to your right is your neighbour, and they speak a different language. You know that he knows where your arc finishes and his should begin but you also both know that this involves a conflict of responsibility between two different areas and in fact, two different countries, and therefore you are now in what’s called a flying flank, simply because to all intents and purposes you’re there on your own as you don’t know what the neighbour’s intentions will be if you are attacked.

The accidental silo

To be fair to you and your battalion, you didn’t want to be isolated from your neighbour but because no one was willing to discuss who was accountable for what, your battalion now finds itself in what we would call in the workplace today, a silo and in this particular case, a lack of communication and ineffective leadership from outside has created the silo. Now we have two silos talking a different language, and each in a unique operating context, and for very different reasons they became siloed. One blames the next-door neighbours for not communicating any decisions across the gap, and the other one blames its leaders for not being there and communicating up and down their own line what to do when asked to support.

Blame begets blame, and very soon another silo appears and this time it’s the leaders who have blamed the men for not taking the initiative on anything and so before you know it there are now three silos. If you count the leaders from one battalion who haven’t managed to communicate effectively their concerns to their neighbouring leaders, there are suddenly four silos, and so it goes on.

These battalions of men literally stood shoulder to shoulder with the physical gap between them being just an imperceptible line where neither general was quite sure where his influence ended, and his opposite number’s begun. This line, is therefore more resembling a hinge, and ran right over no-man’s land to the enemy trenches and beyond if necessary meaning that if there was an enemy attack anywhere down this line and help was required, it was going to be patchy at best if it arrived at all.

It’s obvious therefore to understand an enemy’s desire to find out where these hinges were placed and as much effort was spent in capturing soldiers during trench raids as was expended in fighting battles, to gather critical information that would hinder the successful running of the enemy trench system opposite.

Once the location of the hinge between battalions or armies was identified the enemy would rightly work out which side of the battlefield to concentrate their forces against and without fail it would always result in needless casualties. Much time and effort was spent in probing these hinges to try and understand the fighting health of the unit opposite.

These soldiers were operating in silos and this might sound bizarre because if there’s one organisation where communication is the key skill it’s the military but even here and through the impact of an external force, silos erupted.

The organisation was the army, which was split into different Corps (Business Units if you like), then sub-divided again into Divisions, then into Brigades, then Battalions and those split down into companies, sections, and platoons. Each one of those had an area of responsibility over which it held sway. The further you went back away from the front line, the less it mattered as people had time to discuss areas of influence and the such like, but as you got closer to the front it really mattered to the men. Who was giving orders and who was accountable?

The one thing that the armies of WWI had which isn’t practicable in today’s business world was a strict command structure, and given the size of the organisation was around 125,000 men at the start and over 1 million at the end this is no surprise. What was shared with the modern-day workplace was that the army had a very strong vision (to win) and could readily expect everyone to work towards achieving a common goal (keep winning), motivating and incentivising was also straightforward (don’t get killed). Even the four silos I described above bought into the vision, the common goal, and the motivation, but it all fell down on Executing & Measuring.

The Uncomfortable Truth

In the civilian workplace when there is a culture of working in silos, organisations are at huge risk of losing market share as internal battles are fought and profit lost to competitors because of a lack of ability of departments to effectively understand, align, communicate across divides, execute projects in a timely fashion, and measure progress against agreed timelines.

Just like in the WWI example even if your staff are motivated and are ‘company people’ they’re at the effect of the silo culture and are just as helpless at successfully crossing the silo line as the British soldier was with his counterpart standing next to him in a trench, and with the best will in the world the staff who are in their silos will not change their attitudes overnight, so the question becomes then how to minimise the negative impacts of the silos rather than how to remove them?

Red Flags

There are a number of warning signs that let you know you have a silo problem – to name just six:

• misaligned priorities
• lack of trust
• information hoarding
• a drop in operational efficiency
• a drop in employee engagement
• poor customer experience

None of these can be blamed on the computer system, the photocopier or the coffee machine.

Equally, there are huge numbers of ‘solutions to your silo’ articles online to choose from all of which have one overarching theme, ‘collaboration across functions’. Collaboration however only truly works if it’s managed effectively, what happens for example, when a team leader who has been busy collaborating across functions returns to their silo and meets a wall of apathy or at best resentful compliance because they haven’t been showing up as a leader? The answer of course is that the silo stays the same or antagonism and apathy increase, and the whole point here in the first place was to depower and starve the silo.

We have to therefore, take a step back and look at the people more in-depth. Why are they working in a silo in the first place and what’s at play in their environment? Does the manager know the staff as well as he or she should do? What motivates and demotivates them? What is their partner’s name? Is their best friend actually a pet? Does the manager know what extent to a lesser and greater degree, their job role is? Does the staff know anything about the manager/leader? – remember that this is a two-way street, they’re all in this together.

You have to know what’s important to your people. If there’s no engagement between your staff, and the manager/leader doesn’t understand how they can be engaged with the role that they’re doing, then they won’t understand the company vision, the company’s common goal, and if they don’t know any of that and how to motivate for that vision and goal, what they execute and what transpires will give a less than satisfactory outcome.

Deal with the hinge, manage the silo

The key to dealing with silos is really about reframing your attitude to them. Battalions of soldiers in a trench (in a silo) are still motivated to stay alive (the vision), they will still carry out the tasks required to do that (the common goal), and similarly the people in a workplace silo will in general on the lowest level of consciousness be motivated to keep their jobs which pay the bills etc, so isolating them some more by calling them out might be counter-productive.

Do not isolate, instead, engage with each one of the individuals.

What you also have to think about is the cost to the whole company of a heavy-handed approach to clearing the silos by shuffling staff because there’s no guarantee that more silos won’t pop up once the fallout has cleared. Moving the staff just moves the problem.

The skill is to manage the silo and its people in such a way that their impact is mitigated, whilst at the same time concentrating on the hinge that exists between the silos – deal with the hinge, manage the silos impact.

Some have talked about building bridges between the silos but this only, excuse the pun, bridges over the hinge and the person tasked with bringing alignment and communication between the rival silos, who is now metaphorically running to-and-fro across the bridge, ends up just being a pawn in the ensuing power struggles. The hinge is the key but in particular how much light you shine on it or rather how much pressure you bring to that hinge because if you press a hinge hard enough in the middle the ends fold up toward each other.

Remember that the hinge is home to all the negative excesses in the organisation; non-communication, no responsibility, no ownership, apathy, indifference, cognitive dissonance. What’s required is some fundamental people management to fold that hinge up, down, around, back, any which way that is effective at bringing the silos closer together, and being 100% aware at all times of course that the hinge can just as easily fold away from itself taking the silos along if it is allowed to.

What I do differently to achieve this origami-esk manoeuvring is stand firmly on that hinge to challenge the negativity, and this simply means giving truly effective briefings; constructive feedback; making it clear what I’m prepared to tolerate; making my motivation and inspirations known; empowering the individuals in the teams/silos; and being very aware that what I’m role modelling will directly impact my team’s outcomes and results.

In other words, to make this hinge fold toward itself and bring the silos in so that they can work together, requires a leader’s mindset that is geared toward empathy, honesty with integrity, and confidence. You also should be inspiring, committed, and passionate, and it’s critical that you be a fantastic communicator and decision maker, be accountable, a delegator, an empowerer, a creator, and an innovator………the big question to ask is who in your organisation consistently displays these hinge folding abilities?

[1] https://www.strategyand.pwc.com/media/file/Dealing-with-market-disruption.pdf

[2] https://www.epinsights.co.uk/fortune-500-companies-lose-roughly-31-5-billion-a-year-by-failing-to-share-knowledge/

[3] https://www.perceptiondynamics.info/silo-mentality/how-to-remove-silo-mentality/

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Both how organisational culture influences the implementation of strategy and the bidirectional relationship between the two are well documented. However, this submission seeks to shed some light on how the strategy formulation stage is moulded by culture.

There are many different definitions of organisational culture, with Ravasi & Schultz putting forward that it consists of ‘a set of shared mental assumptions that guide interpretation and action in organisations by defining appropriate behaviour for various situations,’ (2006, p.437). Strategy, for the purposes of this submission, has been defined as ‘the match an organisation makes between its internal resources and skills…and the opportunities and risks created by its external environment,’ (Hofer and Schendel, 1978, p.12). This submission will be proposing that whilst the relationship between strategy and culture can be bidirectional, the influence of culture is greater and this influence affects each and every stage of the strategy formulation process.

Firstly, the influence of culture regarding which of the strategic processes an organisation embodies will be examined. Then, a breakdown of each stage of strategy formulation process, alongside practical examples, will reinforce the power of culture. Finally, the influence of societal culture will be briefly evaluated, concluding that while it is influential, it ultimately forms an aspect of organizational culture.

Strategic Processes

There are three broad schools of thought regarding strategic processes: deliberate, emergent, and process. Essentially, organisational culture influences which of these processes an organisation can successfully embody.

Emergent

The emergent perspective views strategy as evolving to adapt to organisations ever-changing circumstances and corporate culture arguably has the greatest impact on this process. The formulation is based upon a series of informal processes/interactions, often emerging from day-to-day routines (Jonson, Scholes, and Whittington, 2010). In this process, strategy is constantly being reconfigured and redefined requiring organisational-wide collaboration (Kruger, Mazza, and Lawrence, 2007) based upon the notion that ‘strategies grow initially like weeds in a garden; they are not cultivated like tomatoes in a hothouse,’ (Mintzberg, 2018). The influence of culture is undeniable as employees are required to, not only adapt to constantly changing strategies, but also proactively seek out new opportunities and strategies. The responsibility of employees is highlighted by Clayton Christensen who stated, ‘what you have to ensure is that all of the employees are looking for new opportunities to grow’ (Stobierski, 2020). Clearly, for strategy to be formulated in this way, an organisation’s culture must align.

By referring to Johnson, Scholes, and Whittington’s (2005) cultural web, certain elements of culture can be selected to demonstrate its impact. The power structure, for example, must allow for all employees to feel comfortable approaching senior management with problems/ideas. Moreover, rigid routines should be avoided, otherwise, the organisation risks acceptance of status-quo rather than seeking new opportunities. However, culture is just one contextual factor as companies also interacts with external environmental stimuli (Parsons, 1961) meaning that industry, for example, could be influencing strategy as well. For example, many large technology companies embody the dynamic capabilities strategy (Helfat, 2013) suggesting that some environments are better suited to certain processes, henceforth influencing strategy. This, however, does not undermine culture’s influence, it merely extends the elements culture must be aligned to for successful strategy formulation to ensue. Clegg et al (2020) supports this stating that emergent strategies rely upon all three elements of culture: artefacts, expressed values, and basic underlying assumptions.

The control (hierarchy) element of Quinn and Rohrbaugh’s (1983) competing values framework illustrates a type of culture that is ill-suited to an emergent process. This culture, often stereotyped as bureaucracy, is unaligned as its key characteristics include stability, control, and standardization meaning it is slow to perceive the need for change. Evidently, organisational culture can prevent companies from employing this strategic process.

Deliberate

Another strategic process is the deliberate one, where strategy is viewed as rational, analytical being created by top management’s conscious decision-making and then cascaded through the organisation (Clegg et al., 2020). This process would be far better suited to the ‘control (hierarchy) culture previously discussed. Effectively, deliberate strategic process has been built on the premise that ‘unless structure follows strategy, inefficiency rules,’ (Chandler, 1962, p.314). However, the applicability of this process has been questioned, with Mintzberg arguing only 10-30% of intended strategy is realised in this way (Grant, 2021). Additionally, due to the inherent nature of the deliberate process, often culture only impacts strategy during the implementation stage, which is out with the realms of this submission. However, the move away from this process towards the emergent has arguably increased the influence of organisational culture during the strategy formulation stage.

Process

Finally, Andrew Pettigrew developed the process strategy which embodies elements of deliberate and emergent. Process views strategy as a way of simplifying a complex world and organizing change to follow the desired direction (Clegg et al., 2020). Central leadership controls strategy, but the content is determined by the wider organisation. The primary influence within this process is the organisation’s learning which should behave as a whole strategically (Senge, 1990) replacing predictability with preparedness. As culture is an important determinant of an organisation’s ability to learn and adapt to new circumstances (Schwartz and Rist, 2017), culture's influence is also apparent in this way of formulating strategy.

Evidently culture influences which of the strategic processes an organisation can embody, especially regarding process and emergent.

Strategy Formulation: Stage by Stage

‘By influencing strategic decision processes, organisational culture also indirectly influences the content of strategy,’ (Shrivastava, 1985, p.106). As strategic decision-making often tackles novel problems requiring thorough environmental analysis and interpretation, it is difficult to base decisions purely on rationality. In smaller organizations especially, strategy can be heavily influenced by the personality, characteristics, subjective attitudes, and motivations of those decision-makers (Wang, Walker and Redmond, 2007). Johnson, Scholes, and Whittington’s (2005) cultural web, among other elements of culture, will be used to illustrate corporate culture’s impact during every stage of strategy formulation. Admittedly, not every organisation consciously follows these four distinct steps, however, each stage will be considered to some extent. By whom and in what way is decided by the previously discussed strategic processes.

1. Formulation of the Problem

Firstly, problem formulation can be affected by stories. During problem identification, managers generally start by informally and indirectly scanning for more information on issues their intuition registers as a problem (Lyles and Mitroff, 1980). Both their intuition and the information they receive are influenced by the culture as often ‘myths provide a convenient and abundant source of information in ill-structured situations’ (Shrivastava, 2007, p.106). The following example contextualises this. A company developed a computerised management information system due to a dominant myth that their computer systems were a panacea for all their problems. This led to the wrongful formulation of the problem and the subsequent preclusion of other solution alternatives (Shrivastava, 2007). Therefore, the preconceptions of those formulating problems, the information they gather through social interactions, and the underlying, unquestioned organisational myths all influence the problem formulation stage, reiterating the influence of culture on strategy.

Additionally, power and organisational structure cement culture's influence further. If employees do not feel comfortable sharing problems they have identified due to the power structure within the organisation, this will limit the formulation stage. Knowledge sharing is an essential attribute within the problem formulation stage and prospers with structures that support ease of information flows. (Syed-Ikhsan and Rowland, 2004). Although one could argue that this is organisational structure influencing strategy, structure is often considered an aspect of culture (Johnson, Scholes, and Whittington’s (2005), henceforth solidifying culture's sway. A practical example that illustrates this is Facit Inc, where the refusal of managers to recognise the potential of electronic calculator technology led the organisation to incur huge losses. This oversight stemmed from an organisational myth regarding the invulnerability of their product. However, this was intensified by their hiring from within the structure which reinforced this myth. Evidently the organisational culture is a dominant influence during the problem-identification stage of strategy formulation.

2. Generating Solution Alternatives

The language systems and metaphors often used by the organisation shape decision alternatives. The commonly utilized business as war metaphor is a good example, as by continually boxing strategy into this metaphor, it guides the creation and selection of strategic alternatives (Boulding, 1976). It is unlikely an employee viewing business as war would ever suggest a non-competitive strategic alternative, however, Alex Smith's ‘you win when you refuse to compete’ is a valid and potentially successful strategic option (Smith, 2019). Moreover, looking at the bigger picture, the organisation should utilise this stage to exploit the available opportunities that will improve the alignment between strategy and culture (Pearce and Robinson, 1991). Regardless of whether it is culture influencing strategy or vice versa, alignment between the two is imperative, as culture can either be the greatest contribution or obstacle to a successful strategy.

3. Strategic Response

Rituals and routines can influence the strategic response as standard operating procedures typically generate automatic responses that promote inflexibility, solidified by years of unquestioning acceptance (Starbuck, 1983). For example, within large multinational banks, it was found that their well-established procedures for strategic development had trapped them in a loop of formulating and circulating strategy, which, then became obsolete prior to implementation (Bresser and Bishop, 1983). Routines help to cement the mindset ‘we’ve always done it this way’ (Thomas, 2017) which has been described as the most damaging phrase in business. This underpins a form of harmful corporate culture, which is intensified by routines, as static companies rarely sustain success (Zimmerman, 2019). Undoubtedly, this type of culture is going to adversely affect the organisation’s strategy, regardless of how genius the strategy is.

Additionally, the basic underlying assumptions held by an organisation can also influence its strategic response. The News of the World, for example, held the belief that journalism was about generating scoops on sensationalised news. This belief was so deeply entrenched that to achieve this many journalists partook in illegal activities, although within the organisation they were widely accepted as normal (Waterson, 2021). To solidify the fact this was culture influencing them rather than an external force, The Times, another newspaper, owned by the same parent company, operating in the same industry and country, did not partake in such crimes (Clegg et al., 2020). This example perfectly demonstrates how differences in organisational culture alone, can sway which strategic options are considered available by an organisation.

4. Strategy Selection

Finally, the strategic selection stage is influenced by the organisation’s value systems, among other elements of culture. It is generally believed that the adoption of a firm’s strategy is highly dependent upon which type of culture it has (Wong et al., 2013). Whether the ultimate decision is being made by a single top manager, a strategic team, or more broadly within the organisation, strategy is inherently subjective meaning people rely upon their judgment, intuition, and experience to varying extents. Despite a vast range of tools to aid managers' decision-making existing, ‘it is far too easy to fall prey to our biases and focus on a limited set of self-serving analogies that support our preconceived notions,’ (Courtney, Lovallo and Clarke, 2013). Clearly, when adopting strategy there is an underlying rationale that different firms interpret pressures based on their unique set of organisational characteristics (Deshpande, Farley & Webster, 1993).

Ultimately, organisational culture influences the problems the strategy is aiming to solve, the solutions generated, the strategic response, and the strategy selection. This, among other reasons, is why it is commonly believed that organisational culture positively links to both performance and competitive advantage (Klimas, 2016).

Strategic Options Available

Generally, which strategic options are unsuitable due to the organisation’s culture is something that should be considered in the formulation process. However, due to oversights, sometimes misaligned cultures and strategies are only noticed during implementation. This does not, however, change the fact that cultural alignment is a crucial consideration within strategy formulation. Where these two parallels are mismatched, alignment can result from changes to strategy or culture (Montanari, Morgan & Bracker, 1990). The adverse effect of misalignment is demonstrated by Texas Instruments where their ‘culture was not sufficiently Tough Guy/Macho. Indeed, with a history of obtaining the lion’s share of its business from relatively safe-bet defense contracts, TI’s culture had evolved into basically the Process type’ (Deshpande and Parasuraman, 1986, p34). Clearly even a successful organisation opting for a strategy without first assessing the compatibility of its culture can lead to failure.

Whilst organisations do have the option to change the culture to suit strategy, culture ‘is hard, if not impossible, to engineer,’ (Clegg et al., 2020). Having said this, this example illustrates a success story (Chatterjee, 2016): Johnston & Johnston adopted a diversification strategy moving from basic consumer products into high-tech products. A quote from their Chairman, James E Burke, shows him reshaping their organisational culture stating ‘one of the things we insist on here is that everybody understands part of their job is to fail. You don’t move forward unless you make mistakes,’ (Deshpande and Parasuraman, 1986, p34). Clearly the relationship between culture and strategy is bidirectional with strategy also having the power to influence culture. Overall though, the fact culture required adaption for the strategy to be successful illustrates the power of culture's influence.

Organisational Culture or Societal Culture?

However, it is important to remember that organisational culture is not the only influential force impacting strategy formulation. Societal culture also has a great impact, with Jaeger and Balgia (1985) increasing the awareness surrounding societal culture's relationship with strategic planning and decisions. More specifically, Faucheux (1977) gives an example arguing that the development of companies within the Latin culture is based upon metaphors from the Catholic church and hence a very centralised, top-down policy-making structure. Whereas Anglo-Saxon organisations follow a more operational approach based on the existence of consensus and decentralised responsibility. Effectively, this is demonstrating how societal culture can impact the processes and structures within organisations, which subsequently influence strategy. Having said this, corporate culture tends to incorporate the societal culture of the continent/country or cities the company is based within naturally. Henceforth this may not be a reason organisational culture is less influential, but merely explains where elements of the corporate culture stem from.

Conclusion

Overall, the influence culture has on strategy formulation is undeniable. An organisation’s culture influences which of the strategic processes can be adopted, each and every stage of strategic formulation process, and even which strategic alternatives are feasible for an organisation. Admittedly, the relationship is bidirectional, and on occasion, culture requires adaptation to suit strategy, however, this submission argues that this only reinforces organisational culture’s power.

For these reasons, this submission adopts the view of Peter Drucker, that even during the strategy formulation stage: ‘culture eats strategy for breakfast,’ (Guley and Reznik, 2019).

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