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Strategy Under Siege

September 4, 2019

Culture Challenge:

Peter Drucker famously noted that “Culture eats strategy for breakfast.” My experience is that Drucker is correct. One of the more straightforward ways I’ve observed that phenomenon is when a large change initiative is launched by management. For example, installing a new, complex, Enterprise Resource Planning (ERP) system. While leadership and employees may all agree that such a new initiative is needed, unless the culture is one of continuous improvement, the initiative will fail or, at best, take twice as long as planned.

Surrogation

And now there is, finally, recognition of Key Performance Indicators (KPIs) and metrics posing yet another challenge to implementing your strategy. I grew up with the statement that “What gets measured gets done.” That is also true. According to a recent HBR article, the trap we often fall into is being so focused on KPIs or metrics, that we lose sight of the original strategy. That is the measurement becomes the surrogate for the strategy.

Of interest to me in the HBR article was that Wells Fargo is one of their case studies showing exactly how wrong things can go if leadership allows metrics to become the focus for activities. It is interesting because I have spent a considerable amount of time reading and writing about the Wells Fargo case.

Values to the Rescue—Again

Since I started with “culture eating strategy for breakfast,” it seems only fair that I define culture. To me, an organization’s culture is simply stated as “the way we do things around here.” It comprises how we treat each other and how we make decisions. Decisions are made based on the values of the organization. People treat each other based on the values of the organization. So, in the end, the lived values determine the culture. I emphasize lived because all too often, the stated values (the words on banners, websites, and ballcaps) are not the values that are lived every day by the leaders and managers of the organization. The values that create culture and vision are the real values, the lived values.

Michael Myatt begins his wonderfully crafted statement on how a business should structure its vision, mission, and strategy this way, “Values should underpin Vision, which dictates Mission, which determines Strategy, which surfaces Goals. . . “ This all hangs together nicely. Values underpin everything—culture, decisions, and vision.

Bottom Line

If you want to avoid jail, fines, and broken strategies, pay attention to values. On another post, I made the statement, “I will be so bold as to add that a CEO has only one main function—to actively manage the corporate culture. It’s all about providing ‘context’ for how our employees will react under calm or stressful circumstances.” I stand by that statement. In truth, as time goes by, I believe it is more accurate than ever.

The above referenced HBR article suggested that perhaps Wells Fargo is on the right track as it works to mitigate the leadership failures of the past couple of years. I am not so sure. I have tried to keep up with what changes are being made at Wells Fargo. They have indeed made significant changes in how they view long-term relationship building with customers. As part of that long-term relationship initiative, they have eliminated all sales goals. This last item is something all companies should consider doing. Sales goals will, by definition, destroy trust with customers. Especially if the salesperson receives compensation for those sales goals.

What I have not seen in the readily available articles is a deep and thorough review of Wells Fargo’s lived values. If leadership doesn’t rebuild that foundation, all the careful Vision, Mission, and Strategy work will be for naught. Additionally, any metrics or KPIs put in place may once again become the focus along with all the unintended consequences that will cause.

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