Culture Eats Strategy for Breakfast | Today's Organization Development

Peter Drucker, often hailed as the "father of modern management," is credited with the famous saying, "Culture eats strategy for breakfast." This statement, profound in its simplicity, encapsulates the essence of what drives successful organizations today. Drucker, an educator and writer who laid the foundation for contemporary management practices, understood that the human element in any organization is the critical factor that can make or break strategic plans.

But what exactly does this quote mean? Why is culture so powerful that it can overshadow even the most well-crafted strategies?

The Power of Culture in Organizations

In the context of organizational development, culture refers to the shared values, beliefs, norms, and practices that shape how people within an organization behave and interact. It's the invisible hand that guides decision-making, influences behavior, and ultimately determines the success or failure of any strategy.

When Drucker said that "culture eats strategy for breakfast," he was highlighting the idea that no matter how brilliant or well-thought-out a strategy might be, it will falter if it does not align with the organization's culture. A company's culture is its DNA—it shapes everything from how employees respond to challenges to how they interact with customers.

Culture vs. Strategy: A False Dichotomy?

The statement "culture eats strategy for breakfast" does not imply that strategy is unimportant. On the contrary, a well-defined strategy is essential for setting the direction and goals of an organization. However, strategy and culture should not be viewed as opposing forces. Instead, they should be seen as complementary elements that, when aligned, create a powerful synergy.

Think of strategy as the roadmap that outlines where an organization wants to go and how it plans to get there. Culture, on the other hand, is the vehicle that drives the organization along this roadmap. If the vehicle is in poor condition—if the culture is toxic, disengaged, or misaligned with the strategy—it won't matter how clear or detailed the roadmap is; the journey will be fraught with obstacles and delays.

A Story of Culture vs. Strategy: The Tale of Two Companies

Let me share a story that illustrates the profound impact of culture on strategy.

Once upon a time, there were two companies—both in the tech industry, both with innovative products, and both aiming to disrupt the market. Company A had a bold strategy: rapid expansion, aggressive marketing, and ambitious revenue targets. However, its culture was cutthroat, with employees working in silos, competing rather than collaborating, and a leadership team more focused on numbers than on people.

Company B, on the other hand, had a more modest strategy: steady growth, customer-centric innovation, and a focus on long-term sustainability. Its culture was supportive, with a strong emphasis on teamwork, employee well-being, and continuous learning. Leaders at Company B were known for their transparency and approachability, fostering an environment of trust and collaboration.

Over the next five years, Company A achieved some early successes, but internal conflicts, high turnover, and a toxic work environment eventually led to its downfall. The aggressive strategy could not be sustained because the culture did not support it. Company B, in contrast, grew steadily, attracting top talent, fostering innovation, and building strong customer relationships. Its culture became a competitive advantage, driving the company to long-term success.

This story highlights the critical lesson that while strategy can set the direction, culture determines the pace and sustainability of the journey. Without the right culture, even the most promising strategies can falter.

Culture vs. Strategy: A False Dichotomy?

The statement "culture eats strategy for breakfast" does not imply that strategy is unimportant. On the contrary, a well-defined strategy is essential for setting the direction and goals of an organization. However, strategy and culture should not be viewed as opposing forces. Instead, they should be seen as complementary elements that, when aligned, create a powerful synergy.

Think of strategy as the roadmap that outlines where an organization wants to go and how it plans to get there. Culture, on the other hand, is the vehicle that drives the organization along this roadmap. If the vehicle is in poor condition—if the culture is toxic, disengaged, or misaligned with the strategy—it won't matter how clear or detailed the roadmap is; the journey will be fraught with obstacles and delays.

Case Study: Zappos - Where Culture Drives Strategy

One of the most renowned examples of a company where culture drives strategy is Zappos, the online shoe and clothing retailer. Zappos is famous not just for its customer service, but for its unique company culture that has become a central part of its strategy.

Background: Founded in 1999, Zappos quickly became a leader in the online retail space, not just because of its vast selection of products but because of its exceptional customer service. Tony Hsieh, Zappos' CEO, believed that a strong culture was the key to sustaining this success.

Cultural Philosophy: Zappos’ culture is built on ten core values, including "Deliver WOW Through Service," "Create Fun and A Little Weirdness," and "Be Humble." These values are not just words on a wall; they are lived daily by every employee. Hsieh ensured that the company’s hiring process was heavily focused on cultural fit. New hires were even offered money to quit after their training, ensuring that only those who truly aligned with Zappos' culture stayed.

Strategy Alignment: Zappos' strategy has always been centered around delivering exceptional customer service. This strategy is directly supported by its culture. Employees are empowered to do whatever it takes to "WOW" customers, whether that means spending extra time on the phone to resolve an issue or going above and beyond to ensure customer satisfaction. This culture of empowerment and service excellence has not only made Zappos a customer favorite but has also driven its business success. In 2009, Zappos was acquired by Amazon for approximately $1.2 billion, a testament to the value of its culture-driven strategy.

Outcome: Zappos’ culture has become its strongest asset, driving both its strategy and its success. The company continues to thrive, with its culture of service excellence as a key differentiator in the competitive online retail market.

The Impact of Organizational Culture on Performance

Research consistently shows that organizations with strong, positive cultures outperform those with weaker cultures. For example, a 2022 study by the Harvard Business Review found that companies with highly engaged workforces had a 21% higher profitability rate than those with low engagement levels. This correlation between culture and financial performance underscores the importance of nurturing a healthy organizational culture.

Google, often cited as a prime example of a company that has mastered the art of culture, spent years and millions of dollars studying what makes teams successful. To their surprise, they discovered that the composition of teams mattered far less than the norms and culture within those teams. Psychological safety, a key cultural element at Google, was found to be the most important factor driving team performance.

The Risks of Ignoring Culture

Leaders who focus solely on strategy while neglecting culture do so at their peril. A toxic culture can undermine even the most brilliant strategies. Consider the case of Wells Fargo, which in 2016 was embroiled in a scandal where employees opened millions of unauthorized accounts to meet aggressive sales targets. The strategy was clear—boost revenue through cross-selling—but the culture, which emphasized hitting targets at any cost, led to unethical behavior and a major public relations disaster. The fallout was severe: billions in fines, a tarnished reputation, and a dramatic drop in stock value.

This example illustrates that when culture and strategy are misaligned, the consequences can be dire. A strategy that is out of sync with the culture not only fails to deliver results but can also lead to destructive outcomes.

Building a Culture that Supports Strategy

The good news is that leaders have the power to shape and influence organizational culture. Building a culture that supports and enhances strategy requires intentional effort and a commitment to the following principles:

1. Leadership Role Modeling: Leaders set the tone for the organization. When leaders consistently model the behaviors and values they wish to see, they create a powerful example for others to follow. Alan Mulally’s leadership at Ford Motor Company is a testament to this. When he took over as CEO in 2006, Ford was on the brink of collapse. Through a combination of strategic focus and cultural transformation, Mulally turned the company around without resorting to mass layoffs. His approach was centered on fostering transparency, collaboration, and a one-team mentality—cultural shifts that were instrumental in Ford’s recovery.
2. Clear Vision and Values: A strong culture is anchored in a clear vision and a set of core values that resonate with employees. When everyone in the organization understands the bigger picture and their role in achieving it, they are more likely to be engaged and committed. According to a 2023 Gallup report, companies with a clear mission statement that employees believe in have a 40% higher level of employee engagement.
3. Continuous Reinforcement: Culture is not a one-time initiative; it requires continuous reinforcement. This can be achieved through regular communication, recognition programs, and by embedding cultural values into every aspect of the employee experience—from hiring and onboarding to performance management and rewards.
4. Adaptability and Learning: In today’s fast-paced business environment, a culture that encourages adaptability and continuous learning is crucial. Organizations that foster a growth mindset are better equipped to respond to change and innovate. A 2021 McKinsey study found that companies with a strong learning culture were 30% more likely to be market leaders over a 10-year period.
5. Employee Involvement: Engaging employees in the development and evolution of organizational culture is key. Conducting surveys, facilitating open forums, and encouraging feedback can help leaders understand the current culture and identify areas for improvement. When employees feel heard and valued, they are more likely to buy into the culture and contribute to its growth.

Aligning Culture and Strategy for Success

The ultimate goal for any organization is to create a culture that not only supports but enhances its strategic objectives. When culture and strategy are aligned, the results can be transformative. This alignment creates a sense of purpose and unity, driving the organization toward its goals with greater efficiency and effectiveness.

Take the example of Southwest Airlines, which has long been recognized for its strong, employee-centered culture. Southwest’s strategy is focused on low-cost, high-frequency flights, and its culture of employee empowerment and customer service excellence directly supports this strategy. The result? Southwest has consistently been one of the most profitable airlines in the world, even in an industry known for its volatility.

The Future of Organizational Culture

As we move further into the 21st century, the importance of culture in driving organizational success will only increase. The rise of remote work, the growing emphasis on diversity and inclusion, and the need for agility in the face of rapid technological change are all factors that will shape the cultures of tomorrow’s organizations.

Leaders who recognize the strategic importance of culture and invest in building and maintaining it will be better positioned to navigate these changes and achieve sustainable success.

Tips For Building A Culture

Here are some practical tips for building a culture that supports and enhances your strategy:

1.     Conduct Employee Surveys: Regularly survey your employees to understand their perceptions of the current culture and gather insights on what they would like to change or improve. Use this feedback to align cultural practices with your strategic goals.

2.     Communicate Vision and Values Clearly: Ensure that every employee understands the company’s vision, mission, and core values. Regular communication helps reinforce these elements, making them a natural part of the day-to-day work environment.

3.     Lead by Example: Leaders should model the behaviors and attitudes they want to see in their teams. When leaders embody the company’s values, it sets a powerful example for the rest of the organization.

4.     Align Incentives with Culture: Design reward and recognition programs that reinforce the desired culture. For instance, reward teamwork, innovation, and customer-focused behaviors that align with your strategic objectives.

5.     Foster Open Communication: Create an environment where employees feel comfortable sharing ideas, feedback, and concerns. Open communication helps build trust and ensures that everyone is on the same page.

6.     Empower Employees: Give employees the autonomy to make decisions and take actions that align with the company’s strategic goals. Empowered employees are more engaged and committed to the organization’s success.

7.     Provide Continuous Learning Opportunities: Invest in training and development programs that enhance employees’ skills and align with the company’s strategic direction. A culture of continuous learning supports adaptability and innovation.

8.     Celebrate Small Wins: Acknowledge and celebrate small successes that contribute to the overall strategy. This helps build momentum and reinforces a positive, achievement-oriented culture.

9.     Regularly Review and Adjust: Culture is dynamic, so regularly assess how well your culture aligns with your strategy and make adjustments as needed. This ongoing process ensures that your culture remains a strong support for your strategic goals.

Conclusion: Culture is the Foundation of Strategy

In the end, Peter Drucker’s assertion that “culture eats strategy for breakfast” remains as relevant today as ever. Strategy is essential, but it is culture that determines whether that strategy will succeed or fail. By understanding, nurturing, and aligning culture with strategy, leaders can create organizations that are not only successful but also resilient, adaptable, and capable of thriving in an ever-changing world.

So, the next time you’re working on a strategic plan, take a moment to consider the culture of your organization. Is it aligned with your strategy? Does it support your goals? If not, it might be time to focus on culture—because, as Drucker warned us, culture will always have the final say.