In Culture Eats Strategy for Lunch, Shawn Parr at Fast Company makes an extremely seductive argument. Though he doesn’t mention it, this type of analysis goes back to Alfred Thayer Mahan’s The Influence of Sea Power Upon History. Except that Mahan does not fall into this trap of concluding that culture matters more than strategy.
I don’t mean to pick on Parr’s article in particular, but it is representative of a lot of very well-intentioned, feel-good writing about strategy that seems to be appearing these days. Parr’s is one of the more solid ones. Here’s an excerpt.
Get on a Southwest flight to anywhere, buy shoes from Zappos.com, pants from Nordstrom, groceries from Whole Foods, anything from Costco, a Starbucks espresso, or a Double-Double from In N’ Out, and you’ll get a taste of these brands’ vibrant cultures.
Culture is a balanced blend of human psychology, attitudes, actions, and beliefs that combined create either pleasure or pain, serious momentum or miserable stagnation. A strong culture flourishes with a clear set of values and norms that actively guide the way a company operates. Employees are actively and passionately engaged in the business, operating from a sense of confidence and empowerment rather than navigating their days through miserably extensive procedures and mind-numbing bureaucracy. Performance-oriented cultures possess statistically better financial growth, with high employee involvement, strong internal communication, and an acceptance of a healthy level of risk-taking in order to achieve new levels of innovation.
You could summarize this emerging school of thought as “focus on people and strategy will take care of itself.” It is not a superficial and careless error, but one made by thoughtful and serious people who do give such matters serious thoughts. It’s not all Kumbaya (though admittedly, this particular article that I am riffing off of is rather Kumbaya-ish). It is a logical consequence of following the dominant school of strategic thinking today.
You fall into this trap if you fall into the Jomini-Porter tradition of strategy, which is a very procedural and structuralist model that decouples the human and non-human elements of strategic thinking.
If you follow the Clausewitz-Mahan-Boyd tradition, which does not make such an artificial separation of people and non-people parts of strategy you will not make this kind of mistake. In the Clausewitz-Mahan-Boyd tradition, strategy is about human insight operating on chaotic shared mental models, seeking special, unfair advantages to exploit. The resources you have available, and the strengths and weaknesses of those resources (people and culture included), naturally get accommodated in this model.
To get a sense of a more sophisticated way to make “people and culture” arguments around companies like Zappos or Southwest, it is useful to look at a much more thoroughly studied example.
Mahan’s Analysis of Sea Power
Mahan’s analysis of the naval race between the French, the English and the Dutch in the 17th and 18th centuries reads such situations right. He notes that for a few decades, during the time of Jean-Baptiste Colbert (the very capable minister of Louis XIV), France made progress on all matters naval with leaps and bounds. For a while, the English and Dutch felt very anxious indeed.
For a while, the French were actually far ahead of their competitors in the sophistication of their naval technology (remember, during this period, Continental, especially French, mathematics and engineering were still well ahead of English).
But when Colbert broke with Louis, the naval capability eroded within a generation or two, and would not be revived again until Napoleon, a century later (with equal lack of sustained success; as Nelson’s victories would prove).
Mahan concludes that the fundamental difference was in the presence of a robust seafaring culture in the Netherlands and Britain that went all the way down to commoners. And in Britain, it was also a military naval culture (rather than the very mercantile one of the Dutch) led by a nobility that actually knew what it was doing, and threw up great naval commanders frequently, unlike in the French case, where the nobility viewed naval appointments as rent-seeking opportunities, and strong leadership emerged less frequently.
This cultural difference, in turn, grew out of the fact that France is a large, pleasant country with many affairs on land, while Britain is a relatively miserable little archiepelago, whose inhabitants have been historically more eager and willing to get the hell out and take to the sea. Note the very concrete characterization of culture here, in geographic terms. It isn’t about feel-good and ultimately empty abstractions like “respect” but a richer, ethnographic characterization of differences. Happy? The French were possibly much happier during this period, in their lovely country. They didn’t itch to run away to sea.
But the lesson here isn’t that “culture eats strategy for lunch.” The lesson is that culture is what allows you to double down on a successful strategy. You still need the non-cultural parts of strategy to create an opening. You will not be able to double down on all openings.
Strategy Subsumes Culture
I have posts coming up, looking at examples like Southwest in more detail, but the basic point I want to make is that winning is still about human insight looking at chaotic realities (Clausewitz’ coup d’oeil) to find those opportunities and unfair advantages that, if pursued with vigor, turn into success entirely disproportionate to effort.
Culture is about the capacity to sustain that victory for longer-term rewards. In the Golden Age of airlines, before Southwest turned it into a game of budgets, many airlines had equally great cultures (watch Pan Am or read the once-famous Coffee, Tea or Me? books).
Take away the elements of Southwest’s strategy (short-hop, quick-turnaround, single aircraft type, non-assigned seating) and you just get a bunch of happy employees who will soon cease to be happy as the company’s profitability plummets, their jobs get exposed to risks, and disengagement sets in. There are plenty of examples of happiness-focused companies that promptly failed because they were not pursuing the right kinds of opportunities.
What do I mean by strategy subsumes culture?
I mean that culture is merely another variable in the chaos of inputs that you must organize and think through to craft your strategy. If you are looking for a quick in-and-out strategic opportunity, where you hope to make a killing in a month and have no intention of sustaining anything, culture does not matter. If you are looking for an opportunity big enough and long-lasting enough that you can build and grow a company to exploit it, culture matters a great deal.
On the flip side of the coin, you can say that culture renews strategy. Think of it as a yin-yang symbol (the black fish is non-culture parts, with a white eye of culture, and the white fish is culture, with its black eye representing non-cultural elements).
Culture Renews Strategy
If the opportunity is a really long-term one, spanning multiple lifetimes, you will need to think about leadership succession planning, since every big strategic opportunity depreciates in value and expires within a certain period of time, unless it is bolstered by smaller strategic moves that renew and revitalize those options.
These renewal/revitalization moves come from the minds of talented strategic thinkers, who in turn arise with sufficient frequency only in the right kind of culture. Apple is an example of a company that might well be crippled if it turns out there was no cultural capability in place for renewing strategic talent. Just as naval geniuses cropped up more frequently in Britain than in France, product-visionaries will need to crop up with more frequency at Apple if they are to sustain their current edge.
This specific function of culture — to renew strategic capability — is often ignored. As with the article I am riffing on, a lot of thinking about culture focuses exclusively on operational culture in the rank-and-file, and aspects like morale and disengagement.
Often there is a trade-off between this aspect of culture (which is about making people happy) and the other aspect: routinely producing great strategic leadership (which is about making people smarter and more clear-eyed).
You over-optimize for happy employees and you are in danger of not generating enough leaders for tomorrow, because the talented leaders are exactly the ones who will get annoyed by happy-employee-itis and leave for more challenging games.
On the other hand, if you over-optimize for throwing up great leaders, and brutal internecine competition will erode the happiness culture so that operational capabilities suffer.
It is a delicate balancing act. Yin can devour Yang or vice-versa.
People or Process is a Strawman Debate
When talking about such things, you will often encounter a people-versus-process debate, which is also a consequence of Jomini-Porter style thinking. Jomini-Porter thinking not only separates people (and therefore culture) from the other variables, it focuses on codified processes and models for the non-people/non-culture part (like Porter’s five forces and value chain models) over insight into the state of play of fluid and open realities.
This is a strawman debate in the Clausewitz-Mahan-Boyd school, since culture is subsumed within strategy, and strategy is more about insight than process.
One of the few commentators who has recognized this in recent memory is Jim Collins of Good to Great fame. His famous “bus” principle is the right way to frame the people vs. non-people components of strategy: Get the right people on the bus, the wrong people off the bus, and then decide where to go. Nowhere in this bus metaphor is any mention of processes or lean six sigma. Those do matter (in creating operational discipline, which is critical at certain phases of a company’s exploitation of a market opportunity), but not at this level of full-lifecycle thinking.
This principle completely finesses process-thinking and proposes the right trade-off. The shared mental model you build will be the source of whatever strategic insight you choose to pursue (“where to go”). This shared mental model depends on having the right people at the table, having the right kind of vigorous conversation.
A terrible group will paint a useless picture that suggests bad opportunities. Napoleon might have been great at strategic insight, but chances are, he also had the right people on the bus, painting fertile pictures for him to ponder.