02 Jun 2010  What Do YOU Think?

How Do You Weigh Strategy, Execution, and Culture in an Organization’s Success?

Summing up: Respondents who ventured to place weights on the determinants of success gave the nod to culture by a wide margin, says HBS professor Jim Heskett. (Online forum now closed. Next forum opens July 2.)

 

Summing Up

Strategy, execution, and culture: Do we have our priorities right? First, my thanks to all of you who weighed in on the issues of the month regarding ways of thinking and asking questions about the relative importance of strategy, execution, and culture in an organization's success. I hope the comments were as helpful and thought-provoking to you as they were to me.

Those of you willing to venture to place weights on the determinants of success gave the nod to culture by a wide margin. As Mouaz AlZayyat put it, "Growth plans and articulated business tactics cannot be sustainable without a framework of cultural values and rules." Drew Williamson pictured the relationship as "a virtuous circle that can break at any of the three points. It starts with a happy, innovative culture that generates a strategy for success." In Phil Clark's words, "Just thinking about D-Day in the context of your question… . Even as many failures and unplanned events unfolded, the culture and training sustained the men to the ultimate execution of victory on that day." Jobe Mabaso added, "A sound organizational culture is a basis for solid planning and flawless execution."

The importance of execution was advanced, for example, by Mercedes Fernandez, who reminded us that "execution … makes things happen." Bob Legge said: "An outstanding strategy weakly executed will always be trumped by a weak strategy with outstanding execution." Those placing the greatest weight on strategy were characterized by Pete DeLisi's observation that "it's hard to perform if you don't have the right solutions, addressing a real need, provided to the right customers when they are needed, and in a way that differentiates you from competition."

Several noted that "it all depends" on other factors. For example, Basel Kakah commented that "[responses to] those questions could … [depend on] the nature and size of the organization as well as the nature of the industry and business environment…." Fidel Arcenas cited "prevailing conditions" and Ahmed Issa mentioned "external and internal factors" as influences on possible responses.

Perhaps the most interesting responses were to the questions themselves. Gopal Padinjaruveetil commented that "there are no obvious answers to these questions and the answers lie somewhere else … [for example] … good leadership." Yan Song said, "To ask which of these components is more important is equivalent to asking which part of our body—head, torso or heart—is more dispensable." Gerald Nanninga suggested that "it may be as relevant to ask how much is the level of my execution diminishing my level of profits…."

Eddie Jiang provided an alternative way of thinking about the relationship of these three factors by suggesting that they are multiplicative rather than additive. "Organization success = Culture x Strategy x Execution." This argues for a different way of formulating the questions.

Several commented on the importance of the thought behind the questions, leading to yet another question: Are their important differences between these responses and the relative emphasis placed on strategy, execution, and culture in today's business school curricula? If so, why? And can they best be addressed? What do you think?

Original Article

During the course of research for a book I'm writing, I have had the opportunity to talk with a number of managers about the degree to which strategy, execution, and culture contribute to the success of their organizations. After several such conversations, I at first reluctantly—because I feared that respondents would regard the questions as too complex or even irrelevant—began asking each of them three questions intended to attach numbers to an otherwise abstract conversation. The questions are:

  1. If your organization's performance (operating income) = 100%, roughly what percentage is accounted for by the quality of the organization's strategy (clients we target; products, services and results we offer; the way we organize and compensate people, etc.) vs. the quality of the organization's execution of its strategy (the quality of our people, work, processes, decisions, etc.)?
  2. If your organization's strategy = 100%, roughly what proportion of its effectiveness is dependent upon and accounted for by the organization's culture (widely-shared values, beliefs, behaviors, rites and rituals, etc.)?
  3. If the execution of your organization's strategy = 100%, roughly what proportion of its effectiveness is dependent upon and accounted for by the organization's culture?

To my surprise, my respondents neither found the questions too complex nor irrelevant. One even made it the subject of a management meeting at which he had forty of the most senior members of his organization tackle the questions.

Now I ask you, as a change of pace from our previous columns, to address the questions based on your experience. Can you respond, or are the complexities of each question—possibly requiring more complete or different definitions of strategy, execution, and culture—too great? Are the three dimensions of the questions the right ones? Do they cover all or nearly all aspects of competitive success? How would people in various regions of the world—or in for-profit vs. not-for-profit endeavors—approach this set of questions differently? How would you respond to the questions? Why did you respond that way? What do you think?

Comments

    • Paulo Fassina
    • Planner, Samurai

    What if you had a plan to be president of the USA? You could have a perfect plan. A brilliant one! One, that if put on practice, it would give you a 100% chance of being the next president of the USA.

    There is a catch. It's extremely hard to accomplish and you can't do it alone. Actually, you need the best people available, you all have to be believe you can do it and above all, you have to learn how to work together.

    Other than that, the plan is perfect.

    It's all about people. It's all about making ideas become reality.

    Reality is made of people, doing small things, every day. It's not about abstract ideas that in the realm of imagination look good.

    Is strategy good? Of course it is. It gives us a goal, direction, things to care about, helps us to work together.

    But it's not everything. And actually, it's not even a must.

    You can win without a strategy. You could be lucky. You could have other people who care about you and help you in your objectives. Your competitors could make the wrong choices.

    There are an infinitude of variables that just makes every good strategy a good guess.

    If I could put it in numbers I would say that 30% is strategy and 100% is people!

    That's right. Strategy gives you an edge, but it's nothing without people.

     
     
     
    • Bob Legge
    • President, Legge & Company, LLC

    Based on over 30 years of consulting and executive experience: 15% strategy 50% execution 35% culture An outstanding strategy weakly executed will always be trumped by a weak strategy with outstanding execution. Culture is a key part of execution. If the strategy or execution conflict with the culture, bet on the culture.

     
     
     
    • Anonymous

    Firm culture is the critical mass that is needed to drive the execution of management ideas that, are their very heart, are ideas that are first and foremost derived from the generation of strategic planning.

    Firms and enterprises need core culture foundational anchorages to uphold the pillars of strong performance, robust risk management, loyal corporate citizenship, and dedicated and thoughtful client and employee satisfaction.

    Only then, once the foundation and the ivory pillars are set, will adequate ambiance be available for the execution of management ideas.

    Culture and strategy are generated by humans. In this ever-growing global and technological advanced age we live in the execution of ideas are merely delegated to computers and automated programs. Thus I say, 2/3 weight to humans for culture and strategy generation and 1/3 weight to technology for doing the monkey-work execution of ideas.

    I will not be surprised if, over the next decade, there is more of a shift towards more reliance on technology, thus re-balancing the weight distribution less toward Human involvement. Following this logic, will workers be over-compensated and over-paid for their title in the future? However, is this not the very case at point as we speak?

    Perhaps we will always need humans for culture and strategy formation, but at what expense to the "real" value-added end-performance that is generated by robust technological infrastructure?

     
     
     
    • Saurabh Dwivedy
    • Al Futtaim Group - Dubai

    If I could liken strategy, execution and culture to human anatomy - I would reckon strategy to be similar to the brain, which processes information and develops a plan to tackle known and unknown issues of life; with execution I would associate the hands, legs, and the sense organs in general because they help us perform whatever needs to be done and finally with culture I would associate the whole human body because the human body derives from a genetic structural makeup we don't have much say on at any given moment of time. Of course, culture just like the human body can be shaped over a period of time.

    Just as with the human body - there is little the individual pieces (viz. brain, body organs and the body itself) can accomplish individually. It is the "combination" which helps us to achieve "things". Similarly in an organization - while I accord equal importance to strategy and execution, I put culture on a slightly higher pedestal.

    Having a good culture is like having a well-designed free-way; if you have a Mercedes-Benz (good strategy) and are a good driver (good execution) you can cruise along at impressive speed, but if you have an in-a-shambles freeway - you can't really do much despite having an excellent strategy and execution. An argument can be made however with respect to the example cited here as to what happens if you don't have a Benz and but have an old ungainly vehicle instead? To this I have to say that replacing the old vehicle with a new Benz requires far less effort than paving the freeway. Similar argument can be made with respect to execution. Hence the argument about culture's supremacy.

    Fixing the culture of an organization is a long haul. One can hire consultants/strategists to fix strategy and one can hire good executionists to make sure the task is done. But - culture is something that cannot be "hired" or changed overnight.

    People of course are the key ingredient. But I believe that's somewhat a given under the circumstances. Without people - nothing is possible - the impossible and the possible both. It's people who make things happen (or not happen). Among strategy, execution and culture - a good culture is hard to get in legacy and even harder to build from scratch and both a good strategy and superlative execution are required to build a meritorious organization.

     
     
     
    • CJ Cullinane

    I feel that as a past manager of a division of a large corporation that Strategy is about 55 percent of an organizations income. I would say that approximately 25% of the Strategy's (100%) effectiveness is culture. As for Execution (100%), I would say culture is about 60 percent.

    There does seem to be a large discrepency between Culture vs. Strategy and Culture vs. Execution. I believe this is due to where (who) the Strategy is created and the flexibility of the stategists. Often a new product or innovation may not fit a companies culture but is a good strategic move for the organization.

    Successful execution of a plan needs a 'can-do' attitude and a culture of strong beliefs and behaviors. A culture of strong positive attributes can make a strategy or plan work. Put another way; good habits = success, bad habits = failure.

    I look forward to reading your book. This is a great area to study.

    Charlie Cullinane

     
     
     
    • Dr. Kervokian
    • Consultant

    Question 1. It is difficult to apply question 1 to major organizations within 3rd world developing countries due to their monopolistic state-controlled business. Potentially a weightage needs to applied to normalize performance to penalize the preferential treatment (pt) accorded especially for state-owned companies. Perhaps there is a universal quotient for pt that can be used taking in GDP, capitalization, market size and competitiveness.

    After doing the above, would we be able to divvy up performance success factors between people, process and culture (execution) and strategy?

    Paribus ceteris, the 2 sides of the coins are inseparable, as one impacts the other. Execution is a result of strategy, and if the management has not place sufficient brain juices ensure that the execution elements are also covered (e.g. the people that they hire in order to carry the task ), then it would be like architecting a building that's 4 feet high to increase sq footage thus rental space.

    Naturally, organizations are not that dumb, however more often than not they are "blind" due to the dearth of information and asking the right questions to get the right answers quickly enough. Secondly, if there is any culture that should be imbued, its the organizational need for "memory" in order to constantly improve.

    Question 2) Although the question is straightforward, measuring the impact of "culture" would be like trying to quantify the weight of wisps of smoke coming out of an underground smoldering fire. Where corporate leaders are dominant and it's "depth" shallow, then it is easy for them to extend cultural influences. But more often than not, in deeper and wider organizations the influence are minced with emotional baggage and thought processes of the line managers.

    Secondly, unlike a military system, businesses are required to quickly change its system, style and hierarchy to the market and speed in execution. For example; from private to field marshall, that hierarchy has been left relatively unchanged for more than a century. Therefore allowing one element of "culture" to seed and take root.

    In summary, where the organization is more fluid, leaders determine performance and for the bigger more hierarchical organization it will be it's culture. E.g. fear of signing documents, towing the line etc.

    Question 3. Humbly question 2 and 3 should be one; (although I academically appreciate the delineation between a "perfect strategy" and a "perfectly executed strategy") the reason why it should be combined is the results of how fast a business needs to run - there's almost zero time to seek a perfect strategy. Hence, for me, a perfect strategy is one which is "executed". Period. That which is not are only worth as much as the paper and binders that it's in. Regardless, I am not alluding to a ad-hoc/ shorterministic thought processes but "strategy on steroids".

    Alas, the answer to question 3 is the same as 2, IMHO.

     
     
     
    • Ajay Kumar Gupta
    • Management Professional, Master in Management, AIM, Manila

    The performance of the organization depends upon many factors but the greatest among them is the execution of strategy in time. And strategy depends upon culture of the organization.

    Good culture is catalyst for good strategy. Good culture means people are responsible, motivated and committed to their duty and there is a transparency in the organization. Good culture is created out of the vision and efforts of a leader and followers embrace the visions in the organization. So, good culture is created by a good and effective leader. Therefore, culture acts as a platform to bounce ideas, take risk, take decisions, be creative and innovative etc. Strategy without culture is useless. Even the best strategy without good culture is almost impossible to implement. So in this way, culture has more weight-age than strategy.

    Now, take strategy and execution. There is a huge gap between strategy and execution. The gap is cognitive inertia, inaction, and resistance to come out of comfort zone. The more the gap, more it will be difficult to execute the strategy and vice versa. Here comes the role of true leadership who can overcome these perceived obstacles through his courage, action and will power. So, leadership has more weight in executing the strategy. And execution has more weight than strategy in this way.

    I strongly believe that execution has the maximum weight i.e. 60-65%, culture has 20-25% and strategy has 15-20%. The reason why I put strategy in the lowest position is that it can be copied easily with slight modification and alteration etc, but leadership can't be copied.

    Even if you copy the leadership style, it is only style; to execute, you need courage that can't be copied. Power of courage comes from within and can't be copied. So, leadership execution has the maximum weight to make culture and strategy into high performance.

     
     
     
    • Mouaz AlZayyat
    • PMO manager, Al-Rostamani Group

    Many of today's managers underestimate the essence and impact of their organizational cultures. The elements that control workplaces, values, ethics, and the untold rules and stories are often ignored, and business strategies, alone, are assumed to do the job.

    Drucker's statement "Culture eats strategy for breakfast" is wholeheartedly presenting the pain that people face in their workplaces. Growth plans and articulated business tactics cannot be sustainable without a framework of cultural values and rules. Fix the culture first, then define a strategy and an execution plan. If you operate within a culture of deception, ignorance and lack of accountability, no matter how robust or concrete the business plan you develop, it will fail its first encounter internally before externally with the market.

     
     
     
    • Harry J Tucci Jr.
    • Managing Partner, Katahdin Resources

    I think that strategy is certainly important in terms of kind of like a road map. If I am traveling from say Texas to Chicago it would help if I had an idea on how to get between the two points in terms of a broad framework, but the plan still has to be executed. The most brilliant of strategies on paper often fail when put into action because of major unaccounted for variables. The largest of these variables would be your people and culture.

    Corporate culture can not be overestimated in terms of its value to the success or failure of any strategic plan. Put into a numbers perspective I would say that 10% of success is attributed to the strategic planning process, 30% to the actual strategic plan execution and 60% to the people driving the execution, the corporate culture.

    The key to a good manager is to match people and their talents with the right tasks and to ensure those tasks blend well with corporate culture. Without this you have little chance of success.

     
     
     
    • Drew Williamson
    • Advertising Consultant, MBA Arizona State University

    My opinion is that it is a virtuous circle that can break at any of the three points. It starts with a happy, innovative culture that generates a strategy for success. In the execution phase, the strategy is implemented by an organization with a commitment for success. And back to strategy based on feedback from an organization with an open culture. I think culture is the most important variable. I would give it 40% and 30% to strategy and 30% to execution. Culture is the only sustainable advantage.

     
     
     
    • Edward Hare
    • Retired Director...Strategy and Planning, Fortune 250 Manufacturer

    I'm reminded of a quotation that hung on my boss's conference room wall. I believe it came from a former CEO of HarleyDavidson..."All the money's in the execution". Which suggests an awful lot about how an organization is constructed, staffed, it's culture, and how people feel about working in it.

    Regarding "strategy"...I remain of the opinion that is a word that means different things to different people. I tend to favor the word idea. And am reminded of an adage that asked...."What's the business's idea?" And said that one's idea very often dictates strategy.

    Example...FedEx's "idea" was to deliver a package anywhere overnight when that idea seemed preposterous. And besides, who would pay for such a thing? But that simple sounding idea dictated a strategy that revolves around airplanes and tight scheduling.

    Perhaps we agonize too much about "strategy" and culture, and their result, "the numbers". A really good idea...well executed...can result in good performance. Is it really much more complex than that? Canvassing executives for their take on what's important might provide for interesting, but anecdotal, conversation. But add a litmus test too......ask them what they'd regard as the best business idea they've had in their careers. And why. That might tell you something too.

     
     
     
    • Ann Mamallo
    • Director, BlessingWhite

    I've been looking at this from a different lens. I started with engagement, which led to leadership and now I'm planted in culture.

    The tie is this....leaders really hold or drive the strategy and culture of the company. How those leaders get to their positions and stay there depends, primarily, on the culture. If the company is a meritocracy, you tend to find leaders who come up with a strategy that makes sense and fits and the culture promotes the execution. If the culture values other facets (not necessarily stated) like longevity or risk management, then you will gt a potentially insulated strategy and a culture that drags on anything but the status quo.

    To literally answer your question: 1. 40 strategy/60 execution 2. Varies but 70% of strategy dependant on culture 3. Same.

    Ann Mamallo BlessingWhite

     
     
     
    • Sanjeev
    • Head of Business Operations, CT&O, Thomson Reuters

    Strategy, Execution and Culture are inseparable. It is like Speed, traction and direction that are required while driving a car. Strategy provides us the direction, and the execution will define the speed at which we capture the market. I will compare culture to the traction, we do need to change gears at times and propell the organisation forward, especialy during tough times. Who else but inspired employees will do this since work is--at its core--a fundamental human endeavor. In my view, it is unreasonable to associate each to a certain % as i believe the 3 needs to exist in the eco system for an organisation to succeed.

     
     
     
    • Jobe Mabaso
    • C.E.O, Jozan International; South Africa

    Culture 50%; Strategy 35% & Execution 15%.A sound organizational culture is a basis for solid planning and flawless execution. Culture is the people; Strategy is ideas and execution is the technology . Organizations that always survive the worst market storms is because they have a sound culture. This culture will always be harnessed by a detailed planning process and knowledge management system. A sound plan will always lead to flawless execution.

     
     
     
    • Clinton Coker
    • Director Global Excellence, SunGard Global Services

    Question #1 49% quality of organization's strategy 51% quality of strategy execution There is somewhat of a symbiotic relatioship here; though, I believe execution wins out.

    Without goood direction, even the best executed strategy may miss the mark. The design and structure of strategy, operations, support systems, and internal quality systems must be a point of emphasis - almost ot the extent in which these structures are executed. However, the actual execution is where the rubber meets the road. Even with good strategy, an organization will be ineffective - unable to get out of the starting blocks - without good people, work methods, and decisions processes.

    Question #2 100%. The content of an organization's strategy is a deriviative of its values, beliefs, behaviors, etc. The strategy is developed by the people who represent the culture. Organizations then need people who are aligned with the organization's culture to deliver and execute on the strategy. Even if the execution is seamless, if the people's values are not aligned with the organization's values, then the results delivered will miss the mark. This is the case, both in terms of creating satisfied customers and creating value for stakeholders.

    Question #3 100%. If the execution is 100%, then I would think that the culture of the organization is such that it emphasizes a high degree of quality - a General Electric for example. I find it hard to consider an organization that is able to sustain itself through optimal execution without such a cultural infrstructure. To achieve a high level of execution (in strategy), a large propotion of its effectiveness must result from the values, beliefs, behaviors, etc. that are put in place to emphasize quality.

    Finally, consider the importance of people/culture, strategy, and execution collectively. Without a doubt, my priorities are (1) people/culture, (2) execution, and (3) strategy. Given this prioritization, I also understand that if the right people are not effectively executing the right strategy, then customers are not satisfied, employees are not loyal, and stakeholders receive less than an optimal return.

     
     
     
    • James Biltekoff
    • consultant

    I think Yogi Berra had it right. Success is 1/2 strategy, 1/2 execution, and 1/2 culture.

     
     
     
    • Sue Dahling Sullivan
    • Chief Strategic Officer, Citi Performing Arts Center

    Is one really more or less important than another? I think the triad of strategy, execution, and culture are inextricably linked through cause and effect relationships. In the nonprofit sector, I am convinced that the process of developing strategy is as important as the outcome; critical to success is a strong culture (existing OR redefined) that highly values the mission/vision that the strategy fulfills; and execution is only as good as the defined strategic objectives and the culture that drives it. It is a delicate balance, but doesn't organizational success demand that each component be equally strong?

     
     
     
    • Phil Clark
    • Clark & Associates

    Just thinking about D-Day in the context of your question. Strategy was okay, but not perfect. A great deal of things occured on that day that was not planned for. Even Ike had drafted a message to announce the failure if it occured. The culture of the Allied soldiers on that day of surviving and fighting was the guts that drove the execution. Even as many failures and unplanned events unfolded the culture and training sustained the men to the ultimate execution of victory on that day. Strategy, culture and execution are vital for success, but it is the human heart and willingness to sacrifice that forces execution to success.

     
     
     
    • Anonymous

    I see were you are "gettin at" Respondent #3.... I can see how A.I., Artificial Intelligence for the layman, will the next wave of the future. There will be a massive "re-shuffling" of weight distributions for the Holy Trinity of success: strategy, execution, and culture. Although I may add that there is indeed a "luck-factor" that should also be considered.

     
     
     
    • Gerald Nanninga
    • VP, Retail Ventures, Inc.

    I'm sorry, Jim, but I think the wording of these questions is very dangerous and can lead to faulty analysis.

    Take question #1 for example. Let's say that I have a relatively poor strategy. If that were true, then the only way I could create profitability would be by out hustling the competition. In such a scenario, nearly 100% of my profits would, by necessity, have to come from execution. If you got enough people answering that way, one might conclude from this research that strategy is unimportant, since nearly 100% of the profits come from execution.

    The fallacy here is that income is not a fixed amount. It can vary. Perhaps my profits today are $100 and I get nearly $100 of that profit from execution, because my strategy is lousy. However, what if I had a great strategy? Then, perhaps my profits would be $300 even with mediocre execution and $500 with great execution.

    So in reality, even if I say that today nearly 100% of my profits are due to execution, that does not mean that strategy is not as important, if not more important than execution. I might be a lot more profitable with even lower levels of execution if I just had a better strategy. In other words, it may be as relevant to ask how much is the level of my execution diminishing my level of profits as it is to ask how much is it contributing to my level of profits (and the same could be said for strategy).

    If our goal is to provide insight into improving profitability, then question #1 is relatively worthless. I might consider replacing it with a 3x3 grid. One axis would be quality of strategy (poor, average, great), the other axis would be quality of execution (poor, average, great). In the middle square put an index of 100. Then ask people to fill in the squares with how much they think that index would change in the 8 other boxes (for example a score of 200 would imply that profits would be double from what can be obtained in the middle square, and 50 would say that profits would be cut in half). Then, I would ask them to indicate which square they thought their company was in today.

    Although still just opinion research (which has serious limitations) at least now I would have something more akin to a dynamic, predictive model. Now you would have a much better feel for how executives see execution and strategy impacting profitability.

    Better yet, you could do a correlation over the entire sample size between which box executives put themselves in and their true profitability (probably normalized in some way over the sample based on company size and industry). Then you could statistically see how each of the nine squares impact the current profitability of companies. To make this part more interesting, you might want them to grade the quality of their strategy and execution on a 5 or 10 point scale rather than a three point scale.

    As for question #2, a good strategy either takes advantage of (exploits) the culture or provides a plan to pro-actively change the culture as part of the strategy. I'm not sure how you separate them. Question 2 implies you can separate them. In addition, whatever % I do not give to culture means that the strategy effectiveness is coming from someplace else. What is the someplace else? The strategy? The execution? The impact of the global economy or other external factors? Luck?

    Question #3 has similar issues as #2.

    And, as I mentioned earlier, this is all opinion research. It is not quantifiable. At best, it can tell you what the prevailing bias or "fashion" is in business lore.

    Finally, I am reminded of an old line my father used to say. To paraphrase, "Most successful businesses succeed not because of the quality of their leadership or the level of their execution, but because they happened to be in a spot so compelling to customers that weak leadership and weak execution could not overcome the compellingness of the spot they were in."

     
     
     
    • Tom Dolembo
    • founder, NewNorth Institure

    Performance is based on vision, energy and will supported by resources. Strategy directs resources. Execution is a continuous process of will. Recently, probably due to the economic shock we have all experienced, companies seem to be rudderless, becalmed, or driving activities by numbers alone. Still, many are rethinking every aspect of their business. It is frustrating and difficult for them, but many will succeed by force of thought and introspection, not strategy in the HBS context.

    I met an ancient Odawa shaman, Josephine Mandamin, last month who was walking around the Great Lakes carrying a bucket of water. She blessed the water each morning, praying for a healing. Odd as it sounds, minnows gathered when she prayed in Ojibway. I asked why she carried the water bucket, heavy as it is. She said, "each of us, all of us are water. The water is carrying me. It began me and carries me downstream, it knows the way, I follow it." Odawa believe that we cannot act, have strategy in effect, unless we see seven generations back and seven forward. It is called The Great Law. Dismiss this act of vision at your peril, she intimated. And this is a spiritual vision, not something generated from a weekend at Lake George.

    I'm struggling here in Michigan, as many are, seeing one hour ahead is often a challenge. But the question you are asking does bear on the process. You suggest that any activity or strategy can exist, as if in its own context. But many companies have no context at all, no bearings. If the water carries us, and the economy we have created is damaged, by us we should presume, there is no strategic answer. Porter et al notwithstanding, we have entered a period where we are passengers adrift on a very dangerous sea. The idea that we shape our future now, that we can create context for decisions without seriously examining the very basics of our actions, is false.

    Frankly HBS and we its progeny have absolutely no clue. Until we admit it, the entire mythology of strategic action is self delusion. Josephine had no money, and had been walking for three years. But she has purpose. Resources meet her every day. What is our purpose? Quarterly metrics? Percentages?

     
     
     
    • Sherpa

    Any concept, credo, or action can be considered successful with the correct amount of communication, vectored properly. Without the proper amount of communication, strategy, execution, and culture are merely words.

     
     
     
    • Mercedes Fernandez
    • Consultant, Lexay CA

    Im really convinced that all three are very important: strategy, culture and execution. However, the third one is the most because that's the one that makes things happen.

     
     
     
    • Basel Kakah
    • Deputy General Manager, Al Mawarid General Contracting

    From my experience as a manager and a doctorate student of business administration, I would say that those questions could be on different levels of complexity according to the nature and size of the organisation as well as the nature of the industry and business environment it's operating within.

    To be more specific I will take my company as an example. I am working in a real estate investment company that could be regarded small to mid size. The business environment consists of the real estate market and industry as well as the country's effecting factors like economics,culture, norms, government regulations and political stability. Those and other factors don't only shape the customer preferences in the real estate market but also imply the outlines of the corporate strategy. The strategy enables the company to achieve its ultimate goals and deal with its challenges.

    To be able to do so, strategy should take in consideration all the soft and hard factors shaping the business. The strategy should accommodate for the interests of all stake holders including shareholders, customers, suppliers and even employees. All that already said, taking my company as an example, more than 60% of the performance could be traced back to strategy, while about 40% to execution. Corporate culture on the other hand has a significant effect on both strategy and execution. However, the major effect of corporate culture would be on execution. That's mainly due to the nature of factors affecting strategy and the factors affecting execution.

    While strategy is shaped by internal factors(like vision, mission, goals and partially culture) as well as external factors ( markets, competition, environment..etc), the external factors have more direct and larger impact. Therefore, in my case too, the culture may contribute about 20-30% to the strategy effectiveness. On the other hand, because the internal factors are the major drivers and contributors to the efficiency of execution, keeping in mind that execution is mainly carried out by individuals who are highly affected by culture, I would give an approximate effect of 60% to corporate culture over execution.

     
     
     
    • Todd J. Wente
    • Director of Faculty Development, College America Services Inc.

    What wonderful questions, and what interesting perspectives from your respondents.

    My experience differs from that of Mr. Legge; I have found that a mediocre strategy executed with enthusiasm and precision can often succeed where a stronger strategy executed with less enthusiasm and precision will wither and fall by the wayside. This certainly doesn't excuse leaders from working to develop superior strategy. In fact, I think it suggests exactly the opposite.

    During the past several years, our organization has been working with the Afterburner group, a team of former fighter pilots who have brought their process to the business world. Theirs is a world where strategy leads to intelligently selected tactical objectives which, when executed against, can result in continuous success. Their emphasis, however, is that the culture is organized to hold everyone accountable for their part in the process.

    Businesses seem to be afraid to perform the inward analysis necessary to make truly revolutionary changes possible. The Afterburner team contends that this inward analysis (critical for a successful debrief) is what makes improvement possible. In the world of psychology (my discipline) this same type of honesty is what separates truly effective and mature individuals (those who are self-actualized) from all the rest. Whether we are speaking of individuals or organizations, it is the culture that allows this critical piece to occur completely.

    As many of your respondents have mentioned, culture seems to beat out strategy in terms of success if they are out of alignment and incongruent, but wise leaders will understand that working to develop the culture can free up resources in the organization at the point of both strategy and execution. The leader then takes more of a "vision casting" role, allowing individuals and teams within the organization to bring their expertise, creativity and passion to the table in the process of answering the call to make that vision reality.

    Ultimately, when discussing the questions of strategy, culture and execution, the overlap becomes most important. If each of these aspects of the business process are represented on a Venn diagram, with each one being adjusted in size, based on various factors, and location, representing the level of congruence, a more clear picture of the organizations ability can be created.

    With that as background, I would offer my short answers as follows

    Q 1 - 25% strategy - 75% execution Q 2 - 90% - If the strategy isn't aligned to capitalize on the existing culture, the strategy will never be executed Q 3 - 90% - See above.

    It may be worth mentioning in conclusion that if a strategy is seen by the staff as conflicting with the culture, reactions ranging from passive/aggressive responses to mass exodus are possible. And while it is sometimes necessary to make changes in culture, sometimes the best people to initiate those changes are someplace other than the board room. Again, the team from Afterburner helped us immensely with this.

    I love your forums and your questions. Thank you for inviting the participation.

     
     
     
    • Pete DeLisi
    • President, Organizational Synergies

    Question #1: In my opinion, as high as 90% of performance is attributable to the quality of the strategy. Sure you can be lucky and be in the right place at the right time, but it's hard to perform if you don't have the right solutions, addressing a real need, provided to the right customers when they are needed, and in a way that differentiates you from competition.

    Question #2: As a strategy consultant that strongly values the role of culture, I teach that highly person-centered cultures are more innovative, achieve greater buy-in and are fun places to work. But I also know that you can have a highly effective strategy in a comand and control type culture. It's possible to have a brilliant visionary autocrat at the top of such an organization. But this also leads us to question #3.

    Question #3: Here's where culture truly makes a difference. The statistics on successful strategy execution are appalling. Maybe in the old days the autocrat could mandate that you execute his strategy, but the times have changed. Now we need a workforce that understands the strategy, understands their role in it and is empowered to make a difference in it. The empowered culture, that tends to be more innovative, can now apply that innovation in helping the compnay successfully execute the strategy. I would argue that strategy execution is 90% dependent on culture.

     
     
     
    • Mike Leahy
    • Professor of Health Sciences, Linfield College

    Jim, I agree that your 3 variables of stategy, execution, and culture are absolutely key. I also think that a number of the comments on the people dimension, including people competency and culture, are useful. I am currently doing some work in China in a previously earthquake ravaged area of Sichuan province and continuously impressed by the resiliency of the people dimension. Best regards, Mike

     
     
     
    • Jane Clarke
    • Project management Consultant, City

    I keep going back to the old story about putting the big rocks in first. I'm sure Covey speaks of it in his books. And for me the biggest rock or foundation is culture. Be it a family, organisation, church or school, strategy and execution will be short-lived and in many cases actively undermined, if you haven't got the strong foundation of good culture; the key attributes of which are openness and trust.

    As the story goes, you can always fit the pebbles, gravel, sand and water around the rocks (strategy and execution) but if you haven't got the rocks in first they won't fit in after you've added all the other things. It takes a major effort to empty the container and start again which is why so much energy is directed towards strategy and execution; to fulfill the short-term success criteria for individual leaders/CEO's not to create sustainable success for the organisation as a whole. When a leader is prepared to put personal ego second to the good of an organisation then culture becomes the primary vehicle from which strategy and execution easily flow.

    In the reverse it's pushing the proverbial up hill and is why I believe we see a trend towards 3 year CEO's instead of 10 or 20 year CEO's; they burn out quickly when they're force feeding organisations strategy that is in conflict with culture no matter how good that strategy is.

     
     
     
    • Alex Fok
    • Director, specificity Pty Ltd

    It is great to see this subject is taken up (again) During the late 90's when the Balanced Scorecard was actively promoted we commenced research in Australia focussed on medium sized organisations that found the implementation process of the Balanced Score Card too difficult. We ended up developing a questionnaire ( it may be executed on line) using the same formula. We DID find some initial hesitation using this "measuring tool" however, we found the strength of the tool lies in the re-use of the tool after some form of intervention has taken place in the organisation. Our research also showed that in 90% plus of instances the parties participating in the process rated the "people component" of the organisation least developed. www.ascenture.com.au is the website (it is active but has not been serviced for some time) under the heading TOOLS you locate the free analysis tool asking similar questions of Culture, Strategy and Implementation with an overlay.

    Cheers, Alex Fok, Sydney, Australia

     
     
     
    • Eddie Jiang
    • HR Director - China Rx, GlaxoSmithKline

    I've recently heard a saying which I think is making a lot sense: "When individual meets system, system always wins; when strategy meets culture, culture always wins."

    So the questions could not be considered seperatedly and the 3 components are not an addition to become organizational success, but rather multiplication. i.e.:

    Org. succession = Culture * Strategy * Execution

    Defects in any of the components can lead the result of the equation to 0% even if the other parts are rated at 100%.

     
     
     
    • Gerard Danford
    • Faculty, Haaga-Helia University

    I have been exploring somewhat related dimensions. First I keep the strategy definition quite understandable: Where are we going, why are we going there, how are we getting there and what is different about how we are doing it. Mission, Vision etc are intertwined with this definition.

    Secondly my paradigm considers: Trust, Cognition at all levels of the organization (knowledge in an understandable form), and Communication. All of these and other elements contribute to successful implementation.

    Strategic success can be only be achieved if we engage the majority at the bottom of the organizational pyramid.

     
     
     
    • Nicolaas
    • Chief Commercial Officer, DHE

    Since culture can be changed and aligned to strategic aggressiveness and therefore execution, thus all are equally important.

    Another important aspect is the environment turbulence level whether you are in a stable or in an unpredictable market, and all those 3 above mentioned aspects should be aligned.

     
     
     
    • DAVID SEMPLE
    • CEO, Health Care Research & Education

    My comments are based on experience as CEO of a religious hospital, obviously a not-for-profit corporation. My comments may surprise persons unfamiliar with not-for-profit health care.

    I attribute 100% of operating income to the strategic plan and its execution. It is an easy call. In the 90 years prior to initiation of our strategic plan, the organization rarely had positive operating income. At the end of 6 years we had $20 million in cash and investments compared to $600,000 at the outset.

    Q1: However, your question is what % of success is The Plan versus the Execution. I give 20% to the Plan and 80% of success to Execution. We could have "stumbled" to 20% income increase just from the plan. Beyond that, not so much without execution.

    Q2: 80% of Execution depends on Culture, but Culture may have to change.

    One could assume from your question that Culture is "fixed" and therefore Strategy must be "fitted" to the culture. I believe the Culture may need to be changed to fit the strategy, if the success, even continued existence, of the organization depends on implementation of a new Strategy. I further believe a visionary leader/manager often must bring about a change in culture. An example...

    When first making CEO "rounds" of patient care units I often asked: "How are things going today?" Typical response was: "Terrible, we are so busy."

    Over time I explained to staff that as a high fixed cost operation, incremental patient volume was key to profitability, their job security and salary increases.

    After we had implemented many successful strategies to increase volume (topic for another day), the same question resulted in the following response: "Great, we are really busy." Everyone in organization was "on board."

    Q3: Sorry, I don't see a lot of difference between Q2 and Q3.

    Thanks for opportunity to think about your questions and how they affect my thinking.

     
     
     
    • Christina Legaki
    • Managing Director, Pioneer Hi-Bred Hellas SA

    There is a saying that the fish smells from the head, in our case, leaders. Consistency, commitment and hard work are the main components of success. It all starts and ends with people and their freedom to be innovative, different and ready to make mistakes (and been forgiven for this). Execution, strategy and culture issues, at the end, due to overanalysis, might be steering leaders and teams away from their focus. Simple concepts/things are the hard ones to understand, and execute. So, my answer to all questions is 100% culture.

     
     
     
    • Y.G. Chouksey
    • Professor, International School of Business & Media

    Relationship between the strategy and its execution reminds one of the parable of the two lame and blind men. The blind could not see the path and the lame could not walk it, but when the lame person was hoist on the shoulders of blind person with the lame showing the way to the blind, they reached their destination quickly.

    Similarly, Strategy without execution is a lame duck and execution without a strategy leads to a blind alley. But when they combine, the effect is reinforcing and synergic.

    When culture is brought in for consideration along with strategy and execution, the three form the interacting and interdependent arms of a triangle in a state of flux. The relative importance of strategy and execution depends on which of the two is more complex. However, once the equilibrium between the two is achieved, path to desired outcome becomes open if the culture aligns with the strategy.

    In fact culture constitutes the base of the triangle. It is critical to the success of strategy and its implementation. One has to merely recall the cases of Mergers and Acquisitions. Most of them fail not because of the inadequacy of resources or meticulous planning but because of the inability of the two organizations to make their cultures compatible with each other.

     
     
     
    • Pete DeLisi
    • President, Organizational Synergies

    In my earlier post, I forgot what for me may be the most important point of our discussion -- namely, are we asking the right questions? Organizational performance isn't just about the quality of the strategy and the role of culture in its effectiveness and execution. These are critical and necessary, but not sufficient.

    A more systemic view is needed that recognizes that there are other dependent variables for successful strategy execution. These are the business processes, the structure, the human resources, the information/knowledge resources, and the management systems, i.e., what we measure and control. These, including culture and leadership, constitute an operating model that must be aligned with the strategy if the strategy is to be successful. Using the Treacy/Wiersema value discipline construct as an example, the operating model is vastly different for a product leader than it is for an operationally excellent company.

     
     
     
    • Yan Song
    • Program Manager, Abbott Laboratories

    The simple framework of strategy, execution and culture used to work pretty well in capturing and managing the essence of business in more "peaceful" times. It is still useful in many cases. But as the pace of social, political and global change continue to accelerate as it has in recent decades, the distinctions and separations between these modes or facets of business life cycle have shrank dramatically. In many cases and increasingly, the key competitive advantage is no longer any one of these components but a new way of thinking, changing and aligning them dynamically.

    In other words, we ought to be thinking or strategizing about changing our culture even while we are executing and adapting our last strategy. To ask which of these components is more important is equivalent to asking which part of our body - head, torso or heart - is more dispensable. I guess the verdicts depend on how it is being measured and who is counting! But the essence clearly lies outside the framework itself.

    In the type of work that I do, it is still fundamental that we articulate a clear strategy, build an adaptive execution team and nurture an innovative culture. It is even more critical that we do so dynamically and pragmatically so that we don't paralyze ourselves by waiting for others to change nor blindly follow yesterday's recipes for success.

     
     
     
    • Rob Jones
    • IngoodCompany

    The key word in your questions, expressed or implied, is "effectiveness." I've learned that a wide variety of strategies and executions over time can coexist with an organization's ingrained culture. Strategies and executions, even highly effective ones, come and go. You've all built and executed enough of them, and moved on to the next ones. Culture is a far different kind of animal than a strategy. The Nadler-Tushman model identified "Congruence" as a concept of fit between pairs of inputs and between the components of an organizational transformation process.

    "Fit" is a measure of the appropriateness with respect to desired organizational outputs. High congruence, fit is good, strategy and execution is bound to work well through completion. BUT...while the "fit" of a given culture can catalyze the success of given strategies and bolster executions, an ingrained culture that may not be a g ood fit (low congruence) can also survive well beyond well executed and temporally fleeting strategies -- even, ironically, ones that focus on culture change. Forceful CEOs and senior leaders can drive strategies and executions where the culture may be a poor fit.

    But those cultures may simply quiesce during the push, only to reach up years or even decades later and pull the organization back down to its roots, even after years (or decades) of continuous incremental change. It is what is known in the literature as "deep structure," the genetic beginnings of an organization from which the descended organizations can likely never escape entirely. Much like discovering that Mommy had a nose job and daddy had braces, deep structure can and often does visit upon second and third generation organizations the cultural roots traits of its parent organization.

    So, considering a culture for a given strategy and execution is crucial. But it is crucial to know that after the strategy has played itself out, no matter how well executed, deep structure may be lurking below the surface, waiting to pull the organizational back to its early forms.

     
     
     
    • Dr. Ramesh Shah
    • President, v2synergygroup

    The performance of a organization depends mainly on:

    1. The work culture

    2. Implementation and monitoring of the objectives

    3. Desire for innovation

    4. Training to enhance performance.

     
     
     
    • Anonymous

    Strategy, culture and execution can not be separated and considered one without others but order in which I have quoted them is not an coincidence. To start let`s make small assumptions:

    Strategy - concept where to go, considered as one or more major but as well the individual at all levels of activity.

    Culture - people with whom we want to go.

    Execution - 'just' work.

    Those three aspects are like very precise mechanism and can be compared to. On the top of it we have strategy it is the biggest gearwheel it gives direction and motion for organization. Culture is like oil in pinions. Without oil it will not work long time and mechanism will break inevitably. If we put to big pressure of one of those aspects we will have machine not working. If the focus is well located we will have outcome - which is execution, great execution. Thats why execution is the most important part in process. By execution company creates its end product which should be sold. But we can not forget how the execution were performed.

    It is extremely difficult to put allocation of focus for this aspects as it depends from many aspects (product, market, culture, size of company, etc...).

    So when we are listing aspects in order first is Strategy(route direction) then Culture (hikers) and at the end Execution (mountain). We can not start trip from the mountain and end by setting up the route.

    Constantly on the end is a mountain and it is my 100%.

     
     
     
    • Ahmed Y. Issa
    • GM-Key accounts, Aujan Industries co

    Strategy, execution and culture are interrelated; to bring success or failure to an organization depends on external and internal factors. External factors such as the competition, the timing of the execution and the economic environment. Internal ones are many but the culture is the centerpoint and key for the strategy and the execution to succeed. For example, do the frontline managers trust and believe the senior management direction, is the communication two-way communication, is there teamwork spirit among the front line managers, is the organization environment safe to report the mistakes and failures as they occur or are all the negatives pushed under the carpet? At the same time, to change a culture needs a lot of heart, mind, and time.

     
     
     
    • Yadeed Basil Lobo
    • Public Service- New Zealand

    The degree to which strategy, execution, and culture contribute to the success of their organizations.

    How would you respond to the questions? 1. Operating income = 100%, Strategy= 25% ,Execution of its strategy =75%

    The context: Public service (not for profit) in New Zealand with heavy emphasis on strategic planning as the paradigm. While we charge our customers for the services we provide, we have a captured audience. Our strategy is cost leadership (value discipline of operational excellence) which is heavily dependent on execution.

    The efficacy of execution this year (project delivery and maintenance costs) enables us to minimise cost overruns (capex and opex). This helps us fund our costs for the given year and keep price movements minimal. Volumetric pricing (to encourage long term conservation), however, gives us a high operating leverage profile which in any average year lets us completely fund our high fixed costs, but in a recessionary year (as in 2008-09) when commercial usage falls massively in a very short space of time, is let's just say not ideal to our leverage. Thus Strategy provides the impetus or relentless focus to the Execution but Execution trumps in our unique context.

    1. If your organization's strategy = 100%, roughly what proportion of its effectiveness is dependent upon and accounted for by the organization's culture (widely-shared values, beliefs, behaviors, rites and rituals, etc.)? See response to questions below.

    2. If the execution of your organization's strategy = 100%, roughly what proportion of its effectiveness is dependent upon and accounted for by the organization's culture?

    100% Culture is all that matters actually when it comes to execution. In public service (having worked in 5 different government departments- federal and local) the culture determines the execution. An example of effectiveness would be the IRS or IRD in New Zealand. They are very effective because their culture is predominantly compliance driven and they have over a period of time aligned their focus towards it. Similarly with an organisation which is public owned (not listed), which delivers lifeline utility services, if it is driven by an engineering culture with a focus on getting things done then execution is a big part of the culture.

    Can you respond, or are the complexities of each question--possibly requiring more complete or different definitions of strategy, execution, and culture--too great?

    To question 1 the response is easy as it provides a objective quantitative (financial) measure to which you assign the qualitative constants (or variables) which need to be measured.

    Question 2 asks to compare two very qualitative measures strategy (positioning) and culture (despite one of them having a percentage assigned to it) which engenders a degree of difficulty in visualisation of what is being compared with what. Is question 2 meant to be: Does organisational culture determine the development of strategy (the fixation with a particular strategy)? Can an effective strategy be developed this way? - My reply would be yes, organisational inertia does lead to the fixation with the development of similar strategy as the incumbents are geared to think that way.

    In public service what worked yesterday is what would work tomorrow. Innovation is usually a buzz word rather than an actual way to deliver services in a better way. Strategic renewal is more myopic. Moving from one equilibrium to another is evolutionary and more a function of government intervention. Disruptive innovation is not part of the agenda.

    Question 3 is answerable as it relates to execution where success means execution to plan or close to plan (on time within budget and within scope). Execution can be visualised/is accessible via a proxy term.

    Are the three dimensions of the questions the right ones? Yes, they are as they cover the main aspects of the existence of an organisation whether for profit or not for profit.

    Do they cover all or nearly all aspects of competitive success?

    They cover nearly all aspects of competitive success but they do not include one element - is success for the long run - defined as the next 20 years responsible stewardship of the public's assets or is it for the short run - defined as the next reporting period? Also: whether firm governance is structured to keep that particular definition of success top of mind. Focus here would be the key.

    How would people in various regions of the world--or in for-profit vs. not-for-profit endeavors--approach this set of questions differently?

    The responses as can be seen above provide the context of a not for profit in a country with moderate lifeline resources on the other side of the world. It covers success in the long run as compared to a for profit company which would look at the short run (say the next 5 years or depending on how they are capitalised as a long run dividend providing entity or a short run capital gains providing entity to its shareholders).

    Why did you respond that way? I guess the context determines the response. And the context here is of a lifeline resource which everyone takes for granted but needs long run investment and stewardship.

     
     
     
    • Sadiq
    • Geological Engineer, Zenath Contracting

    Strategy, Execution and Culture are three pillars on which a successfull organization is built. All are inclusive and vital for the growth and maintaining the leadership position in their line of business.

     
     
     
    • Anonymous

    Wonderful Responses!

    Very thoughtful, insightful, and at times, very blunt.

    This is a TRUE democracy of communication and speech.

    Genius is in simplicity....period.

    If one could formulate a prescription for the Culture, Strategy, and Execution paradox, this is what it would seem to be...

    Culture = Meaningful Human Dimension Execution = Monkey Work Strategy = Monkey Work

    Let us strive to be very honest with ourselves...I am assured that the corresponding weights assigned to each of the component prescriptions above would NOT be rocket-science.

     
     
     
    • Thomas Ong
    • Sole Proprietor, Consultants

    For a viable enterprise to survive and thrive, get these right in the first place:

    1. Shared Value

    2. Strategy

    3. System

    4. Structure

    5. Staff

    6. Skill

    7. Style

    Note: This, however, is inapplicable to Malaysia where its business culture hinges most on Cronyism, Ethnic Protectionism, Nepotism, Dishonesty, and Product Piracy.

     
     
     
    • Thorsteinn Gardarsson
    • CEO, Action Day

    "A vision without a task is but a dream, a task without a vision is drudgery, a vision and a task is the hope of of the world" -From a church in Sussex, England, 1730

    The question that Mr. Jim Heskett asks is "How Do You Weigh Strategy, Execution, and Culture in an Organization's Success?

    My opinion, based on my experience as CEO: 1. Strategy: 25% 2. Execution 50% 3. Culture 25%

     
     
     
    • Fidel M. Arcenas
    • Consultant, TIEZA

    In Powershift, Alvin Toffler posits that to excel in any endeavor, be it in business, politics, or any other field, one needs strategy, resources and organization. He refers to these as the 3 M's: mind, money, and muscle.

    The right mix in the use of these components depends on prevailing conditions. But an organization's success will first depend on its strategies to attain its long term (or strategic) objectives. This where the mind (at the top level) comes of utmost importance. The level of certainty that such strategies will work will in the end determine the success or failure of the organization.

    This is not saying that financial and human resources are less essential. The tactical maneuvers at the department level and the operational activities of those in the front lines, although of equal importance, must be attuned to the organization's strategic objectives.

     
     
     
    • Gopal Sharma
    • Senior Manager, NB Bank Ltd

    Strategy, Culture and Execution are all interrelated to produce the maximum and desired result. Of course strategy and execution is of prime importance to produce the desired result however lack of desired culture may provide friction effect to the desired result therby reducing the quality and volume of output.

    The loss incurred due to impact of culture cannot be ascertained as it will have multiple effects in the immediate term, short term as well as long term perspectives. Having said that it does not mean that an organisation which lacks desired culture does not produce any result if strategy and execution are right. Undesired culture reduces the effectiveness of strategy and execution in a big way.

    Culture defines the future of any organisation and it is normally derived from the top leadership and the best approach would be a decisive and leadership by example approach. It takes time to improve the culture of any organisation however given a choice it would be easier to establish desired culture in a new organisation rather than an organisation which has developed undesired culture throughout the years.

     
     
     
    • Joe Schmid
    • Oak Leaf Consulting, LLC

    In the context presented, CULTURE is the independent variable - STRATEGY and EXECUTION are dependent variables. That said, for Q.1 my answer would be 50/50. I've never seen poor strategy overcome with great execution; nor have I seen great strategy offsetting lousy execution. Based on my experience they should be a single item - Strategy/Execution vs. two mutually exclusive items.

    Regarding Q.2 and Q.3 my answers are 100% for the simple reason that an organization's culture drives how an organization thinks; that in turn frames the problems it sees; which determines what it works on - and what an organization works on defines what it is. In what I've witnessed, in a competitive environment, and if you ask why enough times, culture is what separates the winners and the also ran.

    The three dimensions you selected are all internal. I'd consider combining Strategy and Execution (which are very different organizational challenges and combining has its risks, but . . .) and adding back a dimension that is externally focused and captures market dynamics.

    The questions are clear and answerable; and regardless of geographic location and corporate formation I've never seen the basic approach change - although I've seen a wide range of different "packaging" describing the same approach.

     
     
     
    • Lawrence Missipo
    • Partner Director, 3GEN Gestion Estrategica

    At a quick glance, the answers to these questions seem simple and straight forward. From the answers from the other respondents, Execution and Culture beat strategy in the sense that the general belief is that if you have good execution and a culture that happens to be aligned to the chosen strategy then success, as measured by organizational performance (operating income) will follow.

    The reason why the answers follow this pattern is that if you look at the logic, strategy comes first and execution and culture are generally SUPPOSED to follow. From my experience, most strategies fail because the execution and culture that were supposed to follow don't. Most of the companies that had failed strategies did because execution was non existent and culture was not changed to suite the new strategy.

    A shift in strategy most often demands a change in culture but since this is so hard for most companies, the easy way out is generally taken, i.e, try to implement the new strategy while maintaining the espoused culture. If we analyse most companies that changed strategy it was because the culture had become a problem. Changing culture and hence ensuring execution is a herculean task and so some companies align strategy TO culture.

    The problem with this is that strategy by definition has to be defined based on market variables and market opportunities identified - it is outward looking. When strategy is defined to align with the existing organizational culture, it may not necessarily embrace those market issues it is supposed to - we have here failure defined even before execution begins.

    For those that undertake the task of effectively changing the culture (... and believe me culture CAN be changed), there are many uphill tasks - breaking functional silos, dealing with letting those who won't change go, even dealing with powerful unions. Those who come out on top, definitely see the results they are seeking.

    The truth is, when the task of changing culture to align to a new strategy is tough, most companies just give up. Those that don't, ultimately reap the benefits. For those who want to know more about the new strategy, old culture, old organization dilema, I recommend the book - "Who Says Elephants Can't Dance".

     
     
     
    • Carl Abruquah
    • Ghana Commercial Bank Ltd.

    On the basis of experience, I would suggest, 20% of strategy, 40% of execution and 40% of culture. It is critical that an organization knows what it intends to achieve. In the same way as a building needs an architect's plan to start with, without strategy, an organization may proceed in disjointed, uncoordinated fashion without any direction or purpose.

    Execution brings home the bacon. An organization needs well qualified, experienced and trained soldiers to execute the battle strategy and win the battle. A culture is a soft issue that must never be ignored in the formulation and implementation of strategy. A culture that is resistant to change will relegated strategy into the dustbins of the organization. A culture of indifference to customer needs will spell the doom of every business. Culture is a crucial matter that must be considered both at the formulation and implementation phases of strategy.

     
     
     
    • Charles H. Green
    • CEO, Trusted Advisor Associates

    Personally, I'm inclined to go with those who put most of the emphasis on culture. But one has to be struck by the lack of unanimity on this issue. Given such basic terms and concepts, why should there be so little agreement?

    Looking at the answers above, the question has some things in common with the game of paper, rock, scissors. All have conditional definitions. If culture defines the ability to execute (as some have suggested), isn't that rather like paper covering rock, even though rock breaks scissors, which in turn cut paper?

    A closer-to-home example: imagine asking which is more important--trust, credibility, or integrity? It's a mish-mash. And the solution is not better definitions: there is no single definition of those terms--they are all situational, intentionally vague, and the meaning we get from them is quite conditional on the context. As Potter Stewart said about pornography, the fact that you know it when you see it doesn't mean you can define it.

    What you get in all these cases is a lot of multi-collinearity, or overlapping definitions, or situational meaning (pick your favorite system of nomenclature). What does one do in these situations?

    Perhaps rather than insisting the question must have an answer, and averaging all the votes to find one, the best approach may be to define some areas which all terms (strategy, execution, culture) seem to cover in common: and then identify some other areas which tend to be the unique province of one term or another.

    With that approach (which this dialog is accomplishing in some form), I think the survey is interesting and valuable. But if we limit the approach to finding the 'right' answer, we will have missed all the meaning by insisting on an inappropriate question.

     
     
     
    • Jacoline Loewen
    • Director, Loewen & Partners Private Equity

    Working in private equity where you do see five years of performance after the capital investment, I would say it is a sliding scale depending on the industry. Average score probably: 15% strategy 30% execution 55% culture.

    The culture of the Post Office, for example, is very strong and distinctive and their execution gets done, but could it it be done better with an Apple culture? No doubt. But the Post Office culture stays rooted until execution slips beneath survival. Then, Apple culture might be considered. Otherwise, why bother.

    The Apple culture is far, far harder to build and maintain though, the Post Office culture is the easiest culture to create and maintain.

    The culture fit to the execution is critical - post office, military and fast food outlet are quite similar in culture as consistent, repetitive delivery is required. That takes a culture of logistics, discipline, stay the course (don't dish out stamps or fast food that you thought would be good. Centralized control rules.) As long as the culture allows the execution to be at an acceptable level, the culture remains.

    As a private equity investor, the decision to commit capital is around the culture of the management. Is it a good culture? Is the execution acceptable? If the level of execution is below desired levels, then is the culture so entrenched, no change could happen - that would be a problem.

    If investing in the Post Office, their culture is so entrenched, they would not be able to change the execution so it would be a pass.

    This is why GM is worth a look again as the top level management teams were taken right out - all of them - plus the unionized factories axed. Now leadership at GM is rapidly evolving the culture and if you can't get it done this week, don't come to work on Monday.

    Their culture is the most important and largest part of change to make execution differ. The strategy of going to three models instead of many is minor compared to the staffs' understanding of what behaviours are now acceptable.

     
     
     
    • Rowland G. Freeman III
    • Counselor, SCORECounselors to America's Small Business

    Strategy and its execution is essential. Too many small and large businesses develop a strategy, only to find it is difficult to execute, and rather than go back and revise it as necessary, it goes into the waste basket, as soon so does the company.

    Culture plays a large part in successful long term businesses, but takes years to develop.

     
     
     
    • David Broderick
    • Director, Global Services Delivery, CAI

    Succesful execution of a company's strategy over the long haul is dependant on a strong business culture. All three are necessary, but not equal to be successful. We have metrics to measure our performance, which will also highlight that the strategy must have been a good one, but not why or how it was successful. Culture is the keystone, but more elusive to measure.

    Regardless of profit or non-profit, or whatever region in the world, the business culture will influence success or failure. Culture is what the people working in the business believe it is. While the culture may change from company to company and region to region, it's importance is still the same. A poor strategy can be saved by having a business culture that responds to the business environment during execution and modifes their approach, so they can be successful. There are many good articles and books written about these successes.

    Another way to view this is how many businesses (and managers) were extremely successful, then tried to execute the same strategy in a different country without taking into consideration the local culture. There are also many good articles and books written about these failures.

    So, yes, these three dimensions do cover what businesses need to be successful. My successful triangle of dimensions would be 20% Strategy, 30% Execution, and 50% Culture.

    Businesses and business schools do a great job teaching strategy and execution as a discipline. For long-term global success, however, we need to better understand and teach about people, cultures, and their effect on an organization's success. This discipline is just as important as undertstanding a P&L, since it will ultimately determine the bottom line.

     
     
     
    • Ashok R.S
    • Chief Executive, Haneda Infra

    I strongly believe the firm culture is the fundamental and the basic for any strategy to evolve. Strategise, based on the core culture and execute the strategy. All the three are interlinked and are important for any project to succeed.

     
     
     
    • Kapil Kumar Sopory
    • Company Secretary, Smec (India) Private Limited

    Commencing any activity without a well thought out plan for action will lead to grope in a blind alley to surely result in a fall and consequent hurt. Hence, it is most important to start with proper planning, i.e., strategising.

    Thereafter, it is important to imlement ,i.e., execute of the strategy. Now, by whom? Obviously by men and machines. These have also to be guided by some work culture which needs to be accepted and acted upon by all.

    Now, it is rather unscientific to throw estimates - in mathematical terms - as to what should be the percentage of each of the three factors. Estimates have been made by many readers which I went through rather with a shudder for they vary too much; these, I would venture to conjecture, are in direct proportion to the psyche of the person and/or his/her experiences in various situations.

    Jim's questions, though not complex or irrelevant, cannot result in data which could be totally relied upon as a base for arriving at plausible conclusions.

     
     
     
    • Naveen Kashyap
    • Head - India R&D Operations
    1. Strategy is that which connects the organization vision ('the desire to be') to its mission ('ability to be'). A well formulated strategy considers execution and associated risks, contingencies & mitigation measures. It also factors in inherent organizational cultures & values & beliefs that influence the outcome of execution. So strategy in our context may take up 40% of the weight. Strategy is after all a well crafted plan. Execution is all about realizing the plans using resources available. The resources particularly human, are influenced by the organization values, beleifs etc which we broadly term as culture. The ability to execute the strategy - i.e., an unstinting attitude to stay focused, relentlessly pursue the goal in a united fashion, being passionate & committed to the goals, managing the integrity (fair practices) and intensity required to realizing the goal are all in the organizations culture. A supportive org culture would make execution a lot simpler. So I associate close to 25-30% of the importance to the culture; with a perfect plan and supportive culture, the results still need to be produced. So execution weighs in to the extent of 30-35%.

    2. The choice of the organization's strategy is not just based on macro factors but also on internal micros which can be leveraged; For eg. we cannot have a state-of-the art product strategy just because such a market exists, if the organizations culture doesn't nurture innovation. A OEM product manufacturer may not do well in a retail service / direct channel business even with the same product because the prevailing culture is too focused on technical specialization without an empathy (a value/belief) for its users, unless it embarks on a culture change mission. You cannot expect a blue ocean strategy by an organization that believes in conservatism (risk averse); if a strategy is deemed good (retrospectively based on the outcome) its success/formulation can be correlated to the corporate culture to the extent of at least 25%-30%. The outcomes in turn reinforce or weaken the prevailing culture and its impact can be felt in the future choice of org strategy & its execution. The orgs choice to strategize or not is also dependent on the culture of the organization in many cases.

    3. Values & Beliefs which are widely shared (as corporate DNA) influence not only the strategy but also the choice of its execution. For eg. A widely shared belief system like - Quality first, Innovation, results through fair business practices shapes the organizations offerings which would be leading edge products/solutions with a high quality. Here the final product itself is the outcome of execution of the strategy - but the qualifiers for the product (quality/innovation) is a result of the corporate belief. Without the guiding principles/values, in spite of a very good execution system the offering may lack the charm that distinguishes it from other offerings. In addition, the basic ability to understand & respond to the organization's strategy can be directly related to the culture. You cannot expect a flexible offering from an org that in itself is very rigid and doesn't value agility.

    Many organizations including us thus orient the staff periodically on the value systems/culture of the organization through workshops & other communication sessions pretty effectively. Thus i would say that the culture influences the effectiveness of the execution at least to an extent of 30-40% if not more.

    In essence, I visualize the factors - The Organization Strategy, its execution strategy and the culture are three sides of the strategy triangle, with the ''culture' as its base. They are tightly coupled (change to one will affect the other & vice versa).

     
     
     
    • Huda Almidani
    • HR Manager, Issa Group

    All are very important, however good execution leads cultural change instead of the contrary.

    A good strategy with good execution is what defines great companies from others.

    I think people should change or be changed for a dynamic execution of a good strategy. Those who lead the way should accept the market dynamics and create the winning culture by day to day decisions, starting top down.

    For the first question: Performance is 60% for strategy, and 40% for execution.

    With outstanding execution of a good strategy, performance will be good, but outstanding strategy and good execution, the performance will be outstanding.

    For second and third: nothing can be done without maintaining enabling organizational culture.

     
     
     
    • John
    • Head of OD, GSMA

    Culture eats strategy for breakfast. If aligned it's about flex in strategy and focussed execution in parallel. If change in strategy, buy in from the top and behaviours from all around will break any strategy - unless it is one of wholesale reduction of costs for example, where money is controlled centrally - a change strategy will never even see ist way past the powerpoint unless you drive broad buy in, invest in capability (people, tools, incentives) and be patient enough to let the culture change - dilemma as culture change will take longer than average strategic lifespan. The fact that CEO tenure is now less than average strategic horizon really does not help!

     
     
     
    • Gopal Padinjaruveetil
    • Enterprise Architect, Capgemini

    I am going to answer this question.

    Are the three dimensions of the questions the right ones?

    When I first read these questions I initial thought iare this a trick questions ? then more I thought about them I realized these are "wicked questions" (something similar to "Wicked Problem" propounded by West Churchman ), and there are no obvious answers to these questions and the answers lies somewhere else.

    Let me explain the 3 concepts Strategy, Execution and Culture and provide the linkage to the real answer.

    Strategy: refers to a plan of action designed to achieve a particular goal.

    Execution refers to ability to get things done (or execute).

    Culture refers to behavior of the individual, enterprise and society. (" I would say there is no such thing as culture, there are only behaviors, behaviors create culture". - Herrero Learndro 2005 article - Forget Culture change behaviors).

    What drives these 3 things - the answer is Authentic Leadership.

    All these 3 things above are by products of good leadership. Just like gasoline, LPG and Bitumen are by products of Crude oil, Strategy, Execution and Culture are by products of good leadership.

    So just like you cannot have gasoline, LPG and Bitumen without drilling Crude Oil, you cannot have Strategy, Execution and Culture without leadership.

    Hence going back to the original question "Are the three dimensions of the questions the right ones?"

    My answer is NO, the real dimension of the 3 questions is leadership.

     
     
     
    • Jim Hart
    • President and CEO, Senn Delaney

    I appreciate the range of comments and discussion. Most interesting for me is the recurrent theme that leaders share that strategy, structure and culture are interdependent. I can't tell you how many CEOs we have worked with have lamented that they have a great strategy, a solid operating model and top leaders, but that execution is lagging. They turn to us to shift the culture.

    For 30 years, we have focused solely on working with CEOs and senior leaders in organizations around the globe to transform their cultures in order to enable strategic execution. It's clear to us, based on decades of field experience and results, that culture plays one of the biggest roles in the success or failure of all strategies and initiatives and in financial performance.

    A dysfunctional culture is why most major system implementations are behind schedule, over budget and fall short of expectations. It is why new organizational structures don't fully deliver on the promise. It's why new CEOs often fail, and why safety and quality issues persist. It's why companies that don't have service cultures struggle to support growth.

    Early on, we coined a phrase to describe this phenomenon. We called it the "Jaws of Culture." All organizations, no matter how successful, have historic habits. While well intentioned, some of those habits get in the way, especially when strategy or operational structure changes or when stretch goals are needed. We call these cultural barriers the "Jaws of Culture."

    Dysfunctional organizational habits act like jaws in the culture that can chew up your strategies and initiatives. Some common examples:

    1. Turf issues, trust issues or silos get in the way when changes require collaboration across the enterprise.
    2. Passive-aggressive resistance shows up when major changes need to be implemented quickly.
    3. People blame others or make excuses when results aren't where they should be.

    We also noted that cultural traits often got in the way when organizations wanted to implement a new strategy or change the structure, such as from a holding company to more of a shared business model. When the strategy of an organization changes, the culture is usually a step or two behind. This lag is like an anchor on a boat and slows progress.

    Our model of culture change involves shifting the mindset of the organization. This eliminates the lag and creates the right behaviors to best support business initiatives.

    It's great to see so many leaders weigh in on this important topic.

     
     
     
    • Venkat
    • Deputy General Manager, AGL

    First, Well begun is half done. Hence, a well thought of strategy plan with built-in feedback mechanism is essential for starters.

    Second, ideas are impotent without action. Hence, thorough follow-up in execution of strategy is much important.

    Many organizations across industries are successful & they do have different cultures, hence if the above two points are followed diligently, culture of success already becomes in-built.

    Thus, Organization Performance = 50:50 Strategy Planning:Execution.

     
     
     
    • Surendranath A.
    • General Manager-HR, BMM Ispat Ltds

    Strategy is nothing but a plan with approach and tactics. Without a strategy there cannot be an execution. Culture of an organization is nothing but an enabler for effective execution as well as making strategies by people. Therefore there must be synergy between strategy, execution and culture. Lack of proper strategy will not yield desired results, however best be the execution and good culture of work. In a nutshell, the maximum weight goes to strategy while the next in the line is execution.

    High performance of the organization depends on the culture of the organization where effective strategies are made and work executed as targeted. There are a number of examples for this conclusion - take the case of Dell in US, it is their strategy of direct marketing which worked.

    In India, the case of Nirma is an example of an effective strategy- low pricing of the detergent and its availability across the country to attract common man which made a big success denting into the market share of well established brand, Surf detergent.

    Behind all these principles, it is the people who make things happen and every organization must develop the competencies of people to make successful strategies and execute it effectively and provide a congenial work culture in the organization.

     
     
     
    • John Emmanuel
    • Chief Operating Officer, Reliant Research, Nigeria

    Brilaint strategy needs excellent execution to deliver success. Culture is within the peripherals and it could be managed with excellent execution. Execution is the leading variable in this trinity followed by strategy and then culture.

     
     
     
    • Humberto
    • Internal consultant

    Where capabilities fit? I'm learning that strategy execution requires capabilities, their connection with culture and the difficulty to adapt the latter to a changing strategy make addressing the questions the way is done above dubious, uncertain

     
     
     
    • Mayur Vegad
    • Student, IEM-CEPT, CEPT University, India

    Culture takes its form from the degree of agreement to the strategy. Strategy should constantly accept, analyze and resolve issues arising from the feedback of culture. Only then the execution will be successful as all the parameters leading to its success are well iterated and calibrated.

     
     
     
    • Sean Sungsoo Kim
    • Director

    This question is orginated from non-clearance between upper level and lower level questions. Organization performance is connected with Culture. however, "Strategy and execution" is connected with not only Organizational performance but also Organizational culture. Usually I think this kind of question will be different based on the level of company size and growth rate. but, even you can find some evidence of correlation, you can not prove it because we don't know the answers from whether strategist-prefer-organization or execution-prefer-organization. ..

     
     
     
    • Anonymous

    The attempt to quantify the relative importance of strategy, its execution, and the culture (which can be seen as part of the execution) is tantamount to asking an olympic athlete. to assign a percentage value to the heart, the muscles, and the lungs. Rather than providing a learned treatise similar to those supplied by several respondents, the athlete might (1) say "I cannot possibly answer because I need all three to succeed," and (2) question the wisdom of the one who poses the question.

     
     
     
    • Jon Katzenbach
    • Senior Partner, Booz & Company

    The most challenging part of the triumvirate (strategy, execution and culture) is culture for the three reasons: 1) It is usually very deeply imbedded in how people think and behave - both leaders and "doers". 2) It is at least as much determined by emotional factors as it is by rational ones. 3) It is a critical influence on the behaviors that often matter most - those at the front-line interface between company and customer.

    Culture may be the most challenging element to tackle directly but it must be made clear that execution of a clear strategy is just as important to ultimate success - and the three are intricately related. The key for most peak performing organizations is to carefully balance formal / rational approaches with human behavior related informal / emotional ones as both are critical for executing most strategic imperatives. The formal and the informal impact strategy execution and similarly influence culture (where the informal and emotional sides are usually the least addressed aspects of culture impact initiatives). Although strategy and execution are just as critical as culture, the latter is certainly the most difficult (if not the most neglected) element of the three to impact.

     
     
     
    • Anonymous

    It's a question of working hard or working smart. Without strategy, execution and culture can make the organisation work hard, but toward what goals? Clear strategy (and tactics) together with good execution and culture makes the organisation work smart.

     
     
     
    • Vikas Gupta
    • Manager, O&G

    The three pillars required by an Organsiation to traverse to the height of Mount Everst and remain there , mainitaning its competive advantage are

    Culture.

    Strategy.

    Execution of Strategy.

    I have written these in the order in which they affect the organisation . Mission and Vision are all affected by the Culture .Some researchers also promote the thought process that staretgy may change the organisation culture as part of Buisness Process Reengineering.

    Every organisation during Organisation Life Cylce ( OLC) goes through a period of Evolution and Revolution. Staregy in the simplest term can be interpreted as blueprint of the actions which firm decides to choose among other various alternatives to seek more than average returns to stakeholders and to gain Competitve advantage in comparison to competitors. During the evolution phase in an organsiation where the turbulency is not seen the strategies are made by the strategist considering the organisation culture, or in other words cultutre leads the mindset of strategist.

    For example if a company is in the field of electronic gadgets where it is well known fact that PLC is short the company culture is to have Incremental or Breakthrough Innovation. There in such organsiation we would see that the stratgeies would be more focussed on innovating the products or adding value to the customer through innovation.

    In other phase of the OLC (organisation life cycle) ie the revolution phase , the strategies are required to overhaul the entire constituinal setup of the organsiation whether it is organsiation structure or the mindest , the thinking pattern.

    In the past many organsiations are well known to undertake ACE program - Organsiational effectiveness and change which was run as part of grnad organisation strategy.

    Regarding Execution of strategy , even if the culture is perfect and in synchronisation with the market or the external environment , the best strategy to a company can prove to be failure if not executed properly. The execution of staregy means that till the last rung of the organsiation ladder the thought process made by few individuals need to be implemented in all employees of organsiation.

    Considering the various organsiations and their evolution and Revolution over couple of years it can be said that there is Dynamic strategic mix of the three pillars in any organsiation.

     
     
     
    • Mohammad Razipour
    • Project Director, Kayson

    We know that in order to successfully do any job, you need three basic elements: -Knowhow, -Skills, and, -Attitude, With varying degrees, most people can rather easily learn the first two. What will make the difference at the end of the day, and therefore determine the degree of success, would be the attitude with which we take on and approach the job. Culture is the land in which you sow the seeds of strategy; if it is rich and fertile, your endeavors in devising strategies, and your plans for executing those strategies will bear fruit, otherwise you are vainly cultivating arid lands, and will not reap any crops. By culture we mean the entire working atmosphere and sets of beliefs and values through which people are operating and executing their day to day jobs, the subtle working milieu that faithfully transfers the positive energy through the whole organization, the urge for accomplishment and sense of responsibility, the belief to make a difference, the way you see things and events, and the manner you respond to them. I therefore cannot see how we can segregate the three issues. Environment (culture) affects people, their mind set, and ultimately their performance. As may immediately be obvious, even thinking of the necessity for having a strategy, and formulating a good and proper one with the participation of the people involved, would need a certain culture.

     
     
     
    • Steve Wirpel
    • Managing Director, Straight Line Performance Solutions, LLC

    Wonderful discussion. Much to agree with and debate.

    I like the previously suggested formula:

    Org. Success = Culture x Strategy x Execution

    If all are functioning at a level higher than zero, some organizational success is possible. If one or more is zero, organizational success is only possible by dumb luck.

    Organizations succeed when all three, culture, strategy and execution, are all strong and are in strong alignment with each other within an organization. Organizations struggle or fail when one or more are weak or don't align. Today, Apple is very successful and it is clear that they are strong in each dimension and have strong alignment across all three dimensions. I am not a Microsoft expert, but it seems fairly clear that Microsoft doesn't have strong alignment and haven't had strong alignment for many years. If Microsoft tried to follow Apple's strategy, culture or execution they would probably fail. Another timely example might be Toyota. The root cause of Toyota's problems can potentially be tied to all three dimensions. The question is: which one was the first to go "off the rails and fall out of alignment?"

     
     
     
    • Fison Mujenja
    • M&E Advisor

    With my third world experience, culture reigns supreme in organisational performance, be it profit or not-for-profit. Culture drives the other processes - the right culture will most likely lead to good strategy (re)formulation and execution. On the other hand, a good strategy in the wrong hands amounts to little organisational performance, and good execution of a wrong strategy is more often than not wasted effort. To me, culture is 50%, and the remaining (50%) is split equally between strategy and execution.

     
     
     
    • Christian G. Fournier
    • Dept head (Ret'd), IIM Ltd

    I have been prompted to contribute my specific experience, because it seems to me that in your choice of questions you have omitted a most important factor : OK, culture is all-important; but how about evolution (and rate of evolution) in a company culture ? The strongest this culture is, the more difficult it will be to adapt to a sea change in business conditions. If the company is perennial enough, company culture ends up being adequate (be it 66%, 75%, 83%, whatever) to the prevailing business conditions as long as the fundamentals of these conditions remain stable. But when these conditions undergo a big shift, the culture can become dramatically inadequate. In a company I worked for in the past, I have lived through a textbook case.

    The company was a state-owned armaments manufacturer, enjoying a monopoly of sorts [an apt analogy would be one of those big US armaments firms, working on cutting-edge technologies and compensated from contracts which - due to technical uncertainties on the product design - end up, in spite of the fancy contractual footwork, to be variants of "cost plus fee"). At all levels of the hierarchy in the company, the focus was set on "justifying the costs". Any production facility in that company would look good if it had generated enough "justifiable costs" (i.e.: which could be documented) to cover expenses and beyond.
    During an order slump, top management decided to look for business in a civilian industrial market, very competitive and in which the technology is fairly standard. The company obtained a big "fixed price" order by submitting a competitive bid based on a breakeven budget; due to market conditions there was no fat whatsoever in this budget (i.e. all contingencies taken at a minimum).

    During the execution of the order, the management proved incapable of mastering the cost overruns: the culture of "cost plus fee" [i.e.: "as long as this cost is justified by production necessities, I do not have to worry further"] was so deeply ingrained into the company culture - particularly at the foreman level - that even though top management gave all its attention to the order and tried all sorts of remedial actions, large cost overruns occurred and seemed to occur in an inevitable sequence - like a boulder let loose on a slope! The order ended up with a sea of red ink and a stream of pink slips. Some managers developed cancers which I am sure were initiated by the stress of executing the order in such conditions. As for me, it was the worst period of my career.

    It is up to you to draw conclusions; I have two : - For "project work", a "cost plus fee organization" cannot be transformed into a "fixed price organization". Both are necessary; it is absurd to negotiate lump sum contracts if the technical contours are not mastered : it only leads to vicious changeorder battles. But I am certain that - if the "FP"=>"C+F" transformation is easy -, on the contrary the "C+F"=>"FP" cultural transformation cannot occur overnight. And my educated guess would be that such "C+F"=>"FP" cultural transformation cannot even occur at all : better to build a separate organization from scratch. - As for "company culture", be sure if you deliberately build it into an essential component of the company identity that this culture will remain flexible enough. A very strong culture will be like 'blinders on a horse' : OK if the path is straight, but not so good for sharp turns...

     
     
     
    • Lawrence Selvanayagam

    Strategy execution and culture is like the trinity to organizations success each has their distinctive role. Strategy can be intellectually simple, execution can be mechanical, culture can be disorienting at times

    While formulating of strategy, a good strategist should also consider the culture in which the strategy is to be implemented.The war on terror appeared to have a good strategy in the beginning and implementation was getting results (Baghdad in few days) but the culture played spoilsport to the success of the strategy and implementation for one believe in "different strokes for different folks" because culture is different.

    Even though strategies can be simple, execution is not. Matching the right people in right positions is critical to strategy execution and thereby the success of the organization.