What is the relationship between strategy and company culture?

As someone who manages a business, you’re familiar with the ins and outs of business. Creating a formal business plan, however, is just the first step on the journey to achieving success.

What comes next involves establishing a healthy company culture to support your strategy and put it into action. After all, people are the strongest driving force behind great results from any plan.

So, how can you consciously gear your Organisational Culture towards supporting your overall business strategy? Why is it crucial for accomplishing great results to have the two aligned?

Let’s delve into this.

What is a business strategy?

Business strategy serves as a map that guides your organisation towards your desired goals amidst growing competition, evolving customer requirements and other external market factors.

To define how your business will achieve its objectives, a business strategy should include a list of principles or rules that clearly state how to best allocate company resources, prioritise tasks and make well-informed decisions.

Aside from providing direction on how to effectively conduct operations, implementing a business strategy offers the following five benefits:

1.   Well-understood strengths and weaknesses

How well is your business performing? Or how do you want it to perform in the future? Creating your business strategy will help you evaluate your company’s strengths, areas of improvement, external threats and opportunities for growth. Having an understanding of where your business currently stands will give you a clearer perspective over where you are now so you can head towards where you want to be.

2.   Efficient systems and processes

Business strategy enables you to take a step back, reflect and think about ways to improve your systems and processes. Spending time to plan ahead also allows you to generate new ways to solve problems – even for those you didn’t realise existed in the first place.

3.   Gain competitive advantages

Having a formal and well-researched business strategy allows you to find and capitalise on differentiating factors that make your organisation unique. This plan helps you become more accountable, focused and committed to fulfilling goals. With a business strategy, your company can also be proactive in addressing challenges and harnessing opportunities in the market.

4.   Better management of staff

The way forward is definitely together with your team. A business strategy ensures that everyone is on the same page by communicating your vision, setting standards for quality work and establishing transparency across all facets of the business.

5.   Measured results

Business strategy empowers you to track your goals and have key performance indicators (KPIs) that will determine the progress and growth of your organisation. With a solid business strategy, you’ll be able to assess success and see where activities didn’t produce results, so the organisation can adapt accordingly.

What is organisational culture?

Professor Geert Hofstede defined culture as “the programming of the human mind by which one group of people distinguishes itself from another group.”

Organisational culture refers to how a particular organisation conducts itself as a whole, in a way that is different from others. For example, how you run meetings, train new talent, communicate rules, provide benefits and implement employee engagement activities. It’s also how everyone in the team works together and the relationships and behaviours that result.

Moreover, Organisational Culture sets out what is deemed acceptable within a business. If an Organisational Culture is developed well, it can foster the right attitude amongst employees and motivate them to effectively fulfil their responsibilities to contribute to the long-term goals of the business.

Keep in mind - the best Organisational Culture for your company is the one you design for yourself.

What is the relationship between business strategy and company culture?

Businesses often separate strategy and culture from one another.

However, this is unfortunate as they have a strong impact on each other.

Top management tends to focus only on strategy since it’s associated with rational decisions, logical actions and overall company direction. On the other hand, culture is left in the hands of mid-managers or the Human Resources (HR) department due to its perception of being less formal, more emotional, intangible and flexible.

However, because mid-managers and the HR team are often not involved with strategy discussions, they might not be able to design the matching culture that will best support the overall business. This may then lead to problems and misalignment across different departments of your organisation.

This is why it’s important to realise that company culture and business strategy go hand-in-hand. Company culture can’t be considered as a lower priority as it’s what gives the strategy momentum and action. While the strategy provides guidance, culture is what motivates everyone in your company to have the same purpose of driving the business forward.

It's very hard to implement an effective strategy if the organisation’s culture is not supportive of this and resists change. For instance, if a part of your strategy involves improving customer satisfaction ratings, yet your staff feel unempowered and unsupported, chances are, this will be a difficult strategy to implement.

How does company culture support business strategy?

“Company culture is the backbone of any successful organisation.” – Gary Vaynerchuk

Taking into account all the different ways in which culture shapes how employees undertake business activities, processes and philosophies - we can’t help but agree.

To help understand this connection better, here are some key points that show how company culture enables business strategy:

1. Strong Organisational Culture stimulates employee engagement, encouraging them to execute strategies well.
2. Company culture determines how much risk your business can take – from investing in new technology and changing business processes to dealing with competitors and clients.
3. By developing a resilient company culture, you can easily communicate what’s required from employees in order to effectively adapt and deal with challenges.
4. Company culture emphasises your organisation’s values to help every team implement your business strategy not only with excellence, but also with integrity, purpose and passion too.
5. Organisational culture unites your workforce to deliver consistent quality work for clients and other stakeholders.

Learn from real-life examples: how culture supports business strategy

So, what does this look like in practise?

Here are some real examples of how other businesses are aligning company culture and business strategy to achieve great outcomes.

•       Tesla

Tesla has cultivated an organisational culture in which proactive learning is the norm. They encourage their team to explore, be open-minded and creative to support the company’s strategy of driving real-world (and off-world) innovation forward.

Now, Tesla is a global leader in developing all-electric vehicles and other products run by clean energy technology.

•       Zappos

Zappos’ business strategy revolves around delivering a strong “WOW” factor by providing happiness to their customers, employees, shareholders and the whole community.

Their company culture of enjoyment supports this. Zappos nurtures a positive and productive culture through its different employee engagement activities – ensuring the team is satisfied enough to also empower high levels of customer satisfaction.

•       HubSpot

HubSpot aims to always be evolving, and its strategy prioritises doing good for the business and its customers. To achieve this, HubSpot approaches company culture like it would a product. From free classes, training opportunities and books to TED-inspired “HubTalks,” HubSpot ensures their employee development is taken to the next level so each member feels empowered to reach their full potential.

From these three of many examples, you can see how business strategy lays down the overall direction and path to success, but it’s the Organisational Culture that facilitates this through action, behaviour and purpose.

Implement a more active approach to culture

Just like the above case studies, your organisation can also foster a strong Organisational Culture and use it to implement business strategy more effectively.

At The Culture Factor Group (Previously known as Hofstede Insights), we help you build and strengthen this synergy.

Our network of experts business consultants collaborate with you and your team to unlock meaningful insights to align your culture with and strategy, all backed by rigorous academic theory and data-driven analysis.

From consulting and training to certifications and tools, we help you achieve excellent results and realign your internal culture to achieve business strategy results.

Speak to us today to discuss your organisation and how we can assist you.

Editor's Note: This post was originally published in May 2021, and last updated in October 2023.