“Culture eats strategy for breakfast.” This is a quote that is often attributed to Peter Drucker, but it’s not clear if he actually said it. This thought has appeared in several other forms over the years such as culture beats strategy, culture trumps strategy, etc. This quote, in any form, seems to make the assumption that culture and strategy are two completely different, if not competing, concepts. Yet this assumption makes little sense, particularly for the type of work we do as architects and engineers (A/Es).
I believe a much more useful way to view culture is to view it is an essential component to strategy – an essential ingredient to the special sauce of a firm that allows it to be successful. There are many different definitions of organizational culture out there ranging from the cute, “what happens when the CEO is out of the room”, to the more academic “complex set of values, beliefs, assumptions, and symbols that define the way in which a firm conducts its business.”1 Culture is the why behind the things that are done day to day in a firm that is formed through its history. It is the glue that binds the firm together.
Culture should be viewed as a distinct resource of the firm. And, as I wrote about in a previous blog post, distinct resources can be the key to establishing competitive advantage and therefore the firm’s strategy. The intangible resources that likely differentiate an A/E firm (such as knowledge, experience, approaches to problem solving, approaches to client experience and relationships, brand and reputation) also likely define the culture of that firm. It follows then that culture is very likely the primary driver of competitive advantage and strategy for a successful A/E firm.
For a resource (culture in this case) to truly provide a sustainable competitive advantage, it must exhibit four characteristics often referred to by the acronym VRIN. Culture must be Valuable to clients, must be Rare amongst competitors, must be Inimitable, and must be Non-substitutable. By its very nature, culture is likely rare and inimitable. Much like people with their knowledge and personalities, no two cultures are alike – there may be similarities, but the magic is in the differences. Cultures are built over time through a unique system of beliefs being applied to many unique experiences through a series of unique events leading to the development of unique knowledge and practices. By virtue of how these unique and rare cultures are developed, they are practically inimitable. Remember that these resources are often difficult to recognize and articulate. Even if you could do that, you would not be able to recreate the series of events that lead to the development of those resources.
So then, the question boils down to whether or not your unique culture is valuable and non-substitutable. Do your clients value the resources associated with your culture over that of your competitors? Are you able to either command higher fees due to this culture or be more efficient that your competitors? Do you provide the best or only fit for needs of your clients? If you can consistently answer yes to these questions, then it is highly likely that your culture provides value and the culture of other firms do not serve as a substitute for that of yours. Congratulations! This is what you want! Now you should make sure you understand which aspects of your culture are VRIN. As mentioned in a previous blog post, clients may already be giving you the insight you need to dig into this question through the profitability of your projects.
Since culture is such a difficult thing to describe and articulate, I hope to dive deeper into that topic in later blog posts. There is an important takeaway from this concept before we get there though. Mintzberg developed a “Change Cube”2 which states that you cannot change the culture of an organization without changing its structure, systems, and people. An important corollary to that is that you may end up changing culture when you begin to change structure, systems, and people. Since culture likely plays a large role in the success of your firm, you need to be aware of the potential impact decisions that affect culture may have. If you don’t, you may inadvertently sidetrack your strategy and your ability to win.
Remember, culture doesn’t eat strategy. Culture is likely a primary element and driver of your strategy. It’s a big ingredient in the special sauce that makes your strategy taste so good.
References:
- Collis, David J. and Montgomery, Cynthia A. “Competing on Resources.” Academy of Management Review, 1986, Vol. 11, No. 3, pp. 656-665.
- Mintzberg, H., Ahlstrand, B., and Lampel, J. “Strategy Safari: A Guided Tour Through the Wilds of Strategic Management.” Free Press, 2001.