You’ve probably heard the phrase, “culture eats strategy for lunch,” which was originally attributed to famed organizational management consultant, Peter Drucker. Lately, I have been thinking about this and have tested its validity with other business leaders. Is this really true and, if so, why do sometimes companies with great cultures ultimately fail, while others with notoriously bad cultures succeed?
Case in point, a few weekends ago I attended a reunion of former employees of Sun Microsystems. Sun Microsystems, created in 1990, coined the phrase, “The network is the computer,” and created several technical innovations including the Java programming language, the Solaris operating system, and the Sparc computer. There were over 1,000 attendees, including the four original founders! I will remind you, the company was ultimately sold to Oracle in 2010. So, why did 999 of my former colleagues and I decide to attend this event, almost 10 years after the company ceased to exist?
As I write this, I still can’t believe it. I’ll talk a bit more about the actual event in a moment, but here is a great example of a company with one of the greatest cultures (I can attest to that, given my 13 years at Sun), and yet, culture alone couldn’t keep the company from its ultimate demise. When I asked a few of my former Sun peers the question, everyone agreed that the culture was amazing and that there still exists an unwavering following of Scott McNealy and the founders. However, when pressed, most said that culture alone isn’t what matters; it is leadership plus culture that is the true recipe for success.
Without leadership, culture alone cannot turn a good company, great. I agree with this, and it made me think about the responsibility we all have as leaders to make sure we are creating a great culture and at the same time leading that culture forward to ensure outstanding and legacy-forming performance and results. It should also be noted that while other companies with poor cultures do exist and seem to find long-term success, their true (and greatest) success is impeded or stifled because they lack the culture to create everlasting followership.
In my opinion, there are three reasons why paying attention to culture enabled by leadership versus just strategy are of paramount importance to a company’s long-term, sustained success:
- First, people are loyal to people (i.e., culture), not to strategy. The hunt for and retainment of great talent has never been fiercer, and I have always said that people don’t quit companies, they quit people. Therefore, enabling a good culture will not only attract the brightest talent, but will also retain them. They will work harder and smarter and take a personal interest in the company’s success. At Sun, we said that the network was the computer, but the real network was the people. As evidence, The Power of Sun Alumni infographic (which is a work in progress, created by former Sun alum, Alan Butler) shows all the people who went on from Sun to create some of the most innovative and progressive technology companies in the world. They all started as disciples of Sun.
- Secondly, culture exists in stories, folklore, and mostly in how people feel, which is eventually represented in a company’s brand. Brand doesn’t exist without culture, and if you believe strategy drives brand and results, then you can’t get to ultimate success without culture underpinning your brand. There are several well-known examples of this, including Starbucks, Nordstrom, and Zappos. They all are examples of how a company’s brand lives not necessarily in the strategy, but in the people who work at the company.
- Last, culture differentiates a company, whereas strategy does not. Many companies can have the exact same strategy and go-to-market approach but will struggle to differentiate themselves from the competition without culture. Again, there are many examples of this, but Southwest is probably one of the best. Many airlines tried to copy their strategy but failed to excel in the way Southwest has, success that is due to the culture that CEO Herb Kelleher created under his leadership many years ago.
However, this is also evidence of the importance of culture + leadership. I always like to remind myself and my leadership team as it pertains to culture within a company or division that, “the fish rots from the head.” Leadership is critical in driving culture. At the end of the day, leadership is a contact sport in upholding the culture you wish to create. You cannot “phone it in.” You must be present and engaged to create and maintain the culture that you wish to achieve. This means putting in place things that reinforce the culture and, equally important, calling out decisions and behaviors that are counter to the culture you desire.
Ensuring the right culture is analogous to driving down a road. There are turns, hazards, and diversions. As a leader, you must keep your hands on the wheel. You must ensure that you are responding to what is ahead because the car (i.e., the company) won’t naturally stay on the path ahead without your guidance, action, and leadership.
At the event, I had the opportunity to speak with Scott McNealy. He said (and I am paraphrasing), “We never were really certain of where we were going; we just knew that we wanted to be the best place for the brightest minds to work.” Well, Scott, you did that—and so much more.
