In my line of work, I’ve had the unique opportunity to work with an incredibly diverse set of clients. From large oil & gas manufacturers to single location non-profit health systems, small technical colleges, and even some religiously-affiliated groups – I’ve been able to see how various organizations see the world, along with their differing approaches to strategic execution.
Yet, despite the differences in size, scope, industry, mission, etc., there are two constant and prevailing truths:
- Strategic Planning is of Pivotal Importance
- A Strong Culture is Key
In This Article
- The Impact of Corporate Culture on Strategy
- Aetna: A Strategy/Culture Alignment Case Study
- Invest in Company Culture to Drive Your Strategy
The Impact of Corporate Culture on Strategy
I’ve yet to find anybody who doesn’t agree with these sentiments. My guess is in your organization, strategic planning and culture are championed above all else.
If you’re like most organizations I work with, however, these pillars are also treated as a left brain/right brain, 2 sides of the coin, balancing arms of the organizational scale.
Instead of having conversations about Strategy OR Culture, teams today need to stop and consider how their strategic plan aligns with their unique and evolving culture.
The importance of corporate culture cannot be understated. Company culture represents your value, and in turn, shows your employees how to perceive their roles within the company and moves strategy forward. While strategy defines the direction and focus of your company, culture creates the shared language that makes this direction achievable.
There are several areas within an organization where this relationship between strategy and culture is clear. These areas can include:
- Retention: When your organization aspires to reach a certain goal, you need a big enough team to support these achievements. Your company’s culture is most often what will keep employees at your business. An organization that respects its employees can hold onto talent and achieve bigger goals.
- Risk: Every company is willing to accept a different level of risk when trying to enact a strategy. Your organization may experience risk with clients, investments and beyond. Culture weaves into risk-taking in different ways. For example, if one of your cultural pillars is encouraging employees to explore new opportunities, you might be more willing to invest in new equipment that comes with a learning curve. With your instilled cultural value, your employees will be ready to accept the challenge.
- Processes: Between client interactions, interdepartmental meetings and hiring new employees, companies need defined processes in several places. Corporate culture defines the values and structures that run throughout all of these processes, clarifying your company’s overall focus. For instance, your culture will inform employees how to interact with clients and what points are worth focusing on or emphasizing. Your clients will see this consistency across the board, creating more trust.
Aetna: A Strategy/Culture Alignment Case Study
Recognizing There’s a Problem
Consider insurance behemoth, Aetna. For much of its 150+ year history, Aetna has thrived in the insurance space. The early 2000s, however, were not such a period. Poor acquisitions, outdated and cumbersome processes, and yes, a toxic culture had sunk the company to its knees.
At one point, Aetna was losing $1 million per day. Executives came and went, 4 CEOs in 5 years, each one touting “culture change” as the key to the turnaround.
Enter John W. Rowe, MD, the man who thought differently about the relationship between strategy and culture. Instead of determining an initial strategy for a turnaround, Dr. Rowe took the unique step of submerging himself at various levels of the organization, seeing the company from his employees’ eyes, and trying to better understand what key individuals in the organization were experiencing. Over time, and utilizing a variety of methods, Dr. Rowe uncovered something amazing.
Identifying the Strategy-Culture Disconnect
Aetna’s prevailing strategy had consisted primarily of narrowly managing medical expenses to reduce the cost of claims. This strategy not only alienated two key contributors to Aetna’s success – patients and physicians – but this methodology also flew directly against the cultural winds that made Aetna unique: a deep-seated creed for providing the best possible care.
The divide between employees’ passion for care and the company’s decision to reduce costs was deeper, however, as employees felt they had been robbed of something greater – pride in the company itself. With the focus on reduced costs, employees were not merely frustrated, they were disheartened, even embarrassed. One Aetna employee summed it up by saying “I began to dread conversations at cocktail parties, knowing I would have to discuss my work.”
In response, Dr. Rowe made a surprising decision. Instead of continuing to focus on reducing costs to turn Aetna around, he announced a bold new strategy centered around “A New Aetna.”
Crafting “New Aetna”
Moving forward, New Aetna was going to invest heavily in customer service, ensuring quality care was at the core of Aetna’s strategic direction.
To communicate his vision and gain buy-in from the company, Rowe met regularly with leaders in the organization, asking for feedback and speaking in detail about what the turnaround would entail. Rowe was careful, not to define “leader” by rank only, but also included individuals with charisma and influence in the company, knowing their support was vital.
What Dr. Rowe understood was simple; any strategy that flew directly against the culture of Aetna was doomed to fail. Speaking at a town hall meeting, Dr. Rowe summed it up as, “Well I guess [the New Aetna is] really all about putting the pride back in Aetna”.
Invest in Company Culture to Drive Your Strategy
While Aetna’s turnaround can be attributed to a number of different forces, it’s impossible to ignore the importance of picking strategies that are aligned with the culture of your organization. This does not mean that every decision must be a popular one, rather selecting a strategy must be done with an eye towards whether your employees can rally behind it.
When finding ways to introduce corporate culture in strategic management, there are several factors to consider. Here’s a checklist and a list of suggested next steps to see the impact of culture on business:
- Do you have formal cultural pillars? Check that your strategic initiatives are in line with your overall company promise.
- Do you have informal cultural pillars? When was the last time you had lunch with a non-direct-report team member? You can learn something about the unwritten ground-level culture by having candid conversations with employees. Take back what you learned and check your strategy again – do they align?
- How did you build your strategic plan? Did you only gain input from your executive team? Did your executive leaders talk to any of their work producers to get their input? In building your next plan, try getting a mixed group of leadership levels in the room to get perspectives from the ground-up.
- Have you communicated your plan roll-out? If you’re dictating your company initiatives a la reading off tablets from on high, your plan becomes more austere with every global Town Hall webinar. Connect your plan to your people by explaining how your organization’s overall initiatives impact each department and level specifically.
- Who are your agents of change? Like Dr. Rowe, leverage your influential employees at every level of the organization to help drive strategy execution. Identify them early on and check in regularly to help create buy-in and understanding within the places you can’t personally reach. The impact of corporate culture is not possible without a system that upholds it. The right people create this system.