Prevailing Winds

“Culture eats strategy for breakfast.” I’ve pondered this line, attributed by a Stanford professor to a sign in the Ford Motor Company board room, as I work with firms that struggle with the simple acts of implementing their strategies. For at least half my consulting career, I focused on the mechanics of business planning, business management,

and strategic focus, with less emphasis on the environment in which all this took place. Now, I’m trying to understand what defines an organization’s behavior and actions, what kind of people are attracted to certain businesses, and how infected cultures become impediments to progress.

It has become clear to me that many advisory firms suffer from “cultural lock-in,” in which businesses refuse to adapt their enterprises to a new environment in spite of obvious influences that tell them they should. It could be market dynamics, talent shortages, new competition, or client demands that force advisors to revisit their business models. But inevitably, there are people who say, “What has worked for us so far, will work for us in the future. If we aren’t growing fast enough, then people have to work harder; if we aren’t profitable enough, then people have to work harder; if they don’t like it here, they can leave.”

Intransigence is rarely an appealing trait for business leaders, and it is especially maddening in organizations in which the leaders do not tolerate fresh approaches and challenges to their vision. We consistently find that people who have deluded themselves as to their own greatness, instead of being self-aware, suffer from this ailment the most. They are able to fill windsocks with a bluster and bravado that stifle other points of view, even if those contrary perspectives might help to salvage their businesses. Cultures that encourage discussion, debate, and closure seem to flourish. Business owners who are threatened by the possibility that those who work for them may in fact have the design for a better mousetrap often lose the opportunity to change and grow.

One firm we worked with last year typified this problem. They had multiple partners ranging in age from 35 to 60. The firm had an excellent reputation in its community, and client surveys consistently described them as trustworthy, responsive, and technically proficient. Yet all the advisors operated in silos, with little integration among them, and in most cases, each partner could hardly abide the others. We were asked to help them develop a succession plan, but what we discovered was a business that had the potential of imploding well before they got to the next stage in their development. Each partner was protective of his turf and unwilling to adapt the business to the reality that confronted them. While the public perception was one of excellence, the internal perception was one of incompetence and arrogance. The younger advisors were encouraging a change of course, but the loudest voices shouted them down and in fact resented any suggestion that there could be a better way.

Eventually, the wheels came off. Due to cultural lock-in, the older, dominant personalities prevailed in their positions, but the talented younger staff defected to competitors or to form their own firms. The shame of this episode is that the younger folks were actually onto something and were not posturing to gain position but were trying to make a constructive change in the direction of the business. The inability of the younger staff to communicate clearly and the unwillingness of the older partners to respond like adults put them on a path to self-destruction. Eventually, all actors in this play found it more fulfilling to talk negatively about their colleagues to others. This was the beginning of the end. The older partners got their way, but at what cost?

This Pyrrhic victory is quite commonplace in entrepreneurial businesses when the leaders are threatened by change and paralyzed by fear of the unknown. Instead of viewing open dialogue and even criticism of processes as constructive ideas, they see themselves under personal attack. While these emotions may be real, they are not helpful. The hardest job of a manager or leader is to accept that criticism from the troops is part of the job. The challenge is translating this tension into forward movement for the business. The healthy response is to see confrontation as teaching moments and opportunities to create a positive, productive culture.

Take Inventory

A few years ago, we surveyed the staffs of advisory firms to understand their attitudes toward their bosses, businesses, and careers. Almost a quarter of the respondents indicated they were looking for jobs elsewhere, and the biggest reason cited was lack of confidence in management. Not money, but work environment.

As advisory practices evolve into larger enterprises, it’s important for the principals to take inventory of the culture they have built and make adjustments to form a culture that they and motivated people will enjoy. In his Corporate Culture Survival Guide, (Jossey-Bass, 1999), Edgar Schein outlines how to do so:

1. Mission: What is the fundamental mission of the organization? What is its reason for being? Where did the strategy and goals come from?

2. Means: How did the organization develop its approach to meeting goals? Does the structure and design of how work gets done reflect the beliefs of the leaders of the organization?

3. Measurement: What are the means for tracking errors in your organization? How do you discover that you are not meeting goals and targets on a real-time basis, and what do you do about it?