Strategy vs. Culture: Who’s the Boss?

On Cyber Monday 2011, Bonobos experienced an epic fail. Generous discounts on luxury men’s clothing drove extreme volumes of traffic to the site, slowing down load times and transactions, and preventing some customers from completing their orders. What happened next is a case study in flawless damage control and best-case customer service – Bonobos’ entire tech team pitched in and worked tirelessly for days alongside a crack-team from the site’s e-commerce vendor to get the site back up and running.

Meanwhile, the rest of the company stopped operations to focus on upset customers. Even CEO Andy Dunn pitched in, coordinating efforts, keeping morale high, and taking customer phone calls late into the night. It was an all hands on deck effort that Bonobos, despite financial losses, views as a positive learning experience.

Was this the result of some brilliantly devised strategy? Or can Bonobos’ success during the Cyber Monday crisis be traced back to its culture?

A Tale of Two Elements

Organizational culture, broadly defined, is the set of assumptions, beliefs, and guidelines shared by an organization. It’s the connective tissue and core essence of any team, shaping how they interpret and make sense of the world, and guiding how they go about getting things done. Culture has great longevity – just look at Goldman Sachs. Culture is easily seen, heard and felt. Think about your own office and what happens there – the stories that get circulated, the way decisions get made, and the behaviors that are encouraged and rewarded all reveal something important about your particular corporate culture.

Strategy is the practice of figuring out the best way to get from a current state to some ideal state. For instance, if you’re out hiking and come across a current preventing you from reaching your final destination, you’ll be forced to figure out a way to get across. Your strategy is the approach you choose, whether simply walking along the bank until you find a safer crossing, or attempting to cross the stream directly by feeling for stepping stones near the surface. A good strategy relies on a deep understanding and actionable articulation of the critical challenges ahead (“I need to cross this stream to finish my hike”), carried out through a set of coherent actions specifically designed to overcome the identified obstacles (“I’ll walk up the river until I find a narrow section that I feel comfortable crossing, and if this fails I’ll have to re-examine the situation”).

Culture and strategy are balanced and expressed differently by every organization. Both, if used right, are important drivers of business success, albeit in different ways. Strategy is mostly responsible for “hard” success metrics closely related to the bottom line: customer acquisition, sales, margins, and market position. Culture is mostly accountable for “soft” metrics: the speed and quality of internal communications, pace of innovation, retention rates, and reputation in the market. Some important characteristics, like product quality, the ability to grow your team and to scale your operations – really, many of the factors that determine whether you can foster and growth –  depend on strategy and culture working in tandem.

Defining the relationship between culture and strategy and unpacking how they work together is tough. While the two concepts look like they should work together to move an organization forward, they end up being the concerns of different parts of the company. The commonly employed organizational design principle of centralization, where the organization is divided into departments with firm divisions (marketing, human resources, sales, etc.), is often a complicit factor.

The best organizations use both strategy and culture in tandem to achieve success.

Centralization introduces a mental model of the organization as a set of functions with their own distinct roles and responsibilities. This mindset has a debilitating effect on an organization’s ability to see the whole picture: in terms of systems. And what’s worse, when strategy becomes the expressed responsibility of one group and culture the expressed responsibility of another, territorialism is implicitly encouraged. Add to this that strategy development, because of its perceived stronger tie to bottom line results, is generally the responsibility of top management, and you’ve got a situation where strategy and culture are effectively decoupled and competing for the same resources.

Better Than A Plan

Let’s return to Bonobos for a moment. What is most impressive about how Bonobos handled their Cyber Monday crisis is that the entire effort was uncoordinated. There was no crisis plan. Everyone just knew what to do. A Bonobos representative who discussed the situation on Quora pointed to the company’s practice of only hiring good people as a crucial contributing factor to how well the situation was handled. But Bonobos also has a clear strategy of providing superior customer service (the company’s customer service motto is a powerful statement that is just as actionable as it is empowering: “People before profit”) as a means of creating sustainable competitive advantage. This strategy guides their culture, and their culture of customer service informs their strategic decisions. Where the company’s culture enabled autonomous rapid and coherent action, its strategy provided a clear recommended direction.

Strategy + Culture = Success

In summation, it’s impossible to separate the contributions of either strategy or culture. The best organizations use both in tandem to achieve success. Culture and strategy are symbiotic: they’re perpetually stuck in a a cause-and-effect relationship in which both, as they change, inform the other. That is why, ultimately, you’ll need both to win in the long-term. Setting up a healthy, and connected culture that is aligned with the overarching purpose of your organization is really a strategy for growth.