You have heard the quote before: “Culture eats strategy for breakfast.”
It is most often attributed to Peter Drucker, but that is incorrect. Drucker actually said, “Culture—no matter how defined—is singularly persistent.”
Similar? Yes, but the differences are critical.
Drucker used the country of Japan as an example in his 1991 Wall Street Journal article. After World War II, Japan became a model for how a modern society functions. Its companies led the total quality revolution. Names like Toyota, Nintendo, and Sony are revered around the globe today.
Japan, after World War II, focused on changing its behavior not its culture. You can, in fact, argue that Japanese companies became so successful because they utilized the strength of their historic cultural values as the catalyst for adopting and adapting new behaviors that became habits.
The culture—strategy connection
The purpose of strategy is to design and implement a course of action to overcome a significant challenge or exploit a significant strength. It should help us achieve our purpose, reach our vision, and/or live our values. It is how we “win” in the marketplace.
Herb Kelleher, the founder and former CEO of Southwest Airlines said this in a 2002 interview with Fortune magazine:
So my biggest fear is that somehow … we lose that esprit de corps, the culture, the spirit. If we ever do lose that, we will have lost our most valuable competitive asset.
Southwest’s recent performance raises the question whether the company has lost (or at least misplaced) that competitive asset, but Kelleher was correct. Culture was essential to the original strategy of high efficiency, streamlined operations, and strong service. In fact, Southwest Airlines without the Southwest culture would have been any of the over 100 low-cost airlines that are now defunct.
The culture doesn’t, per se, eat your strategy. It creates the context that connects your strategy to the past while energizing it for the future. This is essential in a world where decisions about products, services, financial strategies, and technology can provide a unique difference in the marketplace.
What this means for you
The problem for credit unions is that products, services, financial strategies, and technology are not a defendable strategic advantage over the long run. Your competitors offer roughly the same products and services as you. Their financial strategies are similar to yours. You all have the same regulatory standards.
Technology might be an immediate advantage, but even that isn’t sustainable. Every financial institution has access to the same tools. The only difference is the commitment of resources and speed of adoption.
In this environment, your culture is the strategic advantage. Like Drucker said, it is the singularly persistent accelerator and anchor that determines your ability to stand out with existing and prospective members. Most important, it connects new behaviors (like adopting AI tools) with your existing values.
A blueprint for the future
I wrote about the seven habits of high-performance cultures in a previous CUInsight article. That is an excellent companion for this discussion.
Our ongoing research into what makes a culture of excellence shows the following:
- The best organizations view culture as a strategic business driver rather than just a tool to attract and retain happy people. Happy people are a plus, but happy people without business results are a party not a company.
- The table stakes for what contributes to a culture of excellence they continually evolve. Six years ago, the idea of cultures being aligned with stakeholder values was a nice-to-have. Today it is a minimum requirement.
- There are accelerators and game changers. Accelerators will become the new minimum standard. Likewise, game changers become less of a strategic advantage as others adopt them.
- The culture used to be the intangible that sets you apart in a world where products and services are interchangeable. Today, the culture is the intangible that enables you and your stakeholders to flourish in a world of uncertainty, complexity, and change.
Peter Drucker made the distinction between changing culture and changing behavior that grows into habit. From a sociological perspective, culture develops as individuals develop shared habits, behaviors, and ways of operating to survive, thrive, flourish. The culture is passed from generation to generation through shared language, legends, and symbols. It provides the blueprint for individuals and groups to navigate their environment, create meaning, and succeed.
These eight cultural elements currently define what separates the proverbial “best from the rest” today. The descriptions are included to provide context and spur additional thought.
Foundational elements:
- Member obsessed: Every person at every level is obsessed with giving members what they expect in every interaction. Individuals, teams, and the entire organization actively look for ways to serve members better, and they go above expectations to deliver memorable services and results whenever possible.
- People centric: An over-arching respect for people guides every action, decision, and interaction. The organization and its leaders create an environment where commitment is volunteered rather than settling for mandated compliance. Associates take an active role in helping their colleagues succeed.
- Results focused: Flawless execution is the standard. Everyone seeks to deliver results that benefit the members, the organization, and the community they serve. People appreciate the opportunity to deliver their very best work in an environment that values excellence.
- Values aligned: The organization’s values can be readily identified from the behavior and performance of individuals and the team. Likewise, the organization’s values are aligned with and promote stronger communities.
Accelerator elements:
- Change ready: The organization and people within it adapt quickly to change. They embrace change as an opportunity to improve. Resistance to change does not become a barrier to achieving success.
- Data & process driven: Available and relevant data is used to inform and guide decisions without becoming a crutch for procrastination or avoidance of difficult choices. The organization values consistent execution of optimized processes to drive excellence in products, services, and relationships.
Game changer elements:
- Collaboration enabled: The operating structure and technology tools support sharing ideas. Associates seek involvement and ideas from others when solving difficult problems. Information is shared rather than hoarded. No one is offended when someone offers a suggestion to improve a project, process, or outcome.
- Future seeking: The organization actively anticipates potential changes that are just over the horizon. It proactively seeks opportunities that will help the credit union live its purpose and values. We are willing to abandon activities and ideas that will not serve our stakeholders in the future … even if they have worked well.
What about technology and AI?
The International Monetary Fund has stated that artificial intelligence will significantly affect up to 60 percent of jobs in the developed world. Its impact will disrupt or eliminate many jobs while creating others. It has the potential to make us better off as a society while simultaneously challenging what it means to be human.
For now, embracing AI shows up in the change ready and future seeking elements of organizational culture. Stay tuned, however. Artificial intelligence, machine learning, and robotics could combine to create an entirely new culture element in the future.
What’s next?
The best strategy lives at the intersection of impact on the organization and ease of implementation. Culture as the ultimate strategic advantage lives there, and an obvious next step is to make culture its own focus area in your planning process.
Additionally, consider evaluating your existing culture against the eight elements listed above to identify strengths and opportunities that exist today.
Most important, realize that the demands of and on the culture are continually evolving. Every stakeholder group you serve is evaluating you against the best examples in all areas of their lives and work. Benchmark against the best in every industry not just against other credit unions. “Culture—no matter how defined—is singularly persistent.”
Now is the time to use it as a strategic advantage for your credit union.
