Culture Eats Strategy for Breakfast

“Culture eats strategy for breakfast," is a dictum often attributed to management expert Peter Drucker. It means that an organization's internal culture, its shared values, beliefs, and behaviours, is more influential on organizational success and prosperity than its strategic plan.

As a former CEO, I have found myself in dichotomous situations where my Boards and I are responsible for Strategy formulation, while our teams are charged with its implementation. Therefore, the conundrum I struggled with is which deserves more of a leader’s attention: strategy or culture?  This question has spawned decades of leadership literature and corporate fodder in premier sources such as Forbes Magazine, Harvard Business Review, and peer-reviewed academic journals. 

Based on my decades in C-Suite roles, twice as a CEO over 10 years and 20 years teaching Strategy and Leadership at the University of Toronto, I can unequivocally assert Culture Eats Strategy for Breakfast. Simply put, a brilliant strategy will fail if the employees are not aligned or engaged. 

Culture over Strategy - a Case Study

This was demonstrated most clearly in 2000 at Home Depot. Routinely cited in Business School case studies in support of Culture over Strategy arguments, CEO Robert Nardelli’s tenure (2000–2007) as CEO ushered in a corporate culture change that continues to plague the retail giant. 

Under Nardelli, Home Depot’s corporate culture changed from a customer-centric, entrepreneurial spirit to a rigid, metrics-driven, military-like culture. This led to lower employee morale and damaged customer service. 

In retrospect, Nardelli’s error was that, equipped with the General Electric handbook, which he and Jack Welch perfected, when passed over for Welch’s role, Nardelli arrived at Home Depot intending to implement his manufacturing business outlook in a customer-centric, service organization. Naive in retrospect, fatal in application. 

The “Home Depot experience”

As a Leader, Nardelli had a pugnacious, imperial style. Consequently, his decision to take a hammer to the people-oriented culture, which was the essence of the “Home Depot experience”. 

I’m old enough to nostalgically reminisce about the loss of the ‘Home Depot experience’. When Home Depot arrived, it revolutionized the retail scene, spawning numerous copycat Big Box stores. 

In the pre-Nardelli days, however, Home Depot stores were filled with experts in orange aprons roaming the aisles and ready to help with whatever you might need. In fact, they generally found you before you even realized you needed them. It was the personal touch rarely found anywhere else. 

Today, as a self-proclaimed DIY, I find my voice echoes in the abandonment of the massive empty aisles where I search in futility for the correct solution to my home repair need. I often leave, oddly more clueless about what home repair solution could work. Daunted by the plethora of options lining Home Depot’s shelves, I search in vain for an expert who could knowledgeably help me understand which solution would work and why. Initially, I entered the store confident I would prevail in resolving my home issue, only to leave dejected. Alas, I digress in my DIY ambitions. 

Shortly after Nardelli became CEO in late in 2000, he decided that all those experts really weren’t needed, so he got rid of many of them, reduced the hours of others, and hired more part-timers in order to cut costs.

Seemingly overnight, Home Depot went from a place with great customer service to one where it became difficult to find anybody who could help you.

In my experience, slashing staff and running roughshod over people is the province of weak managers who have few

real skills they can fall back on. Such novice leaders often dismiss the need to be strategic in the art and science of the discipline called Human Resource management (note my intentional language used when describing this critical area of business). 

No one can accuse Robert Nardelli of being an inexperienced executive. Quite the contrary, Bob’s noteworthy achievements at GE had many corporations literally vying for his leadership at their organization. In hindsight, Nardelli was simply not the right guy for the job. His valuable skills would have been well-suited elsewhere. 

What Can We Learn?

Returning to the thesis of this blog, what we can learn from the Home Depot case is that while strategy is the plan, culture is how work gets done on a day-to-day basis. Consequently, a toxic or unsupportive culture will undermine or "eat" any strategy, regardless of how well-designed it is.  

With that learned, as CEO, I consciously devoted much of my mental and physical energy to creating a positive, learning culture that encouraged collaboration and engagement. Incidentally, this often happened organically in ethnically diverse teams, which will be the topic of a future blog.

As the Chief Executive, I felt it was my responsibility to strengthen the culture of the organization. Furthermore, I felt that as CEO, it was my duty to strengthen the abilities and competencies of my teams and direct reports. Morally and professionally, I considered this my win-win philosophy because this undoubtedly ensured my teams possessed the motivation to execute the strategy effectively.  

Over my career, I have prided myself on designing visionary strategies. As the bitter taste of false starts and hard-earned lessons ensued, I learned effective strategy must, in tandem, address the cultural dynamics within organizations. It became my primary directive. 

Strategy eats culture for breakfast because Employees bring the strategy to life. Without intimate investment in strategy by teams, the strategy fails. One of the reasons I witnessed strategy fail is that an uninvested team goes through the motions of strategy implementation, versus demonstrating a key attribute for its success: Adaptability. 

A strong culture allows for better, faster responses to unexpected challenges or crises, which assuredly occur in any strategy implementation. Moreover, within a positive culture, teams experience Behavioral Alignment, whereby Culture defines the unwritten rules for how people work together - another critical aspect to successful strategy execution. 

To reinforce my assertion, I will draw upon the analogy of the CEO as a Captain of a ship. When the ship veers off course, both a strong Board and CEO will step in and course correct. However, if no indications are being provided from the crew that the ship is potentially shifting off course, the captain is helpless to execute their expertise in time to rectify the situation. Indeed, readers, Culture eats strategy for breakfast. 

For organizations seeking the time-worn experience of a senior C-Suite Fractional Executive who can right-size, strategy shift or “course correct” as in the analogy above, look no further; we are here to serve.