Strategy and Cultural Fit

In a previous article, I looked at a way to “stop your gears crashing” when implementing a procurement strategy or working with your critical suppliers. In particular, I focused on the interaction of strategy and operations.

In this article, I want to focus on another important combination and that is the impact of organisational culture on your strategy whether that be your own organisation’s culture or the culture that springs up whenever you work closely with a key supplier.The culture-strategy loop

First let’s think about what we mean by culture in an organisational sense. Wikipedia defines it as “the behavior of humans within an organisation and the meaning that people attach to those behaviors. Culture includes the organisation’s vision, values, norms, systems, symbols, language, assumptions, beliefs, and habits.”

Another definition (which summarises the Wikipedia one) is that “culture provides the lens through which we see the world; the logic by which we order it; and the grammar which makes sense of it”.

This is important to our procurement/supplier strategies because if they don’t match the culture of where we work then they are unlikely to be effective. If they are not consistent with “the way we do things around here” then they are doomed to failure.

So how do we assess the culture of where we work so that we can match our strategies to it?

One very useful way was developed by Dan Denison. His belief is that there are four main traits in an organisation’s culture. These are:-

  1. Mission – the organisation’s sense of direction. “Do we know where we are going?”
  2. Adaptability – to changes in the marketplace. “Are we listening to the marketplace?”
  3. Consistency – rooted in a set of strong core values. “Does our business model create leverage?”
  4. Involvement – nurturing the engagement of people. “Are our people aligned and engaged?”

It is Denison’s contention that these four traits are closely linked to performance measures such as growth, quality and innovation.

The subtlety of the model is that it captures several of the underlying tensions in any organisation or supplier relationship. For example, the trade-off between flexibility and stability or that between internal needs and external pressures.

These tensions are even more pronounced when we add in the complexities of a supplier relationship where there may be two views on everything. The conclusion is that although we may be able to resolve one side of the tension we can’t resolve both.

This means that an organisation’s culture will have a “profile” which conveys how these tensions have been resolved and these profiles lend themselves to a particular strategy.

For example, a culture that is biased towards Adaptability and Involvement will be good at encouraging and delivering innovation and product improvements; whereas one that is biased towards Mission and Consistency is more likely to lead on perceived quality and return on investment.

So how do you put this into action?

The first step is to “take the temperature” of your own organisation’s culture plus that of your critical supplier (if you are implementing a SRM programme). This can be done through a mixture of surveys, workshops and interviews. These are often best done by a “honest broker” who has no direct involvement in the strategy (this can be someone from your own organisation or a third party from an external business).

The diagram below summarises the output from such an exercise and shows that the culture of the relationship (in this case) is biased towards innovation.

Innovation wheel

Once you have a view of the culture you can check your strategy against it to see whether there is a good enough fit. If there isn’t then you need to do some work on either amending the strategy or changing the culture. More on this in a future article.

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