Amy Silverstein is the senior director of People for Pizza Pizza Ltd.
The debate over culture versus strategy has shifted notably over the past decade, with business leaders and organizational experts placing a higher value on corporate culture than they’ve done in the past.
Consider a 2021 PwC survey that found close to 70 per cent of executives believed culture should be an important topic on the agenda of their company’s senior leadership. Eight years earlier, the same question garnered a response of less than 55 per cent.
This rising recognition of the importance of culture has led to the popularity of statements such as “culture eats strategy for breakfast” – a catchy phrase attributed often, albeit erroneously, to management legend Peter Drucker. But while it’s encouraging to see corporate culture finally getting the credit it deserves, it’s time we stopped weighing its importance against strategy.
Culture should matter as much as strategy – our experience at Pizza Pizza bears this out.
As companies come under greater pressure to meet financial targets, they often start to prioritize strategy over culture. It’s easy to see why: strategy is designed to deliver results within defined and usually accelerated timespans. By comparison, it’s generally believed that building culture takes time and results are often intangible even when they’re measurable.
But when you prioritize both strategy and culture, what you get is a healthy organization – with strong employee engagement and satisfaction – with a deep understanding of your business strategy and a firm commitment to driving it forward. That’s because one of the hallmarks of a healthy culture is the organization’s willingness to share the details of its strategy with its workers, and to articulate clearly how each worker’s actions can contribute directly to strategic goals.
Leaders who prioritize strategy over culture often do so because they can’t make that direct connection between culture and business results. This is where data comes in. In 2023, Pizza Pizza saw a 21-point increase from the previous year in the number of employees willing to recommend their workplace to family and friends.
When we looked at the factors that contributed to this improvement, we saw high scores in areas such as goals and alignment, mission and purpose, managers’ willingness to share information with their team and senior leaders’ ability to clearly communicate our organization’s future direction.
Things got even more interesting when we layered these culture-based metrics against our strategy metrics. As our engagement scores went up, so did our results against strategy. Among other things, we successfully expanded our network of restaurants and increased same-store sales.
While the direct, cause-and-effect relationships in these parallel improvements in culture and strategic results can’t be drawn in a solid and irrefutable line, the underlying logic is sound: When employees know the organization’s goals and feel their contributions matter, they are more engaged, productive and innovative. And when employees are more engaged, productive and innovative, the organization succeeds.
A solid strategy is, of course, critical to this success. But as our culture at Pizza Pizza has continued to improve markedly in recent years – in 2022 executive search firm Waterstone Human Capital ranked us among Canada’s most admired cultures – we saw first-hand how a great culture can really drive the behaviours that deliver results.
While I believe that culture matters as much as strategy, I think it’s worth making the point that neither the best-embraced culture nor the smartest strategy can work if the two are incompatible. A 2023 article by the Balanced Scorecard Institute, a global management consulting firm, illustrates the impact of misalignment between the values underlying culture and strategy. A conservative and risk-averse culture, for example, could hamper a strategy that requires rapid decision-making. Conversely, a culture that puts a high value on creativity and experimentation is likely to lead to successful execution of an innovation-focused strategy.
“Organizational culture is not a side note in the process of strategy execution,” concluded the article. “It is a central player capable of making or breaking the successful implementation of strategic initiatives critical to the success of the organization’s strategy.”
The article also underlined culture’s role in strengthening an organization’s ability to adapt to change. I attribute Pizza Pizza’s resilience during the pandemic, as well as our strong recent performance, to our healthy culture.
Organizations that place equal value on culture and strategy don’t always focus on both at the same time. They don’t need to, former Best Buy chief executive officer Hubert Joly wrote in a 2022 article for Harvard Business Review.
Mr. Joly viewed culture and strategy as part of a triangle that also includes purpose. Each of these three connected angles shapes the other two, he wrote, and if one changes “the other two must evolve and adjust to maintain balance and shape, or the triangle breaks and falls apart.”
The decision to focus on one angle over another should depend entirely on circumstances, he said. Trying to focus on all three at once inevitably leads to “heroic mediocrity.”
From Mr. Joly’s perspective, prioritizing culture over strategy, or vice versa, is a matter of focusing on the right thing at the right time.
From my perspective – and I believe other people at Pizza Pizza would agree with me on this – it’s always the right time to focus on culture.
This column is part of Globe Careers’ Leadership Lab series, where executives and experts share their views and advice about the world of work. Find all Leadership Lab stories at tgam.ca/leadershiplab and guidelines for how to contribute to the column here.