The power of culture transformation

Transforming organizational culture is a complex undertaking, but the benefits are massive. In the report, we outline how to successfully approach culture change.

Each year, companies invest millions in growth strategies such as mergers and acquisitions, global expansion, and new market penetration. Yet only a fraction see the results they hoped for. Successful execution of a growth strategy depends not only on the right talent but also on having a culture that drives high performance.

Changing the culture, however, is daunting for any organization. Culture is deeply embedded in values, assumptions, behaviors, and attitudes. It is, in essence, the human glue that makes the company unique.

Turning a culture 180 degrees is neither possible nor desirable. The goal of culture transformation is to preserve those aspects of the culture that made a company strong and at the same time to alter any habits that are impeding strategic change. Finding the perfect alignment between culture and a new strategy takes time. But with persistence and a comprehensive understanding of what levers can steer the culture, organizations can move themselves toward that desired state.

Execution trinity: culture, strategy, and talent.

Executing a new business strategy requires aligning three key areas: culture, strategy, and talent. A 2010 research study found that alignment of day-to-day work to what the company stands for drives employee engagement (Aon-Hewitt 2010). Organizations with high levels of engagement outperformed the total stock market index and posted total shareholder returns 22% higher than average. Companies with low engagement had a total shareholder return that was 28% lower than average.

In a 2014 Korn Ferry survey, 72% of executives agreed that culture is extremely important to organizational performance, yet only 32% believed their own organization’s culture is aligned to its business strategies.

To align its culture with its business strategy, an organization must have a clear
understanding of:

  • The type of culture that will drive its specific strategy.
  • The current culture and how it supports or hinders strategy execution.
  • The differences between the two.
  • The levers that will have a powerful impact on culture transformation (potential accelerators).
  • Foreseeable challenges that could derail efforts.

Effectively addressing an organization’s culture during a period of strategy change will help maintain high levels of productivity, engagement, and focus—and thus help ensure financial performance. It also helps an organization retain its most valuable asset: its best talent.

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