“Culture eats strategy for breakfast” – does this saying still hold true?

“Culture eats strategy for breakfast” is a well-known quote often associated with management consultant Peter Drucker.

Drucker believed that organisational culture – the values, beliefs and behaviours that shape how work gets done – is more influential than any strategic plan a company might create.

But does that hold true in today’s tough economic times or does strategy need to be prioritised to ensure a company not only survives but thrives? 

In this article, we’ll explore the meaning behind this infamous business quote, the benefits and risks of running a culture-first company and how culture and strategy can work together successfully.

What does “culture eats strategy for breakfast” mean?

Management consultant Peter Drucker’s written work was hugely influential in the 1950s, 60s and 70s and his huge contribution to the philosophical and practical foundations of modern management theory is still applied today.

While some speculate that Drucker didn’t actually say this famous company culture quote, he did support a business model where culture was the foundation on which strategy was built. The saying still resonates with companies of all sizes today, but does it remain relevant in a post-pandemic and Brexit time of economic turbulence?

What’s the difference between culture and strategy?

First up, the saying doesn’t suggest that one is more important than the other. Culture and strategy are both crucial to business success. But whether you’re starting a business or looking to change your current culture, it’s important to understand the key differences between the two and how they work together.

Strategy provides the guiding principles and plan of action to achieve a company’s vision,  outlining the long-term goals and determining success and profitability. A good strategy can both clarify a company’s objectives and act as a guide to managers and executives during the decision-making process.

On the other hand, culture is what defines your organisation’s values and how employees interact to achieve its goals. There are many culture types out there – from fast-paced market cultures to family-focused clan cultures – all of which must align with those core values. It’s ultimately what motivates employees to have the same purpose of driving the business forward.

Understanding the quote

The quote itself means that no matter how strong your strategy is, your business won’t succeed if your employees don’t live by your culture. If they aren’t passionate about your company’s core values or mission, then your strategy will suffer as a result.

Your company’s organisational culture is what defines your shared values, attitudes and behaviours that make up your work environment. It’s this day-to-day experience of your employees that impacts overall productivity and profitability.

Benefits and risks of a culture-first company

Taken at face value, treating your staff well and ensuring they are happy should be a pre-requisite for any successful business. That said, while being culture-first can have multiple positive outcomes, it doesn’t come without potential pitfalls to be aware of.

Pros of being culture-first

• Core values are prioritised: The company sets its core values as the foundation for success and puts employees ahead of its strategic goals. This ensures that decision-making is aligned with those values and creates a sense of care between the company and its employees.
  
• Attracts and retains talent: Rather than solely focusing on skills, the culture-first approach prioritises alignment between company values and the candidate’s personal views. 68% of workers in the UK, France, Ireland and Germany prioritise organisations that share their values, according to a LinkedIn survey.
  
• Better work processes: Research by Bain & Company revealed that culture-driven organisations experience 26% fewer mistakes, 22% higher productivity, 41% lower absenteeism and 30% stronger customer satisfaction than other businesses.
  
• Staff turnover decreases: Culture-first companies are less likely to face high staff turnover, with 40% of them experiencing lower turnover rates than others. 89% of satisfied employees are also likely to recommend the company to others.
  
• Employees feel motivated: Employees are more likely to feel motivated and driven in their work. Companies with highly engaged employees are 21% more profitable and 17% more productive than those with disengaged staff, according to recent research by Gallup.
  
• Builds a good brand reputation: Internal culture impacts how companies are represented to external customers. Culture-first companies with a positive and consistent culture can enhance their brand reputation as it demonstrates their authenticity and reliability, making them more appealing to both talent and investors.

Cons of being culture-first

• Relationships are more important than results: While fostering good relationships with employees helps to build a strong culture, the balance between relationships and results can become blurred. This can lead to a lack of clear standards, unconstructive feedback and mistakes being swept under the rug to avoid conflict.
  
• Boredom and low motivation: Without clear expectations or proper feedback, employee motivation and productivity can suffer. This also poses the risk of “bore-out”, in which employees feel like their work is meaningless, in turn impacting their mental health.
  
• People avoid challenging the status quo: Employees don’t feel comfortable speaking out, and so go along with the majority to avoid rocking the boat. As a result, innovation is suppressed and decision-making is slowed down, often leading to bad decisions.
  
• Risk of resentment: As honest communication isn’t encouraged, this can lead to internal resentment among employees. For example, brushing mistakes under the rug or telling a colleague that they did a good job when it needed heavy adjustments. People not being held accountable for bad behaviour can also lead to mistrust, in turn risking a higher staff turnover.
  
• Lack of recognition: Unity and cooperation are heavily emphasised, so leaders often worry about giving recognition to an individual employee so that others don’t feel envious. To avoid this, they either give generic recognition to everyone or don’t give any at all. This makes employees feel undervalued as a result.
  
• Employees get rewarded for underperforming: Leaders try too hard to protect relationships. This results in a culture of fear and avoidance, where employees aren’t held accountable for poor quality work or bad behaviour.
  

Examples of culture-first companies

It’s fair to say that there are still many successful companies in 2024 who follow the ethos that “culture eats strategy for breakfast”. However, the general consensus is balancing the two is crucial. 

These two well-known brands illustrate what happens when the balance is good – and bad.  One is a lesson about adjusting your culture to keep happy employees, while the other demonstrates why the wrong culture is detrimental to your employees’ wellbeing and brand reputation.

Hall of Fame: Google’s priority on employee wellbeing

Google often makes the top of the list for its positive work culture, and for good reason.

Its organisational culture is built on the belief that happy and engaged employees are more likely to provide good quality work. By prioritising wellbeing and satisfaction, it has been able to create an environment where employees feel motivated and driven to do their best.

Everyone’s heard about Google’s legendary soft perks and benefits. Aside from the fun foosball tables and handy fitness facilities, free food and snacks were also a popular perk for the company, particularly during the Cost of Living crisis.

However, culture is about more than a hammock in the office. During the Great Resignation, Google’s approach to increasing employee happiness was to give employees more work. While this inevitably raised eyebrows, the company’s justification was to – give staff more purpose, get staff involved in projects outside their duties and set higher goals for employees to reach new achievements.

This approach is supported by a recent LinkedIn study, which reported that 71% of employees with “too much work” felt happier in their jobs compared to 62% who had “too little work”. The study also found that employees with more work were also more productive.

Hall of Shame: BrewDog called out for toxic work culture

Employees of brewery and pub chain BrewDog banded together to sign a formal grievance, accusing bosses of orchestrating a toxic culture of bullying in many bar locations. Employees also claimed that anyone who tried to improve the conditions was “sacked or forced out”. There were also accusations of workers being put at serious risk of electrocution due to cellars with wet floors and exposed wires.

This, just three years after former employees accused the company and its ex CEO James Watts of fostering “a culture of fear”, in which staff were subjected to bad treatment. An open letter on Twitter was posted, where BrewDog was accused of cutting corners on health and safety, not living by its values and creating a toxic environment, leaving staff with mental health issues.

“Growth, at all costs, has always been perceived as the number one focus for the company”, the letter reads. “Being treated like a human being was sadly not always a given for those working at BrewDog.”

Conclusion

Strategy and culture are the bread and butter of creating a successful business and for the current economic landscape, a balance between the two is essential. 

Your strategy is what guides your plan of action to achieve your goals. Your culture is what defines the values that you share with your employees. Together, a strong strategy and culture should work together to help your business adapt to challenges, unite your workforce and assess risk effectively.

Drucker’s words of wisdom on building a business serve as a strong reminder that while strategy is important, it’ll ultimately fall flat without a strong organisational culture to support it.