Culture and Strategy

What is culture and why is it important?

When discussing culture, I assume most of us think of our national culture, which distinguishes human beings from different parts of the world. People raised in unidentical environments will see and respond to the world in a widely varying way.

Back in the day, Lotrecchiano’s (2005) defined culture as “a person’s or group’s beliefs, their interactions with the world, and how they are influenced by the environment in which they exist.”. Social scientists used the term “ethnic group” or “cultural group” to refer to people who share common aspects of culture. However, defining culture is not an easy job for many reasons, among other things, it lends itself to different interpretations at different levels, not just national or regional cultures.

It is also important to understand some key characteristics of culture, regardless of the definition one favours:

Holistic – it encompasses all aspects of human life and society including language, beliefs, customs, norms, technology and so on, forming an interconnected system where every part influences and is influenced by others.

Example: In many Indigenous cultures, language is closely tied to the land, nature, and spirituality. The vocabulary reflects deep relationships with the environment, which shapes both identity and worldview.

Learned – it is not biologically inherited but rather passed down from one generation to another, through social interactions, communication and education. As community members grew up, they became aware of what is acceptable and what isn’t in their culture.

Example: Immigrants often learn the language, customs, and behaviours of their new country over time.

Relative – culture varies widely across societies. So, what is considered normal, polite or moral in one culture might differ significantly from another.

Example: In some cultures, direct eye contact is seen as respectful; in others, it may be considered rude or confrontational.

Dynamic – culture is not fixed or static. Culture constantly evolves and adapts as a response to changing circumstances and as a result of the influence of other cultures.

Example – The global spread of Western pop culture has influenced local cultures worldwide, such as K-pop in South Korea, which combines Western musical styles with Korean language and cultural elements.

Similar to an iceberg – Like an iceberg, culture has many layers. Some of it is visible, on the surface, but a much larger part is below water level and very difficult to see.

Example – In many Western cultures, there is an unspoken rule about personal space. However, in some Middle Eastern or South American cultures, people may stand much closer to each other during conversations, which may seem strange or uncomfortable to someone from a Western culture.

Source: Difficulties in defining culture

Cultural influences at multiple levels

As mentioned in the previous section, defining culture is challenging as it exists on more than one level as the below image shows.

Source: Johnson, G., Scholes, K., and Whittington, R., 2008. Exploring corporate strategy. 8th ed. Harlow: Pearson Education, page 190.

National and regional cultures

Geert Hofstede is perhaps the most well-known writer about national culture. He came up with the so-called six dimensions or basic issues that society needs in order to organisation itself.

• The Power Distance

• The Collectivism vs Individualism

• The Uncertainty Avoidance

• The Femininity vs Masculinity

• The Long-term vs Short-term Orientation

• The Indulgence vs Restraint

Source: Hofstede’s Cultural Dimensions Theory

The above influential framework demonstrated how the attitude towards work, authority, equality and other important factors differs from one country to another. These differences have been shaped by powerful cultural forces related to history, religion and even climate over centuries.

Businesses that operate in multiple countries need to understand how to cope with such cultural differences in the workplace to improve communication, strengthen leadership power and streamline decision-making.

For example, an American organisation that wants to expand into South Korea would face typical challenges as Koreans generally emphasise hierarchy and respect for authority compared to the U.S.A., which favours a flatter structure. In addition, South Korean culture is highly collectivist (score of 82), opposing to American culture of individualism (score of 91). All of these mean American leaders need to adjust their management styles that reflect the Korean preference for top-down decision-making and create opportunities for team building to foster a sense of belonging and group cohesion.

Source: Country comparison graphs

The organisational field

The culture of an organisation is also shaped by ‘work-based’ groupings such as an industry (or sector), also known as an organisational field, a community of organisations that interact more frequently with one another than with those outside the field. Such organisations may share a common technology, set of regulations or education and training.

For instance, there are many organisations in the organisational field of ‘healthcare’, such as hospitals, medical research institutions, pharmaceutical companies and health insurance providers. The roles of each are different and their visions of how public health would be achieved differ. However, they are all committed to the principle that standard healthcare needs should be addressed, and worth striving for. Therefore, they interact frequently on this issue and develop shared ways of understanding and debating when issues arise.

Organisational culture

In a formal definition of organisational culture, Edgar Schein (1983) defined it as the pattern of ‘basic assumptions and beliefs’ that are shared by members of an organisation to deal with its problems of ‘external adaptation and internal integration’.

The culture of an organisation can be analysed at different levels, starting with:

• Visible artifacts – The organisation’s constructed environment, architecture, technology, office layout, manner of dress, visible or audible behaviour patterns, public documents such as charters, employee orientation materials etc. This level of analysis is ‘tricky’ because the data are easy to obtain but we often do not understand the underlying logic, the ‘why’ of what we observe.

• Values – Values govern behaviour which helps answer the question of why people behave the way they do. They are often written down as statements about the organisation’s mission, objectives and strategies. Values are harder to observe directly and require interviews with key members of the organisation.

• Taken-for-granted assumptions – At the core of an organization’s culture, these assumptions reflect the collective experiences of aspects of organizational life that are often difficult to articulate or explain. They shape how group members perceive, think, and feel about various situations, significantly influencing their values and guiding behaviours. A key challenge with these assumptions is that they are deeply ingrained, making them difficult to change—particularly when strategic transformation is required.

Source: Schein’s iceberg model of culture.

Functional/divisional culture

While an organisation may have an overarching culture, distinct subcultures often emerge within various functions—such as finance, marketing, and operations—due to the differing nature of their work. Similarly, geographical divisions in multinational companies may develop unique cultural traits. When divisions pursue diverse strategies, these distinct market positionings naturally foster varied subcultures. Consequently, aligning strategic positioning with organisational culture becomes a crucial factor for achieving organisational success.

Culture’s influences on strategy

Strategy has long been recognized as key to business success, and purpose has become a vital element of modern business. However, culture is often the missing link between the two, creating a significant gap between a company’s stated purpose and its employees’ actual experiences.

Culture is, in effect, an unintended driver of strategy. The effect of culture on strategy can be summarised as follows:

Source: Johnson, G., Scholes, K., and Whittington, R., 2008. Exploring corporate strategy. 8th ed. Harlow: Pearson Education, page 196.

Based on the above illustration of culture’s influences on strategy, when faced with a stimulus for action, such as declining performance:

Step 1 Managers will first attempt to improve the implementation of the existing strategy. This might be through:

• Lower cost

• Improve efficiency

• Tighten controls or;

• Improve accepted ways of doing things

Step 2  If things in step 1 are not effective, a change of strategy may occur, but still in line with the existing culture. At this step, it focuses on understanding gaps in the current strategy and realigning it with organisational goals or market demands.

Step 3 If the reconstructing strategy fails, the final step is to abandon the existing paradigm altogether and adopt an entirely new approach. This involves a transformative shift in thinking and operations, often challenging deep-seated organisational norms or assumptions.

Analysing culture with culture web

Components of culture web

Being able to analyse culture is critical, as highlighted in the preceding sections. The cultural web offers an effective framework for this purpose, providing a rich source of information about the existing culture and its impact on an organisation or specific functions.

The elements of the cultural web are as follows:

Source: Johnson, G., Scholes, K., and Whittington, R., 2008. Exploring corporate strategy. 8th ed. Harlow: Pearson Education, page 198.

• At the core, Paradigm is a collective experience that is applied to a situation to make sense of it and inform a likely course of action. For instance, the paradigm of a charity may lie in helping those in need, but its success depends on being effectively managed to achieve its primary goal of raising funds. Nevertheless, insiders within an organisation may find it challenging to identify it as these assumptions have been taken for granted for a long time. What they could do might be to ask the outside person for more subjective perspectives or examine other aspects of the culture web as explained in the following parts.

• Routines are the day-to-day behaviours, actions and patterns of work that define “how we do things around here”. These routines are significant because they reflect and reinforce the organization’s culture, shaping how employees interact, make decisions, and approach tasks.

• The rituals of organisational life are activities or events that reinforce what the organization deems important and help build a sense of belonging and shared purpose among its members. Unlike routines, which are practical and habitual, rituals carry a deeper symbolic meaning and are often tied to the organization’s values, identity, and culture. For example, an annual awards ceremony might symbolise the organization’s commitment to recognizing excellence. However, rituals can also be informal activities such as drinks in the pub after work or gossiping around photocopying machines.

• Symbols refer to objectives, events, acts or people that convey, maintain or create meaning over and above their functional purpose. For example, offices and office layouts, cars and titles have a functional purpose but are also typically signals about status and hierarchy.

• Stories are the narratives that circulate within an organization, often highlighting key events, individuals, successes, failures, or defining moments in the organisation’s history, providing a way for employees to interpret and connect with the organisation’s culture. For instance, stories about how the organisation was started and how the organisation positively impacted customers, showcasing its mission or purpose.

• Power structures are the most powerful groupings within an organisation that shape the organization’s culture by influencing what is prioritized, how conflicts are resolved, and how authority is perceived and exercised. Different types of power structures can be centralised/decentralised power, cultural icons/heroes, a founder or charismatic leader and so on.

• Organisational structure refers to the formal and informal frameworks that define how work is organised, tasks are coordinated and authority is distributed within an organisation. It reflects how roles, responsibilities, and communication flows are designed and carried out, shaping the organization’s culture and influencing employee behaviour. For example, formal hierarchical, mechanistic structures may emphasise that strategy is the province of top managers and everyone else is ‘working to orders’.

• Control systems consider what is important to monitor in the organisation. Systems including mechanisms, processes and procedures help ensure that an organisation stays aligned with its goals, maintains standards, and operates effectively.

The question to ask

If an analysis of the culture of an organisation is to be undertaken, knowing some useful questions might help build up an understanding of culture using the cultural web.

Source: Johnson, G., Scholes, K., and Whittington, R., 2008. Exploring corporate strategy. 8th ed. Harlow: Pearson Education, page 202.

Using the above framework, a version of the culture web has been adapted and produced by managers and staff of the UK Forestry Commission, a public sector organisation charged with managing the forests of the UK as illustrated below:

Source: Johnson, G., Scholes, K., and Whittington, R., 2008. Exploring corporate strategy. 8th ed. Harlow: Pearson Education, page 200.

Final thoughts

In summary, culture plays a critical role in shaping human interactions, influencing strategic decision-making, and driving organizational success. By fostering the importance of cultural awareness with useful frameworks and tools such as the culture web, managers of the organisation can effectively analyse cultural influences and navigate complexity in diverse settings, whether adapting business strategies across different countries or aligning organizational practices with shared values and assumptions.

References

Johnson, G, Scholes, K and Whittington, R 2008, Exploring corporate strategy, 8th ed, Harlow: Pearson Education.

Joly, H 2022, Does your company’s culture reinforce its strategy and purpose?, Harvard Business Review, available at <https://hbr.org/2022/06/does-your-companys-culture-reinforce-its-strategy-and-purpose>.

National Center for Cultural Competence n.d., Cultural Awareness, George Town University, available at <https://nccc.georgetown.edu/curricula/awareness/C5.html>.

University of Oxford n.d., My culture myself? What is culture anyway?, University of Oxford, available at <https://www.conted.ox.ac.uk/courses/samples/inter-culturally-speaking-online/index.html>.

Geert Hofstede n.d., The 6-D model of national culture, Geert Hofstede, available at <https://geerthofstede.com/culture-geert-hofstede-gert-jan-hofstede/6d-model-of-national-culture/>.

BA Theories 2021, Hofstede’s Cultural Dimensions Theory, BA Theories, available at <https://www.batheories.com/hofstede-cultural-dimensions-theory/?noamp=mobile>.

The Open University n.d., Defining culture: the gold standard, The Open University, available at <https://www.open.edu/openlearn/money-business/hybrid-working-skills-leadership/content-section-1.5>.