Culture Eats Strategy for Breakfast, But the Category Leader Consumes All

The Mid-Market Business Strategy That Delivers the Highest Value

scale category leadership strategy culture We’ve all heard the famous Peter Drucker saying “Culture eats strategy for breakfast.” This means that the Culture of your company will determine its success, mediocrity, or failure—regardless of how strong your Strategy may be. Culture moderates your Strategy execution.

In a perfect world, Strategy and Culture should unfold simultaneously and be closely aligned. When in sync, they enable each other to create incredible organizational value, with a synergy that complements and nurtures each other.

Of course, this assumes the following:

  • the Culture/Strategy propulsion formula is correct,
  • Leadership wants to unlock the greatest possible enterprise value (where “good” isn’t good enough), and
  • different strategies deliver differing value plateaus

So how do you get started? Leadership’s first obligation is to choose the Strategy that will deliver the highest value and then design Culture accordingly. However, in our experience, Leaders often make the mistake of choosing the Strategy they are most familiar with—regardless of value potential.

We See Only What We Are Capable of Seeing. How Much Is Beyond Us?

Why do leaders forgo the highest value, highest return strategies? In our work we see three over-riding patterns:

  1. Hooked to Corporate Politics
  2. Rely Too Much on Past Experience
  3. Don’t See the Opportunity

When it comes to Strategy, executives have typically been schooled in and/or have experience with these “classic” business strategies.

  • Structuralism. Build the business operations around the current market conditions and use the industry structure to your advantage.
  • Growth. Focus on introducing new products or features or expanding into new markets.
  • Cost Leadership. Offer competitive pricing for your product or service.
  • Differentiation. Offer a truly unique product or service.
  • Premium Brand. Charge a high price for your product or service.
  • Acquisition. Promote growth by purchasing other businesses.
  • Focus. Choose what segment of the market you want to target through any of the above strategies.

The challenge is that this prior grounding gets in the way of seeing how Strategy (and Culture) have evolved. Newer, higher value creation strategies include:

  • Customer-centricity. Growth does not come from leading with your products, marketing, sales channels or campaigns, but instead from your customer’s needs and wishes.
  • Category Design. Growth comes from creating, developing, and dominating new categories of products and services.
  • Business Model. The choice of business model through which the firm will compete in the marketplace.

There is a better way

Imagine a business strategy that is designed to deliver exponential (as opposed to linear) growth and cultivates a synergistic culture to propel strategy execution.

It is created specifically for middle market companies that possess data from which new insights can be developed and the infrastructure to do something about it. When established companies develop the ability to align their strategy with tech-enabled business models, they can achieve category leadership and scale faster than start-ups and with greater agility than large organizations.

We named this Category Creation process SmartScaleSM.  Traditional business strategies can support rapid growth but not scale.  In order to have a meaningful impact on earnings and growth, the business model needs to be transformed. This means a Strategy and Culture that delivers value to the business that goes beyond simply competing against other companies and market participants. Instead, it requires that the business redefines the competitive space completely – creating a new category and then owning that space. This synergistic Strategy and Culture combination yields Category Leadership and sustainable Scale for your middle market company.

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At FortéOne, we’ve been on the forefront of change as thought and implementation leaders our entire careers. We know that Change is not a single initiative and Scale is not merely another program. Scale is a new way of seeing the world – it’s a paradigm, a lifestyle, a culture.

According to a global McKinsey performance study, less than 8% of strategic initiatives resulted in performance improvement. As seasoned authorities in sustainable value creation, we’ve made careers of leading those 8%. Ready to learn more?