Why Every Executive Should Be Focusing on Culture Change Now

As the global community emerges from the COVID-19 pandemic, business leaders must lay the foundation for their organizations to thrive in a very different world. The pandemic accelerated three interlinked types of transformation affecting every industry: the adoption of digital technologies, the development of new business models, and the implementation of new ways of working. Most companies are now engaged in one or more of these types of transformation. Businesses that aren’t — whether because they have ignored the signals or have failed to adapt quickly enough — risk becoming obsolete.

While most executives recognize the transformation imperative, far fewer understand the essential connection between business transformation and culture change. Companies cannot realize the true potential of digital transformation, embrace new business models, or implement new ways of working without supporting changes in organizational behaviors and norms. A recent study by Boston Consulting Group found that companies that focused on culture were five times more likely to achieve breakthrough results in their digital transformation initiatives than those that didn’t.

Focusing on culture change also can help companies that have not yet embarked on transformation journeys. An adaptive culture provides a foundation for transformation. It also helps organizations overcome cultural fragmentation due to the incomplete integration of acquisitions or a legacy of growth across multiple geographies.

Leaders also need to understand that culture is dynamic and that change will happen in their organizations even if they do nothing to guide it. Employee values, mindset, and behaviors have evolved rapidly in the past year. These changes may or may not be the ones your organization needs, or necessary changes may not be progressing at the right pace.

For these reasons, leaders must take a proactive approach to build the right culture now and avoid the need to reshape culture in parallel with large-scale organizational transformation.

What Is Organizational Culture?

We define culture as a shared set of values (what we care about), beliefs (what we believe to be true), and norms of behavior (how we do things). Cultures exist to align effort, engender shared sensemaking, increase predictability, and encode organizational lessons about what does and doesn’t work.

Intuitively, we know that a strong culture is essential for a company’s overall health and competitiveness. As the famous phrase attributed to Peter Drucker points out, “Culture eats strategy for breakfast.