Strategy versus Culture: How to Exploit Low Chances of Success When Starting a Cultural Revolution in a Society, a Company, or an Organization
The question of what is more important — strategy or culture — in the life of a society or an organization is probably raised as often as the question of what is primary when raising a child: nature or nurture.
Culture, like nature when raising a child, reflects the result of evolution, that is, a gradual, lengthy process leading to a specific way a society, or an organization as part of this society, works.
On the other hand, management strategy, most often, seeks to change the culture of a society or an organization in a revolutionary way, thereby modifying evolutionary processes. The same thing happens with the upbringing of children: they are given what the educator considers necessary to instill in them, thus trying to “correct” their natural, instinctive traits.
Assuming that the implementation of revolutionary transformations by seeking to accelerate or even to change evolutionary processes is an extremely time-consuming process, as well as intellectually, organizationally and financially costly, the chances of success are obviously not high.
However, if the strategy implemented by a country’s leaders or an organization’s managers cannot change the culture in a society or an organization at all, then this may well mean a developmental dead end. If a society or an organization simply “drifts” along the river called “evolution”, then they may not come anywhere. There are probably more examples of the societies and organizations that have already vanished or have been falling into decay than there are examples of the successful ones. The same applies to the upbringing of children if it is totally left to chance.
So, what is necessary to succeed when implementing your management strategy aimed at transforming a society or an organization, given the chances of success are rather low? The necessary factors may look like this, in declining order of importance:
1. “Fanatical”, Professional, and Organizationally Skillful Leadership
The word “fanatical” implies not just an ideological acknowledgement of the need to implement the strategy, but a sincere, almost religious, belief in its necessity. Most revolutionary transformations of societies and organizations in different periods of human history were primarily led by the individuals with this “fanatical” personality trait. We can recall examples from different historical periods: Alexander the Great and the Hellenization of the Middle East; Julius Caesar and the transformation of the Roman Republic into a monarchy; Oliver Cromwell and the end of absolutism in England; Peter the Great and his transformations in Russia; Napoleon and the end of absolutism in France; Lenin and the formation of the USSR; Franklin D. Roosevelt and the “peaceful” revolution in America during the Great Depression of the 1930s, etc.
Almost all the leaders of successful revolutionary transformations of societies or organizations had choleric personality traits and a “weak”, from a biological point of view, nervous system. Its “weakness” implied an inability to accept the situation as it is and “relax”. The only things that could calm it down for a while were actions aimed at correcting the real or imaginary shortcomings of the society. A classic example is Alexander the Great’s approach to solving the “Gordian Knot” problem. He simply cut it in half instead of wasting time (and irritating his nervous system!) to untie it. After all, as Plutarch claimed: “He did not covet pleasure, nor even wealth, but excellence and fame”.
Of course, being a “fanatic” is not enough. It seems obvious that you should have organizational skills. But you should be a professional in your field too. This factor is not always obvious for many managers. There are many brilliant engineers. But Henry Ford turned out to be only one of the few engineers capable of starting and successfully growing a revolutionary manufacturing company. Being “only” a good manager is not enough to successfully carry out revolutionary transformations. One should be a professional in his or her field too. Steve Jobs, first and foremost, was a great salesman, not a hi-tech guru. But he was also a professional, being able to understand complex technical issues perfectly well.
It is possible, without being a professional, to “administer” slow evolutionary processes regardless of the industry. However, the implementation of a revolutionary strategy implies a good knowledge of the field. Otherwise, “evolutionist insiders” will almost always have a good chance to slow down the revolutionary process, “dilute” it, or “freeze” it.
2. The Creative Potential Within an Organization: People Who Like What They Do.
Obviously, “fanatical” leaders who are convinced of the rightness of their cause is the necessary condition but not the sufficient one. Leaders need people who will put their ideas into practice. The best practitioners are the people who like what they do. In fact, this again has something in common with the topic of parenting. If you like something to do, then there is an innate inclination towards it. If a person is passionate about a project, it implies that he or she will try much harder in trying to deliver a high-quality result, regardless of his or her material and non-material motivation.
That is why the availability of such people is extremely important. “Dry”, unenthusiastic practitioners can be assigned various tasks when implementing a revolutionary project, if they are materially and non-materially motivated. However, their performance will most likely be based on the principle of achieving the minimum acceptable result. You can hardly expect anything innovative from them since innovations require deep immersion in the subject. And this is practically impossible without being genuinely interested in what you do. The genuine interest is not based only on the principles of material or non-material motivation. Enthusiastic people are intellectually involved in their work rather than just motivated by the promises of financial and non-financial rewards. This can be compared to writing a school essay. If the topic is not interesting, then the main question schoolchildren usually ask is the minimum required word count. On the other hand, if the topic is interesting, then schoolchildren effortlessly write long and high-quality essays.
That was the main reason why the leaders of the most successful and even radical revolutionary transformations were quite careful in their relationships with good, enthusiastic professionals, despite ideological differences.
From a strategic point of view, it is always better to do things that you like. Doing what you like will make you go further and deeper compared to others. That is a very good basis for you to be more competitive in the field of your interest.
3. Motivation: Material, Non-Material, Negative
In general, revolutionary transformations of societies or organizations were successful only when the vast majority of a country’s people or a company’s staff ultimately felt the material benefits of the changes. By and large, a revolution is an attempt either to accelerate the evolutionary process or to correct its course. That is why the spread of Greek influence in the Middle East, the transformation of the Roman Republic into the Roman Empire, the elimination of absolutism in England and France, the resolution of the long overdue land issue in the USSR, and the New Deal in America were the result of the objective needs of these societies. The same applies to such classic examples from the business history as the mass introduction of personal means of transport of the Ford era, or the mass introduction of personal means of communication of the Jobs era. And this aspect is clear and obvious.
It is not always obvious, however, that generally higher income or higher wages alone are not sufficient for a successful revolution. Economic inequality plays its important role too. Humans are a highly social species, so they evaluate financial aspects not only in absolute terms, but in relative terms as well. You can call it a built-in propensity for “fairness”. In this regard, we can mention well-known experiments when banknotes were distributed to two groups of students: one group was handed a bill with the face value of $50, while the second group was handed a bill with the face value of $100. The group that received the $50 bill was outraged by this “unfair” treatment and preferred to return the money, provided that the second group of students also returns their “free” $100 bill. Moreover, this innate sense of “fairness” extends not only to humans and apes, but also to monkeys. There was an experiment involving two Capuchin monkeys where one of them received a grape, while the other one got a slice of cucumber. When the monkeys were in isolation, they happily accepted their respective food treats. But when the monkey receiving the cucumber saw the other monkey getting the grape, she was extremely «indignant» and could even throw the “unfair” treat out of the cage. It is not difficult to guess that Capuchin monkeys prefer grapes to cucumbers.
This does not mean that people want to be paid the same salary as was often the case with a wage “equalization” system in the USSR. This certainly did not motivate workers, given the differences in their contribution to the outcome. The threshold at which an employee begins to feel motivated can be called a direct, objectively motivating factor. But a very large difference in wages may be demotivating too. If employees know (and they often do) that management receives ten times more, then this can be called an indirect, subjectively demotivating factor.
Societies and companies with a high degree of wage “equalization” are unstable “at the top”. Most often, these systems undergo revolutionary changes initiated by the elite within the context of a country or by the management within the context of a company. A good example is the fate of the Soviet Union or the attempts of the management of state-owned companies to privatize them.
On the other hand, societies and companies with a high level of income inequality are unstable “at the bottom”. This can be expressed not only in the revolutionary impulse of the working class, but also in a large-scale emigration in the context of a country or a high turnover rate of employees in the context of a company. A good example is Franklin D. Roosevelt’s New Deal in the 1930s, which, among other things, aimed at equalizing the standard of living: in the period from 1929 to 1950 the share of wealth held by the top 0.1% of US residents fell from 24% to 10%, while the top marginal income tax rate rose from 24% to 84% [ 1 ]. Nowadays Roosevelt is called the savior of capitalism. Then the press called him a traitor to his class.
It is difficult to indicate any quantitative threshold of direct, objective motivation or indirect, subjective demotivation. If we make comparisons among developed countries, the Scandinavian countries, Japan, and Germany are the countries with the lowest levels of income inequality. The highest levels of income inequality are observed in English-speaking countries (U.S., U.K., Australia) and in Southern Europe (Portugal, Spain, Italy, Greece). It is not surprising that the level of political uncertainty was higher in the second group of countries. However, it is also not surprising that the owners of many large companies, sports stars, and other celebrities from the first group of countries frequently move to live outside their home countries.
If material motivation is not possible, then it is necessary to use non-material motivation. In principle, this is in line with the classical microeconomic problem where each person maximizes his or her utility function, consisting of the amount of consumption and the amount of leisure time. Therefore, a more flexible work schedule, remote work, and other similar “perks” can be useful in retaining employees. But it is extremely unlikely that people, who consider the availability of leisure or free time to be an important factor in choosing a job, will be fertile ground for implementing a strategy of radical changes. A classic example is students who earn extra money to supplement their income during their studies. The word “moonlighting” rather than “working” reflects very well their attitude towards their job.
Negative motivation finds its expression in a policy pursued by the leaders of a country or the management of a company which can be formulated as “you have nowhere to go anyway”. In principle, such a policy can be pursued in cases of military conflicts, serious social upheavals, natural and technogenic disasters, epidemics and pandemics. As Churchill used to say: “Never let a good crisis go to waste.” It is hard to disagree. As a matter of fact, these are the situations when revolutions do occur: “The bottoms do not want and the tops cannot live in the old way” or vice versa.
4. Ideology: Sensible Agitprop
The role of propaganda when implementing major strategic changes is undoubtedly important. But, as history shows, the best propaganda, like lies, is a half-truth. In other words, some truth must still be present. The experience of completely different socio-economic systems provides good evidence for this observation. In the early years of the Soviet rule propaganda kept pace with the real improvement of socio-economic conditions and therefore it was effective. Towards the end of the Soviet period it degraded to entirely empty slogans against the background of socio-economic stagnation.
Similar observations can be made with respect to what is happening now in the United States and many other Western countries. In a recent study McKinsey, a management-consultant firm, provides the following figures: in the age of “renewed economic progress” from 1939 to 1973 the average annual per capita GDP growth rate in the United States and Western European countries was +3.1%, while during the period of “low growth and/or great divide”, as defined by McKinsey, from 2007 to 2019 the average annual per capita GDP growth rate in the United States was only +1% [ 2 ]. At the same time, the share of wealth held by the top 1% of Americans fell from 51% in 1929 to 22% in the late 1970s. By 2012 it had risen back to 42%. The share of income received by the same top 1% of US residents decreased from 24% in 1929 to 8% in the late 1970s. By 2018 it had recovered to the level last seen during the “roaring” 1920s: 22% [ 3 ]. In this situation it is much harder to sell the “American Dream”. This is the major cause of political instability in recent years. This explains very well the ineffectiveness of “progressive” propaganda too because the economic policies pursued in this period were not, in fact, progressive.
Neither will help agitprop tricks à la “reaching out to the masses”. Rather, it is likely to have the opposite, annoying effect. The general mood of the population in most countries indicates that it has already had enough of the “sweetened” politically correct “if you try harder, you will definitely succeed” slogans. The real world does not function like that. And there is nothing certain in our life, except death and taxes. The “if you don’t try at all, you certainly won’t succeed” message is much more realistic because “doing nothing” is equivalent to “death”. That is why when implementing propaganda campaigns within societies or companies, it is necessary to present a vision and provide a guideline to indicate where we are moving. However, it is also important to acknowledge the existence of well-known issues and realistic ways of solving them. Otherwise, over time, the people no longer take seriously even reasonable appeals.
Summary:
If a company or an organization needs to implement strategic changes, then it is of utmost importance to identify the availability of the required prerequisites: “fanatical” leadership, the creative potential, the effective motivation system, and the sensible propaganda support.
If the company’s management is not “fanatically” convinced of the need for major changes; if there is a shortage of people in the company who really like what they do; if the system of material motivation is not sufficiently motivating or is clearly demotivating; if the emphasis is primarily on non-material factors, while propaganda has the opposite effect, then the low chances of success become illusory.
In this situation, the company’s management should accept the evolutionary course of events and engage in “administering” the prevailing culture, hoping for its gradual, incremental transformation… or for a crisis. It is almost a sin not to exploit a good crisis!
References:
[ 1 ] Thomas Pikketty, Emmanuel Saez, Gabriel Zucman, The Urban-Brookings Tax Policy Center; «The Pandemic Will Reduce Inequality — or Make It Worse. The Rich Got Even Richer After the Great Recession, But The Great Depression Changed The Social Order», Ben Steverman, Bloomberg, 29 April 2020.
[ 2 ] «Will Productivity and Growth Return After the COVID-19 Crisis»?, Jan Mischke, Jonathan Woetzel, Sven Smit, James Manyika, Michael Birshan, Eckart Windhagen, Jörg Schubert, Solveigh Hieronimus, Guillaume Dagorret, and Marc Canal Noguer, McKinsey Global Institute, 30 March 2021.
[ 3 ] Emmanuel Saez, Gabriel Zucman, as published in «A Guide to Statistics on Historical Trends in Income Inequality», Chad Stone, Danilo Trisi, Arloc Sherman, Jennifer Beltrán, Center on Budget and Policy Priorities, 13 January 2020.
