The recipe that binds strategy and organisation involves three key ingredients:

organisational structure, leadership and culture.

Introduction

Developing a strategic plan is vital to an organization’s success. An organization must be

able to efficiently execute that strategy to achieve its performance improvement goals. The
organization’s culture is often the most important determiner in successful execution. At the
core, implementing strategy depends on three essential elements, building and sustaining an
organizational culture that facilitates and accelerates change, having a strong l eadership team
that communicates an agency’s strategic priorities often and effectively and building an
organisational structure that is right for the strategy to succeed. This paper therefore argues
that the three essential ingredients for strategy in an organisation are organisational structure,
leadership and culture.

Organisational Structure as an ingredient that bind strategy and organisation

Strategy primarily refers to the roadmap laid out by an organization. The principal objective of
strategy is to ensure that an organization achieves the set targets in order to sustain and grow in
an increasingly competitive world. On the other hand, a structure is the manner in which the
internal resources of a company get connected with each other. Structure is not simply an
organization chart. Structure is all the people, positions, procedures, processes, culture,
technology and related elements that comprise the organization. It defines how all the pieces,
parts and processes work together (or don’t in some cases). This structure must be totally
integrated with strategy for the organization to achieve its mission and goals. Structure
supports strategy. If an organization changes its strategy, it must change its structure to support
the new strategy. When it doesn‘t, the structure acts like a bungee cord and pulls the
organization back to its old strategy. What the organization does defines the strategy.
Changing strategy means changing what everyone in the organization does (Ansoff, 1965).

The first important research on the strategy structure relationship was Alfred Chandler’s study of
nearly 100 large US companies. After tracing the development of these organizations over 50
years an compiling extensive case histories of companies such as DuPont, General Motors,
Standard Oil of New Jersey and Sears, Chandler concluded that changes in corporate strategy
precede and lead to changes in an organization’s structure. Chandler’s (1962) statement
Structure follows strategy’ implies that every organizational structure is mainly developed
based on the strategy of the organization and therefore successful implementation of an
organization’s strategy will depend on the firm’s primary organizational structure. This is so
because the firms key activities and the way in which they will be coordinated to achieve the
firm’s strategic purpose depends on the structure of the organization. The primary structure of
an organization is one of the basic means through which strategists position the firm so as to
execute the strategy in a manner that balances internal efficiency and effectiveness (Grant,
1998).

Since structure follows strategy, the choice of an organization structure largely depends on the
strategy of the firm. The structural design ties together key activities and resources of the firm
and it must therefore be closely aligned with the demands of the firm’s strategy. For instance,
based on a primary organization structure, the development of new product features may
require more collaborative working between separate departments and with suppliers and
distributors. This change in behavior might be supported by a reduction in departmentally based
targets and the creation of a cross-departmental development budget and thus a re-design in the
structure. Similarly, based on the same primary organizational structure of a firm and the need to
develop a new strategy, it can lead to the adoption of a new structure (Blaxill and Eckardt, 2009).

Take an example of a firm that begins as a simple functional unit operating at a single site such
as a shoe warehouse and within a single industry. The initial growth strategy of the firm is
volume expansion which creates a need for an administrative office that will manage the
increased volume. The growth strategy becomes geographic expansion which will require
multiple field units, still performing the same function but in different locations. Administrative
problems with regard to standardization, specialization and inter-unit coordination will lead to
geographic units and for a central administrative unit to oversee these problems. If the firm
carries on with the product diversification strategy, then a change in the structure of the firm has
to be done and adopt the multidivisional structure in which similar activities will be grouped and
separate divisions will handle independent products and will be responsible for short-run
operating decisions. It can be clearly seen that a firm will adopt a structure depending on the
type of strategy it wishes to accomplish (Mulcaster, 2009).
It takes the right structure for a strategy to succeed. Management that is solely focused on results
can have a tendency to direct everyone on what they need to do without paying attention to the
current way the organization works. While people may carry out these actions, it is only when
their daily way of working supports strategy that the organization‘s direction is sustainable over
time (Davis and Devinney, 1997). Chandler (1962) argues that structures follows strategy in
organizations. Strategy is the determination of long-term goals and objectives, courses of action
and allocation of resources, and structure is the way the organization is put together to administer
the strategy, with all the hierarchies and lines of authority that the strategy implies (Collins,
2007).

Coca-Cola, for example, operates on a multi-divisional (M-form) structure wherein the company
has structured its global business according to different regions in the world. More specifically,
Coca-Cola has five main geographic operating segments that operate as Strategic Business Units
(SBUs). The SBUs report to a parent company based at the corporate headquarters. Since Coca-
Cola operates through an SBU model, it has adopted a related-linked strategy. Coca-Cola offers
related products in the global market. Some of the products are same, while some are different
but related. For example, Coca-Cola (a carbonated drink) is a global product of the company,
whereas; Lilt is a local product that serves the markets in Great Britain and Ireland. Coca-Cola’s
other products are part of its overall product offering i.e. soft drinks. Under soft drinks, the
company caters to segments such as sports and health. Therefore, a related-linked strategy best
serves the goals of the company, as it has a related-diversified business. The strategy helps the
company to provide enough space to each SBU for decision-making.

An organization’s structure is a means to help management achieve its objectives. Because

objectives are derived from the organization’s overall strategy, it is only logical that strategy and
structure should be closely linked. For example, if the organization focuses on providing certain
services say, police protection in a community, its structure will be one that promotes
standardized and efficient services. Similarly, if an organization is attempting to employ a
growth strategy by entering into global markets, it will need a structure that is flexible, fluid, and
readily adaptable to the environment. Accordingly, organization structure should follow strategy.
And if management makes a significant change in its organization’s strategy, then it will need to
modify structure to accommodate and support that change.

Leadership as an ingredient that bind strategy and organisation

Leadership is a set of behavior that enforces the people to formulate the organizational goals and
then motivate them to jointly contribute in order to achieve organization’s goals. Basically leader
plays a vital role in the decision making to ensure efficacy (effectiveness) and success of the
organization. A leader should be supportive in order to guide subordinates. He should treat
everyone equally without any discrimination. He should appreciate every one’s involvement. It is
the responsibility of the leader to build strong relationships within the whole organization in both
vertically and horizontally. Leader should involve everyone in the strategic management process
because it is positively relating with overall performance. It is the commitment of the leader that
helps to achieve the strategic vision. Most importantly leader’s objectives should be integrating
with the organizations strategic goals and objectives to be champion. And for this leader’s power
should be use accurately with honesty and loyalty. Leader should have a clear mental approach
about the need of change and organization’s capabilities (Sami, Qamar & Khalid, 2011).

Organization’s performance depends upon the strategies that use to achieve company’s vision.
Leadership assimilates the strategy with vision to enrich the capability of the firm to perform
well or according to the need. Today’s business environment is rapidly changing and mostly
leaders try to adopt flexible and process improvement strategies to ensure responsiveness of the
organization towards change. Leadership influenced the whole decision making process and
decision making is the core of the strategic management process (Sami et al, 2011). It facilitates
the whole process starting from conceptual framework for strategy formulation and till the
evaluation. Especially strategy implementation is fully depending upon efficient decision
making. Basically leadership influences three areas of organization first, the vision, Secondly the
strategies itself and finally the values. These three components jointly create the culture of the
organization. It is the responsibility of the leader to introduce a clear understanding of the vision
throughout the organization. Everyone should know where we want to be in future. Vision
should be simple so that everyone can easily understand it. Vision is the hub of the organization
and is the heart of strategic management process.
Leadership is responsible for development of strategies to achieve the vision. Basically strategy
formulation means is to provide road map and this road map should be clear and focused. It is
the duty of leadership to relate the strategy process with the vision. It should develop a culture of
learning by providing a clear set of values for the organization. Values demonstrate the behavior
of the organization and lead the organization towards right. Both vision and strategies should
reflect these values. Once the leader understands the importance of values the process of strategy
formulation and implementation becomes easy. The most important role of the leadership is to
integrate the people with the strategic management process. It should involve everyone to ensure
responsiveness towards change (Jonminerich, 2008).

Leadership is critical to formulate and implement strategy. Formulated strategies are nothing if
they could not be implemented efficiently. Leaders generally divide strategy formulation and
implementation into five steps. And leadership is an important element for whole process.
Firstly, leaders are responsible to create vision that must be attached with the firm’s values and
also vision must be supportive and understandable. Vision tells the strategist about future and
values tells about the past. An important task for leadership is to make a distinction between
vision and mission. Secondly leaders are responsible to set organizational goals and objectives
especially their work is to define long term measurable objectives. Thirdly leaders formulate the
strategies that are suitable for the achievement of goals and objectives. Leaders define what
would be most appropriate way to cope with situation requirement. Fourthly leaders perform
their primary function that is the implementation of the strategy. According to Sophocles “what
you cannot enforce, do not command” because strategies are nothing if they can’t have
implemented efficiently and timely. Leaders construct the culture for change and develop the
capabilities for proper implementation of formulated strategy. Leaders should consider every
strategy as temporary because environment is dynamic. So leaders should focus at continuous
improvement of strategic management process (James and Green, 2005).

Leadership has a significant role play in the formation and carrying out of strategies. It is termed
as a linkage which connects the strategic management process with the aim and vision of the
organization. It begins the strategic thought by offering vision. After that, it works as a
foundation to cushion culture where everybody realizes what are the ways to do, and what are
the prevalent values regarding the firm. Fundamentally, values offer the direction. The
responsibility lies on the leadership to familiarize the values or a culture pertinent to corporate.
The vision of the leader itself proffers base line strategy formation and the pledge of the
leadership makes sure the enactment of strategy. Formulated strategies can’t be implemented
without the involvement of every one. Everyone should understand the need of change and
should contribute their effort to efficiently implement the strategies. And only leadership can
inspire and motivate the people to bring change because people always resist change. Leadership
works to find out the gaps by carefully scan the environment both internal and external. And
develop plans to fill these gaps by implementation of plans (Ascot, 2008).

Culture as an ingredient that bind strategy and organisation

Organizational culture includes the shared beliefs, norms and values within an organization. It
sets the foundation for strategy. In nowadays world-wide, every organization has its own
culture. The organizational culture just like an individual’s personality, can influence opinions,
actions and strategic choice within the firm. For a strategy within an organization to develop
and be implemented successfully, it must fully align with the organizational culture. Thus,
initiatives and goals must be established within an organization to support and establish an
organizational culture that embraces the organization’s strategy over time. Organizational
culture significantly influences the process of strategy formulation and selection, as well as its
implementation. On the other hand, the selection and implementation of strategy can
strengthen or change the existing organizational culture.

There is a strong link between corporate culture and strategic management. A company is
managed and strategic decisions are made using the same values, beliefs and principles set
through the organizational culture. Strategy sets the direction and focus, elaborates plans and
formal environment for employees to understand the organization’s goals, while culture helps
accomplishing goals by encompassing them in the organization’s shared values and beliefs. The
vision of the organization needs to be first assimilated in the culture. A strategy can only be
implemented it is backed by the corporate culture. The company sets the headline of its story
through the strategy and the language through culture. Intention is given by strategy and culture
sets and measure the aspiration, the commitment, the performance.

Corporate culture will impact the way a leader expresses his vision to other members of the
organization as well as gaining support for implementing new strategies. Strategy gives the
direction and culture sets the way you make your trip until destination positive, negative,
challenging, funny, and painful. According to Torben Rick corporate activity is shaped through
culture and strategy and works at its best when values, policies, strategies and practices are
harmonized. Just like in a symphony orchestra, where different family of instruments are mixed,
standing alone or grouped on different sections, employ various players and all under the
command of a conductor who unifies them and sets the sound of an ensemble, corporate culture
needs to unify its instruments to work out; behaviors, relationships, attitudes, values and
environment (Rick, 2013).

When an alignment is formed between organizational culture and strategic management, the
organization wins a competitive advantage in global market. The strategic plan needs to be
constant with culture and the board has the mission to set the risk appetite and risk tolerance for
the organization. Management is responsible for adopting and monitoring culture after it is
agreed by the board, aligning it to the business strategy. Also is management responsibility to
ensure trainings for staff on ethics, culture, risk management due diligence so they would
understand and apply them. The strategic way dictates what it should be done and culture
highlights the normal way to be done. Best results in company’s performance consists in the
alignment of both. A poor corporate culture can lead to disengagement of employees, decreasing
business performance and customers’ satisfaction. Corporate culture lies at the base of financial
crisis and many business failures, such as: Enron, BP Oil Spill, Toshiba, Volkswagen, Wells
Fargo and Olympus.
The alignment between strategy and culture: Source: (Rick, 2013)

One of the perspective to look at how organizational culture supports strategy is through its
influence on organization’s missions and visions. Missions and visions play an important part in
company’s strategic management. According to Harrison and John (2010), a written mission
statement is one of the most common way that managements use to communicate with their
staffs about strategic direction. Generally, missions and visions state the company’s purpose and
values which provides ideals and direction for the company as it interacts with the marketplace.
This will not only give a sense of purpose to internal and external stakeholders but also help
them in resource allocation decisions which is very for carrying out company’s strategy
management. However, in order to have an effective missions and visions, managements need to
connect them to organizational culture. In fact, one of the way to see an organization’s culture
through its reflection in core values (Schein 2010).

According to Tocquigny and Butcher (2012), core values are the set of belief or ideology by
which an organization operates. They are the foundation of organizational culture. In this fast
paced era when everything is changing, core values are still constant. The organization may
develop new strategies, policies or even significantly restructure; however, the fundamental
identity of the company still remains intact. These values are the essential, foundational
principles that will guide the organization’s vision, mission and strategies as well as define and
differentiating the organization from its competitors (Senske 2003). They create a foundation of
attitudes and practices that every members have to agree to follow in order to support the vision
and long term success of the organization. They also provide reference points and goals which
allows organization to shape and strengthen its business. As internalized perception and beliefs
can motivate staff’s performance to exceptional levels, an effective strategic leaders need to
understand and develop their intended implemented strategies that are suitable to organizational
culture in order to pursue the vision of organization’s leaders. Until organization decides what
those cultural values are, and how they will interact with each other, very difficult to do anything
else, whether setting goals, establishing measurements, solving problems or even making
decision effectively.

One example about how organizational culture can support company’s vision and mission is
Facebook. Facebook is described as ‘a cutting edge technology that constantly taking on new
challenges in the worlds of milliseconds and terabyte. Their vision for the company is to create a
fast changing and innovative company. They do not aim for perfection that requires a long time
in order to launch the product but they weigh heavily on being able to make and ship products
quickly, get customer’s feedback and continue to innovate it. In order to encourage creativity and
innovation within the company, Facebook’s culture created by Zuckerberg is a relaxed,
unstructured and open culture. Employees can come and go as they please, with no standard
work schedules which results in more employee freedom. If employees need to chill out, they
can play video or table-top games. Collaboration and teamwork are encouraged to be in an
informal communication and atmosphere. They also constantly encourage people to keeping
things fresh, innovative and interesting, to be bold in experimenting new ideas, without any
meddling from above. All of these have fostered for a fun-loving, casual and creative working
environment which makes their staffs satisfied while achieving their goal to be a rapid innovative
technology company (Robbins and Judge 2011).

In conclusion it is pivotal for any leader to have a cultural awareness in formulation, exaction
and evaluation of strategy process for any organisation irrespective of their purpose of existence.
Ultimately it is leader’s ability to strike the right balance between Strategy, organisational
structure, leadership and culture to realise organisational vision ethically
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