An organization’s strategy, culture, and human capital—the people—are frequently cited in business books, stories, and case studies as the key ingredients in the grand mix of why companies succeed or fail. 

At a lunch meeting in the 1990s, when the big three of Dallas-Fort Worth Health Systems were contemplating a merger, an executive of one of the merger partners appeared at my lunch table with a look of grave concern.  He was a rising star in one of the organizations, a financially secure juggernaut with an excellent reputation, a diverse and well-heeled medical staff, and a rock solid balance sheet.  Throughout the negotiations, the top executives of the two healthier systems of the three were jockeying to determine which would be the top dog and which system would prevail in overall control. My friend had been a loyal soldier, enthusiastically supporting this game-changing deal and trumpeting the multiple strategic values of the merger. The deal had been publicly announced and the new organization’s structure was being unveiled to the various executive teams.  My friend came directly from a morning-long meeting with his new boss, an executive of one of the other systems.  I remember being alarmed by his look. 

“You know,” he began very deliberately, “I have been a big supporter of this merger because I thought it would truly be a great thing for this community.  But I have just learned an incredible lesson:  culture trumps strategy every time.”

He was right.

As the merger meetings continued, word began to leak that all was not as rosy as had been projected.  Newspaper reports disclosed that a leadership shake-up at one of the hospital organizations was imminent because of mediocre financial results and a consultant’s report that attributed mounting operational challenges to weak middle management.  That organization’s board and their bondholders became nervous. Leadership was apparently distracted by the win/lose game of who would run the giant new system.  Within weeks, plans for the three organization mega-system were scuttled and my friend’s system completed their original deal with the third and least financially stable.  Today, all is well for all parties.

Culture is king.  It is the heart and soul of what an organization is all about.  It is also one of the more complex aspects of how a company operates.  It is critical to success and immensely difficult to change.  I learned that first hand in the early 1990s when I was charged with leading an emergency medical services organization with a deeply imbedded traditional public service model that was comfortable for the employees, into a radically different, high-performance, consumer-focused, organization.  The changes included a total overhaul of employee work schedules.  It had to be done in six months.  I was lucky I escaped alive.

Culture change is a tough assignment for any organization. It is particularly challenging in hospitals, which, as Peter Drucker famously explained, are among the most complex of all human organizations.  It may begin with three or four global values, but the heart and soul of an organization is in hundreds upon hundreds of unwritten rules and actions that ensure that the work gets done.  In his book “The Power of Habit”, Charles Duhigg, an investigative reporter for The New York Times, postulates that actions that are made in an organization do not occur as the result of deliberate decisions. They occur based on the thousands of independent choices made by employees each day.  Most of the time these are based on daily routines—and habits—not the global pronouncements from the executive suite. 

Having big idea values is important, but those global values and their constant reminders will not produce consistent change.  Leaders who seek to transform the culture of an organization will have to dig deep down into the inner workings of each department and change those hundreds of habits that may be limiting the organization’s success.

That is why the process takes so long—years and years.  That is why consistency and patience are prerequisites. That is why it takes total leadership engagement and employee empowerment to achieve transformative change. 

© 2012 John Gregory Self