Culture Eats Strategy for Breakfast

Washington Nationals LogoMy new favorite baseball team is the Washington Nationals. This is mostly because, as a father of four former little-league or high school baseball players, I’m a fan of Vegas-native baseball phenom, Bryce Harper.

The Nationals didn’t make the playoffs this year, to the surprise of almost everyone familiar with Major League Baseball.  They were a consensus pick to win the National League East, both by experts and by statistical analysis. Only 27 other teams since 2003 have had a better win-total projection than the Nationals’ 90.8 this year, according to baseball columnist Rob Arthur.

Nationals slugger Bryce Harper emerged as the superstar he’d long been expected to be, putting up offensive numbers not seen since Barry Bonds’s late-career dominance. Harper has hit .336/.467/.658 this season, with 41 home runs and 117 runs scored. All of those totals lead the National League, and his on-base percentage, slugging percentage and OPS+ lead the majors.

Why did they fail, especially when they are so loaded with talent and after doing so well the first half of the season?

Due to myriad injuries, the Nationals weren’t able to put their intended Opening Day lineup on the field until Aug. 25. Those eight players were only available at the same time for a total of just two games.

But is that the reason why?

Many teams have fared better than the Nationals of late with a few replacement players.  The 1972 Miami Dolphins immediately comes to mind with the only undefeated season in NFL history and backup Earl Morrall as their quarterback.

I believe that the Nationals’ team culture, even if it can’t yet be measured in a substantive way, is the major reason.  There’s plenty of evidenceHarper Choke that things were getting rough in the Nationals’ clubhouse. There was a midseason trade for closer Jonathan Papelbon, which preceded a stretch of poor performance. Over and above correlation, Papelbon has blown several saves and literally tried to choke the soon-to-be-MVP, Harper, in the dugout last week.

I believe the blame for the Nationals’ collapse is more on the team leadership, manager Matt Williams, for his incompetence in both in-game strategy and clubhouse management, and club general manager Mike Rizzo.  After the Papelbon choking incident, amazingly, Williams sent Papelbon back out to finish the game and get the save, which he blew.  Williams had no reaction to the fight when asked about Papelbon, simply saying, “He’s our closer.”

To me that sent the wrong message to the team and was more evidence Nationals management’s inattentiveness to the corporate culture. A leader must be willing to immediately punish or terminate an employee that violates to the firm’s core values, even if that person is a top performer.

“Culture eats strategy for breakfast” is a phrase attributed to Peter Drucker, the worlds leading expert on management.  With the Nationals’ demise, one can now say “Culture eats talent for breakfast, lunch and dinner.”

Culture is a balanced blend of human psychology, attitudes, actions, and beliefs that create either pleasure or pain, serious momentum or miserable stagnation. A strong culture flourishes with a clear set of values and norms that actively guide the way a company operates.

In 1992, HBS Professors John Kotter and James Heskett completed an extensive research project detailing the corporate cultures of 200 companies and how each company’s culture affected its long-term economic performance.  Their research argued that strong corporate cultures which facilitate adaptation to a changing world are associated with strong financial results.   They found that those cultures highly value employees, customers, and owners and encourage leadership from everyone in the firm.

One standout exhibit in their book, Corporate Culture and Performance, highlights the difference in results over an eleven-year period between twelve companies that had a performance enhancing culture and twenty companies that did not have this sort of culture.

Table - Performance-enhancing Cultures

There is a very real financial benefit to have a performance-enhancing culture.  Revenue growth from companies with this positive corporate culture is typically four times higher than those with poor cultures.  Net profit or earnings growth is often exponentially higher.

Pat Lencioni, author of the classic Five Dysfunctions of a Team, emphasizes the importance of a performance-enhancing culture.

Lencioni outlines five dysfunctions that damage the corporate culture, each impacting the others:

  • Absence of Trust—unwilling to be vulnerable within the group
  • Fear of Conflict—seeking harmony over constructive and passionate debate
  • Lack of Commitment—feigning buy-in for group decisions, resulting in no aligned direction
  • Avoidance of Accountability—failing to hold people (and each other) accountable to a high standard of performance
  • Inattention to Results— more interested in status than outcomes

Can a company with a poor culture change into a better environment?  You bet it can.  Ballard Consulting offers tools and coaching to help CEOs and other leaders understand their culture and improve it.  We’ve worked with many stagnant companies that changed their cultures to become high performers.

I am sad that the Nationals didn’t make it to the playoffs, much as I am sad when companies that could and should excel don’t meet their potential.

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