7.2 Opening Story: Culture Eats Strategy for Breakfast

“Hi, David,” Emily said as she approached David’s corner table in Olympus’ corporate cafeteria. “Thanks for taking a few minutes during lunch to meet with me. With all of the projects we’ve got going it’s tough to keep up with everything.”

“Hi, Emily. It’s my pleasure. You’re the boss. By the way, I empathize with the time crunch thing. I’m running 100 miles an hour these days. Your text said you wanted to talk about last week’s Gorilla incident and the task force you asked me to put together. What’s up?”

“Exactly. I’m still a little peeved about the way things went down last week. We’ve busted our backsides over the past year to make Doug and his marketing team look good. I’d hoped we had earned a little good will. Obviously, we’ve got more work to do. David, sorry for venting—and sorry for the added work. I know you’re busy. But, as I told Doug, I trust you.”

Emily continued, “I just want to make sure we get off to the right start. We don’t have the time or political capital to waste. There’s an old saying, ‘ Culture eats strategy for breakfast.’ We’ve spent a ton of time overhauling our strategy. But, Gorilla and Doug’s reaction last week may be a warning that we’ve taken the culture part for granted.”

"Emily, I've heard the saying, but I'm not sure I follow where you're going with it?" David queried.

"David, I don't need to tell you that logistics has always been managed as a cost center. That's not going to change! Even so, we've tried to put the customer at the heart of everything we do. We've asked our people to ask themselves, ‘How will this affect Ms. Jones? What would she think?' whenever we make a decision. But, I'm afraid culture doesn't change as quickly as strategy. The bottom line: I'm worried we might be our own worst enemy."

David smiled knowingly, saying, "I get it. You're worried that we might be giving lip service to Ms. Jones. That is, when push comes to shove, we don't really make the customer-pleasing decision. Rather, we take the path of least resistance and make the ‘how-can-I-cut-costs' decision. After all, if we want to get our costs down, transportation is our largest pot of gold."

"Absolutely! You've nailed it. The cost-center culture has reigned supreme for so long that it's possible we had gotten out ahead of ourselves thinking we had become a true customer-centered logistics organization. Is it possible that we're still cutting corners somewhere—one of which caused us to drop the ball last week? Maybe we aren't doing the right due diligence in picking and managing our carriers. Or, maybe we're trying too hard to pinch pennies through our Ts & CsTerms and conditions. David, don't get me wrong. I'm not saying that all of our progress is a mirage. The delivery numbers that we watch so closely may not tell the whole story, but they aren't fabricated—and they're not all wrong. I just want to make sure we've got our ducks in a row before we take a deep dive into how decisions elsewhere in the company affect order fulfillment. Before we start stepping on anybody else's toes, we need to take a close look at how we really make decisions. I want you to look at two things right up front:

• Where are we on the culture-change thing?

• How well do we assess all the different transportation decisions? They're hugely important. Do we know what happens to delivery performance when we pull lever A, B, or C?"

"Fair enough, Emily," David agreed. "As I put the team together and we get up and running, we'll start by taking a close look at the alignment between our customer strategy and our decision-making culture. If I had to bet, I'd guess you're right. We—or at least some people on our team—probably talk the customer-service talk even as we still make some decisions based on getting our short-term costs down. By the way, I like you're second point. Honestly, I don't think any of us really knows how all the dominoes will fall when we make a decision. We've never paid the price to find out."

1. What role does transportation play in building an outstanding customer-fullfilment capability?

2. How do transportation costs measure up to other logistics costs? How does this influence the way you make decisions?

3. How do culture and strategy work together to drive results? How can systems thinking influence both strategy and culture?