“War is the realm of uncertainty; three quarters of the factors on which action in war is based are wrapped in a fog of greater or lesser uncertainty.” – Carl von Clausewitz, Prussian military strategist
Clausewitz is describing what modern military theorists call the “fog of war,” or the uncertainty in situational awareness experienced by participants in military operations. Put differently, the fog of war describes uncertainty regarding one’s own capability, adversary capability, and adversary intent during an engagement, operation, or campaign. Starting and running a business shares a lot of these same characteristics. The “fog of entrepreneurship” can just as easily be described as a realm of uncertainty in which three quarters of factors on which action is based are wrapped in a fog of greater or lesser uncertainty.
In this context of uncertainty, a company’s culture is vitally important. Scholars define culture as “a pattern of basic assumptions – invented, discovered, or developed by a given group as it learns to cope with its problems of external adaption and internal integration – that has worked well enough to be considered as valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.” Put succinctly, culture is a set of processes that guide the actions of a given group or organization.
So what does Clausewitz tell us about effectively leading in this context?
Know the differences between and effectively employ strategy, operations, and tactics.
Strategy answers the existential questions of where and how a company competes. It is the integrated set of choices that if successful leads to a company’s relative competitive advantage. Operational planning is the process of mobilizing that strategy. It is the process of defining milestones and conditions for success. It takes the long-term disposition of strategy and breaks it down into achievable metrics. Finally, tactics are the actions employed on a day-to-day basis to achieve operational metrics and eventually (or perpetually) lead to the successful mobilization of strategy. Most importantly, tactics should connect to operations, which should connect to strategy.
The sequential link between strategy, operations, and tactics is vital as we consider our earlier definition of culture. Aristotle famously said, “We are what we repeatedly do.” Said differently, a company’s culture coalesces into a set of processes by which habits are formed and decisions are made. Thus, without proper care as a founder, a company’s culture will drive the tactics, operations and strategic direction of a company instead of the reverse.
How do you link strategy to your organization’s culture?
It is important to step back and think about how a culture is developed. Over time basic assumptions “work well enough and are considered as valid.” The important question a founder must ask is, what systems are in place to validate assumptions?
- People: One source is the founder himself. In an early stage start-up, his personal validation serves to establish a pattern of basic assumptions. Just as military commanders issue intent, founders provide a purpose and end state to guide employee action. Additionally, as a company grows, other influential individuals contribute to, enforce, or possibly alter a company’s culture. Thus, hiring (and firing) decisions are key to maintaining or changing a company’s culture.
- Structure: The organizational structure is another source of culture. A hierarchical structure might enforce boundaries and control where as a flat organization might enforce autonomy. Military organizations are purposefully hierarchical to enforce discipline and promote efficient, distributed management. As a company grows, a founder should thoughtfully design a structure that promotes and enforces a desired strategy. If the company competes on innovation through customer feedback, a structure should allocate resources to market facing portions of the organization. Alternatively, if following a low-cost strategy, resources should be consolidated at the core to maximize efficiencies.
- Systems: Finally, a company’s system of rewards, compensation, and boundaries contributes to its culture. The link between strategy, operations, and tactics is enforced through the identification and reward of critical performance variables. By rewarding (or punishing) certain activities, a company promotes a set of standards that will attract like-minded employees and will enforce belief systems that support desired outcomes.
With Clausewitz’s advice in mind as you start and grow your company, take conscious steps to craft your culture. Because just like in war, it could ultimately mean the difference between victory and defeat.