Culture Eats Strategy for Breakfast

 In Building Successful Partner Channels, Business Model Management, Entering Foreign Markets, Featured

The term “culture eats strategy for breakfast” is, unfortunately, not my idea. The statement emphasizes that even the best thought out strategy is worthless without an organization that can implement and live it. Making people prepared for undertaking substantial and on-going changes requires a very special culture.

According to reliable sources, Mark Fields, former CEO of Ford Motor Company, said it, and he allegedly heard it from Peter Drucker. These sources will also know that it was attributed to Mr. Drucker for the first time in 2006.

We can, therefore, be quite sure that neither Erik nor Preben Damgaard was familiar with the statement when they had to find a solution to increasing cooperation problems in the management team in their company Damgaard Data in the early 1990s.

From 0 to 100 employees in six years

From 1986 to 1992, the number of employees in Damgaard Data grew from 0 to 100, and a team of middle managers was introduced to operate the company’s various functions. The individual manager did well. It was the cooperation between them and their departments that didn’t work well. The trouble was visible in four ways:

  1. Management meetings were elongated with topics that focused more on internal relationships than on customers and resellers.
  2. Preben Damgaard (co-founder and CEO) spent more and more time solving internal conflicts than developing the business.
  3. In independent market analyses, the company scored high on the products, but low on organizational efficiency.
  4. An employee satisfaction survey at the beginning of 1993 showed dissatisfaction with management.

With annual growth rates in revenue of over 25%, solid profits, solid fiscal reserves, and rising market share, the problems were invisible from the outside.

Nevertheless, in March 1993, Preben Damgaard wrote the following article in the internal staff magazine:

If a frog is thrown into a pot of boiling water, it will instantly jump out of the pot unharmed. If, on the other hand, the frog is put in a pot of cold water and the pot is slowly warmed up until it boils, the frog will not notice the change and will be boiled alive.

I use this example as it can be applied to Damgaard Data and the EDP industry.

We are in a market that constantly and rapidly changes. Today’s EDP industry doesn’t resemble the EDP industry of 1988, and it almost certainly won’t resemble the IT industry to come in 1998.

If we are to ensure the survival of Damgaard Data as a healthy company, we need to adapt to the constant changes.

The problem for Damgaard Data might actually be that things are going as well as they are. Unless we remain vigilant, we risk the great years we’re experiencing now lulling us into a false sense of security, so we won’t notice the changes and we will slowly let ourselves be boiled alive. There is no crisis now, but a crisis could occur if we don’t adapt ourselves on a regular basis.

Being with a company such as Damgaard Data, in a changing industry, places great demands on each individual employee. But change doesn’t mean that we adjust everything overnight. It’s about all employees, through the way we think and work, continually adjusting and slowly adapting the business to the changing market conditions.

In other words, Damgaard Data is dependent upon all employees contributing to the company’s ability to adapt. To make this possible, we will implement an organizational development project (see elsewhere in the newsletter), which will include all employees.

I have different suggestions as to what changes we will experience in the years to come. The price of EDP programs will fall because end-users will know more about IT, and competition will become even tougher. We have experienced how the prices of, for example, Lotus and WordPerfect have fallen sharply over the past year, and that, too, will happen to products such as CONCORDE. Instead, Damgaard Data and similar companies will increasingly earn their living selling training, support, consulting and other forms of services.

Moreover, an increasing proportion of the programs will be sold via mail order companies and in large IT supermarkets, Metro, Fona, Merlin, etc., where the programs sit on shelves, like in SuperBrugsen. This will also apply to programs such as CONCORDE.

End-users want branded goods. Therefore, CONCORDE has to be a name for financial management, just as Levis is for jeans. Standards for almost everything in a program will be a requirement. If a program doesn’t meet the standards for keyboard layouts, menu structure, data saving and retrieval, screen layout, etc., the program won’t sell. Thus, programs are resembling each other more and more.

The message is this: learn to embrace change. If you don’t adapt you’ll die.

Preben Damgaard”

Immediately afterward, with the help of an external consultant, he launched a major organizational development project that included all the staff and had the motto: “User-friendly software for everyone.”

User-friendly software for everyone

Damgaard Data’s male soccer team in 1994

When you read about the management crisis in my book “From Damgaard to Microsoft“, you will understand that the solution Preben Damgaard chose did not follow the classic pattern; starting with defining a mission, a vision, goals, values, and strategy in the management team, then rolling it out to the many employees. Instead, he involved the entire organization immediately. He believed that if the company should continue to grow faster than its competitors, then first and foremost a culture should be created in which each employee understood the overall purpose and values of the company. Thereafter, there should be room for initiatives and actions that did not necessarily require prior discussion and approval up and down in the company’s formal organization, but that could be implemented quickly and adapted as the situation required.

The moment of truth was in the daily interactions with customers, resellers, suppliers, colleagues and other stakeholders. Productivity and quality in these interactions lay in the hands of the individual and could not be micromanaged. If the employees understood why the company existed, then they could figure out what to do to help that purpose. That was the philosophy.

“User-friendly software for everyone” may appear somewhat blurred and fluffy, but in the early 1990s, it was both ambitious and forward-looking. The slogan was announced in the company’s annual report and explained in a way so that dealers and customers could also understand the value it provided to them.

Start with why

As early as 1993, the organizational development in Damgaard Data was built on principles that were only formulated clearly in management theories many years later. These are the same principles that Simon Sinek in 2009 expresses in his book “Start with Why” and as he outlines in this video:

Damgaard Data was renamed Damgaard in 1999, merged with Navision Software in 2000 under the name Navision and was acquired by Microsoft in 2002.

Click here for more information about From Damgaard to Microsoft

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