A leadership team announces a new strategy. The logic is sound, the market case is clear, and the communication plan is thorough. Yet the organization does not move with it.

The missing element may be the relationship between strategy and culture. Strategy influences culture when leaders help people interpret what a new direction means for the organization. Culture influences strategy by shaping which directions people view as credible, legitimate, or consistent with who they believe the organization to be.

The first pathway is often described as sensegiving. Leaders do more than communicate facts about the strategy. They help people connect the direction to the organization’s identity and understand how their work fits within it. This is not a matter of finding a better slogan. It requires leaders to address the questions the strategy creates about continuity, loss, and change.

The influence also moves the other way. Culture can expand the strategic options an organization is willing to consider, or it can narrow them. A deeply held belief about customers, quality, professional identity, or the organization’s history may make a particular strategy feel unacceptable even when the economic case is strong.

One CFO in the OGF study explained the difficulty: “If your vision and strategy are so fundamentally different for the future than what made it successful, it’s really hard for people to envision something new.” The strategy may describe where the organization is going while culture continues to answer the question of who the organization is.

Leaders can examine both directions:

  • Have we explained how the new strategy connects to the organization’s identity?
  • What does the strategy ask people to leave behind?
  • Which cultural assumptions are narrowing the options we are willing to consider?
  • Where does the strategic story lose credibility as it moves through the organization?

Clear communication remains necessary, but clarity alone does not resolve an identity conflict. People need a way to understand change as part of the organization’s continuing story. At the same time, leaders need to recognize when that story has become a constraint on adaptation.