Changing strategy is relatively straightforward.

Changing how an organisation operates because of that strategy is much harder.

IBM CEO Arvind Krishna is finding that out as he continues to reshape the technology giant. The strategic direction is clear: move away from parts of the business reliant on large customer capital expenditure and towards more growth-oriented, consumption-based models.

The strategy change itself doesn’t appear to be the problem. Krishna told the Wall Street Journal that the board is “very confident in our strategy and our approach to the market”.

The challenge is getting the organisation to move with it.

Changing Successful Behaviours

IBM’s sales force has spent years succeeding through large licensing deals. That success created behaviours, habits and incentives that made sense for the organisation at the time.

But the strategy has changed. Now, IBM needs its teams to focus more on consumption-based software. As Krishna puts it, “those are big shifts”.

This is an important distinction for any organisation going through strategic change.

The behaviours that need to change are not necessarily bad behaviours. They may be the very behaviours that have made people successful for years. As Krishna explains: “If people had a lot of success for a long time in one set of motions and tasks, then you’ve got to now teach them how to do this in a different way.”

That is much harder than announcing a new strategy.

Strategy Is the Start, Not the End

A strategy can define the destination. But it doesn’t automatically change the behaviours that will get an organisation there.

When a strategy changes, leadership teams need to ask what else needs to change with it.

What should people now prioritise? Which behaviours will need to be encouraged? What will need to stop being rewarded? Where do people need new skills or capabilities? And how do leaders need to behave differently themselves to become role models?

These questions are easy to overlook because strategy often feels like the most tangible part of transformation. A new direction can be articulated, communicated and measured.

The human implications are harder to see.

The Leadership Challenge

This is where strategic change becomes a leadership challenge.

It isn’t enough for senior leaders to understand the strategy themselves. They need to create the conditions for everyone else to understand what it means for how they work.

That might mean changing incentives. It might mean developing new leadership capabilities or challenging long-established assumptions about what good performance looks like. It also means recognising that people don’t automatically abandon behaviours that have worked for them simply because the organisation has announced a new direction.

They need to understand why the change is happening, what is expected of them and what success now looks like.

That requires active leadership.

Culture doesn’t change by itself

Krishna acknowledges that the cultural shift at IBM has been slower than expected:

“Cultural change always takes longer”

That may be true. But the lesson isn’t that leaders should simply accept that culture will eventually catch up with strategy.

It is that cultural change needs to be deliberately led.

If the strategy has changed but the incentives, behaviours, leadership practices and ways of working haven’t, the organisation is still operating partly according to its old strategy.

And that creates friction between what the organisation says it wants to achieve and what people are actually being encouraged to do.

The Strategy isn’t the Golden Ticket

IBM’s experience is a useful reminder that strategic change is only a starting point, albeit a highly significant one.

A strong strategy gives an organisation direction. Leadership translates that direction into action. Culture is shaped by what happens next: what leaders prioritise, what they reward, what they challenge and what people experience every day.

The question for leadership teams isn’t simply:

“Is our strategy right?”

It is also:

“Have we created the conditions for our people to deliver it?”

Because even the best strategy won’t change an organisation if the organisation hasn’t changed with it.

What’s next

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At Coode, we look at strategy through a human lens because success depends on how people work together. When leadership teams achieve real alignment in how they lead, they unlock performance that may have been present all along but not yet fully realised.

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