Ray Kleeman is right that culture should be managed like a core business function. But the moment an organisation needs to build innovation capability and drive innovation-led growth, his argument stops being good practice and becomes existential.
For years, I’ve watched organisations treat culture as decoration — the perks, the posters, the espresso machines. So when Ray Kleeman, CHRO at Reinsurance Group of America, argued in HR Executive that culture should be intentionally designed, measured and managed like any core business function, I found myself nodding at almost every paragraph. His piece is one of the clearest articulations I’ve read of a truth too many leadership teams still resist: culture is a performance system, not a perk.
If you haven’t read it, you should.
But I want to push the argument one step further. Because everything Ray describes becomes exponentially more important the moment an organisation stops asking “how do we execute better?” and starts asking “how do we grow through innovation?”
The gap that culture explains
Research I cite constantly — because it refuses to close — shows that while approximately 84% of executives say innovation is critical to their growth strategy, only around 6% are satisfied with their innovation performance. That gap is not an ideas gap, and it’s not a strategy gap. In more than two decades advising executive teams around the world, I’ve found it’s almost always a capability gap — and innovation capability lives precisely where Ray says culture lives: in the collective thinking that shapes how people behave, decide and solve problems every day.
Here’s why that matters more for innovation than for anything else an organisation does. Innovation is not an activity; it’s an outcome. Organisations shouldn’t be self declaring that they’re innovative or that they’ve innovated just because they’ve launched a new product or service. It’s a label only your customers can bestow when they experience what you provide them as sufficiently valuable, meaningful or transformative. No internal committee can declare “we’ve innovated.” Which means leaders can’t manage innovation directly at all. The only thing they can manage is the conditions from which it emerges — the collective thinking, the leadership behaviours, the appetite for intelligent risk.
For innovation-led growth, culture isn’t a core business function. It’s the delivery mechanism for the entire growth agenda.
If you’re not managing it with the same rigour you apply to capital allocation, you’re leaving your future to chance.
Retiring the most famous line in the culture debate
For a generation, the culture conversation has been anchored to a single line attributed to Peter Drucker: “culture eats strategy for breakfast.” It did useful work in its day. It warned leaders that no strategy survives contact with a culture that rejects it, and it forced culture onto agendas where it had never appeared.
But it’s now outdated — and quietly damaging. Because it frames culture and strategy as adversaries locked in a contest one of them must lose. It gave culture permission to sit outside the business system: mystical, unmanaged and unaccountable. And it let executives file culture under “important but unmanageable” — which is exactly the mindset Ray’s article dismantles.
My view, formed across years of advising CEOs on innovation-led growth, is this: “strategy, leadership and culture need to eat breakfast together.” Not competing for primacy but operating as one integrated system, at the same table, every single day.
The logic is simple. Strategy without cultural capability is fiction — a beautifully argued document describing things your organisation cannot actually do. Culture without strategic direction is a warm feeling that generates no growth. And leadership is what binds the two, because — as Ray puts it in one of the best lines I’ve read this year; “leaders get what they role-model, tolerate and reward.” When any one of the three is missing from the table, the other two underperform. When all three are aligned, innovation capability stops being an initiative and becomes part of the organisation’s DNA. That state of alignment is what I’ve long described as the equilibrium every innovation-led organisation ultimately has to reach.
The bar is higher for innovation
Look closely at Ray’s “winning mindset” — enterprise first, seek the truth, progress over perfection, embrace change — and notice something: those aren’t just performance behaviours. They’re innovation-focussed behaviours. That’s no accident. Any culture ambitious enough to be deliberately designed ends up reaching for the same raw materials innovation requires.
But here’s the distinction I’d add. A culture managed for execution optimises for consistency, accountability and delivery — all vital, none sufficient. Innovation-led growth demands conditions that execution cultures can quietly work against: the willingness to operate in uncertainty, to test and fail fast, to challenge existing models rather than refine them, and to surface ideas without fear of career consequences. Those conditions never arise automatically from performance management. They have to be deliberately built — designed, measured and led, exactly as Ray prescribes, but against a higher bar.
And the leadership standard rises with it. It’s one thing for leaders to role-model accountability and delivery. It’s another to role-model vulnerability — to say “I got that wrong” or “I don’t know, what do you think?” in front of the people they lead. Yet in my experience, that behaviour, more than any process or programme, determines whether people bring their boldest thinking to work. Executives who demand an innovative culture while never demonstrating the behaviours that enable one are caught in a double bind of their own making — and their people can tell.
Measuring what actually matters
Ray’s measurement framing — observable, experiential, outcomes — translates directly to innovation capability, and I’d encourage every executive team to use it that way. Observable: how fast are problems identified and solved, and is that speed compounding? Experiential: do people feel safe enough to challenge, question and admit failure? Outcomes: is the market — not an internal committee — telling you that you’ve created new value?
One warning, though. Measure conditions, not activity. Labs, hackathons and idea platforms are the easiest things in the world to count and the least reliable indicators of capability. I’ve seen too many organisations mistake innovation theatre for innovation-led outcomes because the activity metrics looked healthy while the collective thinking never changed.
The organisations that will win
Ray predicts the winners of the next decade will be the organisations with the most aligned mindsets. I agree — and I’d sharpen it. The winners will be the organisations whose aligned mindsets are pointed at creating new value, not just delivering existing value more efficiently. The ones that treat culture as a designed, measured, led capability — and treat innovation as the effect that proves the design is working.
So ask yourself three questions:
- Does culture appear on your executive agenda with the same rigour as capital allocation?
- Could your leaders describe the specific collective thinking your growth strategy depends on?
- And when did one of them last model the behaviour they’re asking everyone else to adopt?
Culture stopped eating strategy for breakfast some time ago. In the organisations winning through innovation, strategy, leadership and culture sit at the same table every morning — and they’re all eating together.