Create Human Relationships, not Resources

Published June 8, 2021
​Updated October 30, 2022

​Strategy expresses itself financially through a culture of over- or under-achievement. Humans treated as a resource underachieve. Humans in a win-win relationship typically overachieve. The failure of corporations to recognize the impact on financial statements of a poor strategy expressed through their culture is a uniquely 21st Century phenomenon — a major divergence from the great corporations of the 20th Century.

IBM’s 20th Century strategy created a culture of human relationships. Its strategy was to build a business that would continue forever, balance the distribution of profits between its stakeholders, decentralize decision making, and manage internal and external relationships through a corporate constitution of respect, service and excellence.
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​Its reputation, character, and financial results are well documented in corporate history.

​IBM’s 20th Century strategy produced a 1 + 1 > 2 culture.

Create Human Relationships, Not Human Resources

• Strategy and Culture: The Dynamic Duo
• Human Resources or Human Relationships
• A 1 + 1 > 2 Culture or 1 + 1 < 2 Culture​
• When Strategy Loses its Positive Connection with Culture
• An Uncommon Business Approach: Interlock Strategy and Culture

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 Strategy and Culture: The Dynamic Duo

Strategy and culture are such intimate dance partners that in any given situation either may lead. If implemented well, culture will cover strategy’s missteps and both will magnify the other’s successes. ​Working together, they can help soften the impact of economic downturns, react faster to economic upturns, anticipate strategic shifts within an industry, and innovate faster to extend success into new areas.

​Corporations are social entities. At their most simplistic, they involve the cooperative efforts of two individuals. These two individuals may be one of a multitude of combinations: sales and development, editor and author, employee and executive, salesman and customer, or one of hundreds of others.

​It’s hard to capture the financial impact of each human interaction as a financial equation, but human beings in a corporate setting interact for positive gain—the intent of an interaction is never to produce a zero-sum game.

​And it’s the same with the interaction between strategy and culture; strategy produces a culture of human interactions where one-plus-one is greater than two, or one-plus-one is less than two. It’s in the best interest of the corporation that its strategy encourages a positive gain.

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​The key to interlock strategy with culture is quite simple: evaluate if your strategy is encouraging a culture of human relationships or human resources.

 Human Resources or Human Relationships

Culture and strategy should be intimate dance partners

Over the past few decades our best financial minds have come to view human beings as a resource. We have even changed the title of internal corporate departments from Human Relations to Human Resources. (In 1941, when Thomas J. Watson Sr. created IBM’s first department focused on individual improvement, it was called the Human Relations Department.)
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Peter F. Drucker wrote that a human being who is expected to only do what he or she is told without responsibility for, or sharing in the decisions concerning their work is a resource. To counter this, he assigned management the responsibility to make the worker achieve. For the worker to achieve, he believed an employee needs to not only realize their livelihood at work but also attain social status, integrate within a social community and find personal satisfaction.

​Drucker considered this a measure of corporate performance — extraordinary corporate performance that’s based on powerful human relationships.

 A 1 + 1 > 2 Culture or 1 + 1 < 2 Culture

In 2007, the same year that Sam Palmisano announced IBM's first earnings-per-share roadmap, Gallup documented the powerful financial impact of human relationships in a paper titled, Investors, Take Note: Engagement Boosts Earnings. They call such employees engaged and describe them as passionate; Watson Sr., founder of IBM, labeled these employees as enthusiastic. [See Footnote #1]

​A great corporate strategy encourages its culture to use an individual’s personal potential as its main power source.
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By employing individual energy into any process, a corporation multiplies (not sums) the benefits of its resources. Mathematically, the potential of a human relationship can be expressed as 1 + 1 > 2; and the potential of a human resource can be expressed in the equation 1 + 1 < 2. Because these human equations don’t balance on a spreadsheet, culture is rarely found as a line item on any financial analysis.​

A positive corporate culture makes 1 + 1 >  2

When Strategy Loses its Positive Connection with Culture

Strategy expresses itself financially through a culture of over- or under-achievement. Humans treated as a resource underachieve. Humans in a win-win relationship typically overachieve. The failure of corporations to recognize the impact on financial statements of a poor strategy expressed through their culture is a uniquely 21st Century phenomenon — a major divergence from the great corporations of the 20th Century.

IBM’s 20th Century strategy created a culture of human relationships. Its strategy was to build a business that would continue forever, balance the distribution of profits between its stakeholders, decentralize decision making, and manage internal and external relationships through a corporate constitution of respect, service and excellence.
​
​Its reputation, character, and financial results are well documented in corporate history. IBM’s 20th Century strategy produced a 1 + 1 > 2 culture.

 An Uncommon Business Approach: Interlock Strategy and Culture

Human beings are not lumps of coal. They can self-ignite, adapt and grow

​People are not lumps of coal with a finite energy supply — subject to the laws of mechanics — awaiting the application of an outside force. People can self-initiate, grow, adapt, develop, evolve and improve their contributions. Individuals are the spirit of an organization. But this spirit degrades when treated like a resource — becoming passive, uncaring and apathetic.
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When nurtured, employees are inherently self-energized, engaged, passionate and enthusiastic, resulting in supreme sales efforts, innovative thinking and a limitless, renewable source of human energy. Individuals, so inspired, surpass management expectations, and teams of such individuals don’t wait to be led but lead their corporations into the future.
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With people, relationships matter. In such relationships — expressed through a corporate culture — one-plus-one never equals two; unless it is a glimpse of two’s fleeting shadow as the corporate culture passes by heading up or down.

IBM’s Thomas J. Watson Sr. summarized it nicely when he said, “There is no such thing as standing still. You either advance or recede.” ​

Is the impact of your strategy on your culture creating human relationships or just more human resources?

If it is the former, congratulate yourself on a winning, long-term strategy because one-plus-one will be greater than two.

​If it is the later — beware — because one-plus-one will prove to be less than two.

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[Footnote #1] IBM 20th Century Roadmap History: Sam Palmisano implemented two, earnings-per-share roadmaps. He announced the first one in 2007 which had a 2010 end-of-year target date. In 2011, as he was leaving the corner office, he announced the second which had a 2015 end-of-year target date. Ginni Rometty abandoned this final roadmap in 2014 when it was obvious it could not be achieved. Employees, in the face of these roadmaps, referred to themselves as roadkill.

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