An example of culture effecting strategy

There’s a new post out on Stratechery today which I enjoyed reading this morning. I’ve not really read up or investigated Xiaomi, nor have I been a customer, so many of Ben’s posts discussing the topic are interesting to me. Mostly, this is because my bias’s about the company are fairly low. I’m uninformed and ignorant about their strategy and their products for the most part. In that light, todays post certainly did resonate with me in an area I’d like to think I am less ignorant – organisational culture.

This strategy also explains Xiaomi’s international expansion strategy: India – the world’s 2nd largest population – is already well underway, and Indonesia – the 4th largest – just kicked off. Brazil (5th) is coming soon. True, the United States (3rd) isn’t coming any time soon, but why bother? Apple has the fans, everyone has appliances, and yes, there is a bit of an IP problem.

This may be a long bow to draw, between Ben’s post which is obviously very strategy focused, and my own desire to talk more about operating and organisational cultures here on my blog. But it’s for that very reason that I like what this example displays so much. It’s an overt example of how a companies culture impacts upon it’s strategy. Xiaomi is a Chinese company and so with that comes everything that goes with that culture – including the apparent choices to not expand into the US as a growth strategy. Here in San Francisco, and indeed even in Australia, the general cultural world-view I’ve been exposed to with regards to growing a companies size and profits is to expand to the US or the UK. Yes, there’s been a much bigger focus on doing business with China (and Asia more broadly) in the last decade, but I find most of this bias still extends mostly to the mining and resources sector. Personally, in my experience, our cultural norms keep us focused on expanding into places that we’re very familiar with.

This is true at lower perspectives, too, but they’re less easy to see when you’re in an organisation. The choice to follow one strategic path or another is absolutely a product of the operational culture that your company has incubated over it’s entire life.