When the company pivots, make sure the culture pivots with it: for an organization facing a significant strategic shift, the degree of the board's involvement in overseeing culture may determine success or failure.

• Author: Hart, Jim
• Position: HEIDRICK & STRUGGLES GOVERNANCE LETTER

In the world of startups, a pivot is a sharp course correction in a fledging company's business model, often in response to initial setbacks or as a result of new strategic insights. Big public companies, too, must sometimes pivot. And the need to do so can be as urgent for them as that of a startup burning through cash. That need can arise from any of a number of circumstances, planned or unplanned: the sudden appearance of an activist investor, a big acquisition or divestiture, a major failure in the market, an industry disruption (like the emergence of new technology that radically changes the terms of competition), or, as happened with the Great Recession, earthshaking economic developments. And the need to pivot comes faster than ever: The average lifespan of a company listed in the S&P 500 index of leading U.S. companies dropped from 67 years in the 1920s to 15 years today, according to Richard Foster of the Yale School of Management. In some cases, these companies died because they failed to pivot, but in many cases they disappeared because they pivoted so successfully that they became new companies.

Given the magnitude and urgency of the task, culture may be the furthest thing from directors' minds as they oversee a significant strategic shift and the restructuring that usually accompanies it. Boards rarely discuss culture under any circumstances, and directors resist the subject for many reasons ("How Board Governance and Company Culture Intersect," Directors & Boards, First Quarter 2014). But unless the culture pivots with the strategy, the results are likely to disappoint. Lately, in fact, we've seen several Fortune 500 boards take a hand in making sure culture follows strategy.

For these boards, culture is not a fuzzy, abstract concept but something quite specific: the behavior of people in key leadership positions in relation to strategy. The question for the board is the extent to which people in the organization exhibit the behaviors required to make a new strategy work. These farseeing boards want to ensure that the top team's actions are aligned with the new direction of the company.

Consider the case of a technology company facing shrinking margins for both of its two quite different divisions: one, manufacturing a basic technology component; the other, providing large turnkey system solutions. Cost-cutting had kept the company afloat but a flood of cheap imports from Asia was threatening to take it under. The markets for...