After reading the August 8th article from The New York Times titled "What Works in Taiwan Doesn’t Always in Arizona, a Chipmaking Giant Learns," I was immediately reminded of Peter Drucker’s famous quote: “Culture eats strategy for breakfast.” This quote has never been more relevant, especially when considering the challenges faced by Taiwan Semiconductor Manufacturing Company (TSMC) in its recent expansion into Arizona. Just a day ago, during an interview with Tim Bezhashvyly from Hidden Hint, I mentioned why it’s better to start AI culture adaptation early rather than late. TSMC’s struggles are a stark reminder of why cultural adaptation must begin now—particularly as we move into the era of AI 2.0.
TSMC’s Cultural Reality Check 🧠
TSMC’s decision to build a $65 billion facility in Arizona was intended to be a strategic win, diversifying its manufacturing base and mitigating geopolitical risks. However, the company quickly discovered that its highly successful Taiwanese operations couldn’t be easily replicated in the United States. TSMC's complex manufacturing process, honed over decades in Taiwan, faced significant hurdles when transplanted to the American desert.
The company’s rigorous work culture, characterized by high expectations and long hours, clashed with the work-life balance that American employees prioritize. This cultural mismatch led to frustration, higher turnover, and significant delays in project timelines. Some American employees even quit after disagreements over work expectations, highlighting the challenges of importing a corporate culture without adaptation.
To address these issues, TSMC implemented communication training for managers and adjusted workloads to better align with local expectations. However, despite these efforts, the experience underscored a critical lesson: no matter how well-planned a strategy is, if it doesn’t align with the local culture, it’s bound to face obstacles. This brings us back to Drucker’s quote—culture truly does eat strategy for breakfast.
What TSMC Could Have Done Differently: Culture Before Strategy 🎯
TSMC could have benefited from starting with smaller, decentralized operations and gradually integrating its corporate culture, allowing employees time to adapt while maintaining operational flexibility. Launching with a smaller pilot plant would have also allowed TSMC to experiment with different management styles and operational approaches. Understanding what it takes to bridge the culture gap could have enabled the company to identify what works in the U.S. context, scale up gradually, or make necessary adjustments before committing to a larger-scale operation.
These steps would have allowed TSMC to adjust its approach to fit the local culture, mitigate risks, and achieve a smoother transition into the U.S.—or even decide to scale down due to unbridgeable cultural differences. By moving in without fully preparing for these cultural differences, TSMC encountered significant setbacks. The challenges in Arizona clearly demonstrate one message loud and clear: “Culture before strategy.”
When Culture and Strategy Aren’t in Sync: Drawing Parallels from TSMC 🚀
If culture and strategy aren’t aligned, companies face several potential risks:
Strategic Misalignment: TSMC’s attempt to replicate its Taiwanese operations in Arizona without cultural adjustments led to delays and frustration. Similarly, strategies that overlook cultural readiness can quickly become outdated, resulting in failed initiatives and wasted resources.
Productivity Challenges: TSMC encountered productivity issues as American employees struggled to adapt to the company’s demanding work culture. In the context of AI, a lack of cultural support can lead to confusion and inefficiency as employees grapple with new tools and workflows.
Increased Turnover: The cultural clash at TSMC created a stressful work environment, leading to higher turnover rates. In any organization, resistance to change can drive away top talent, exacerbating the challenges of adaptation.
Learning from TSMC: A Call to Action 📢
TSMC’s struggles in Arizona should serve as a wake-up call for any organization planning significant transformations, whether they involve AI, global expansion, or other strategic shifts. The cultural foundation of the company is just as important—if not more so—than the strategic planning behind these initiatives.
I’ve long advocated for starting AI cultural adaptation early. Waiting until AI 2.0 is fully market-ready before shifting your company’s culture could leave you scrambling to catch up. Companies that start planning for AI culture adaptation and align their strategic goals today will be better positioned to navigate the challenges, seize the opportunities that AI 2.0 will bring, and reduce their chance of failure.
Is your company ready to align culture with strategy in the age of AI 2.0? Let’s discuss how you can start preparing today. 🤝
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