Laying down the foundation for honest conversation
Once two companies have closed a deal to merge and begin the practical process of joining organizations in earnest, one of the first questions they should settle is how they plan to join cultures. This is primarily a matter of seeing what is and setting clear expectations for what will be. A crucial question to explore: What is the level of cultural integration (and therefore cultural change) required for each of the organizations as they come together?
The leadership of both the acquiring and acquired company must have conscious, explicit conversations about how they see the companies’ cultures coming together in order for the merger process to happen more smoothly. As the teams align around a common vision for the future, they can begin implementing steps to make the integration process work.
Not all companies have the same goal in mind. They largely break down according to two factors: Degree of change in the acquiring company, and degree of change in the acquired company. These were formed into a framework by Mitchell Lee Marks and Philip H. Mirvis (2011) that we use today at Denison to discuss transition planning and team alignment with our clients.
Cultural Preservation: If it ain’t broke, don’t fix it.
Some organizations opt to keep the culture of both companies—merging and merged—separate. This requires little to no cultural change. The discussion is fairly straightforward, but it needs to be had and it needs to be explicit nonetheless.
Absorption: When two become one.
It often happens that, when two companies merge, the acquired company must assimilate into the culture of the acquiring company (although in the rarest of cases, the opposite happens in what’s known as a reverse merger). This can happen over time, but it can also happen rapidly. Cisco developed a reputation for absorbing acquisitions in a very short time span (days to weeks): employees of the acquired company would show up to work within days of being acquired and have a Cisco email address and a Cisco coffee mug at their desk. This rapid adoption of a new brand and identity can be a difficult transition for some, and a clean break for others depending on how it is managed.
The Best of Both: Easier said than done.
The majority of acquiring organizations indicate that their intention is to preserve certain capabilities and other assets of an acquired company and bring them forward into the newly formed organization. While this sounds good in theory, it is much easier said than done. The habits and routines of the acquiring company are usually deep rooted and do not easily accommodate new approaches to getting work done. The good intentions of wanting to be respectful of how the acquired company operates get engulfed by the day to day demands of the business and results in the subsequent failure to truly understand the practices that have contributed to the acquired company’s success (and purchase price).
In this scenario, it is critical that you have relevant culture data—specifically culture data that is based on business performance—to facilitate the understanding and capture of the practices that can drive the combined business forward. Putting objective, performance-based culture data on the table for all to see and work with has the potential to move the culture discussions beyond impressions and opinions and into the honest conversations and thoughtful actions that result in the true execution of the best of both strategy.
How Denison aids the Transition Planning and Team Alignment process.
Leading discussions about the cultural alignment strategy is a key step in Denison’s integration work. From our extensive research, we know the key cultural attributes that drive business performance. We can use our proprietary model, tools and processes to help organizations answer critical questions such as:
- What are the performance-based cultural beliefs, values and habits present in the organization today?
- How clear and pervasive are they?
- What level of change will be required to achieve the cultural integration and business objectives of the M&A strategy?
If we can help organizations come to the table to discuss these questions, and if we can facilitate those discussions with clear and relevant culture data, then all parties are better prepared to have an honest discussion, reach alignment and turn good intentions into a working reality.