Mergers and acquisitions are not simply the result of greedy CEOs and boards foisting deals on shareholders to line their own pockets. But they often look that way as fat bonus payments and short-term spikes in share price seem to drive decision making. Regardless of the primary reason, as Craig Runde rightly points out in his recent LinkedIn article, it’s “culture” that’s often overlooked when deals are hatched in the boardroom.
Sadly, treating the people factor as if it’s just one more item on a tick list to be “managed” won’t cut the mustard if you want your merger to be a success. Better long term results are likely if culture is treated as your most fundamental – and most challenging – variable.
The good news is that the idea of “culture first” is gaining mainstream acceptance. In research we carried out among about 100 global leaders two years ago, culture and “getting people to work well together” consistently topped the list of key factors for corporate success. Even Silicon Valley investors we talked with are muttering the mantras of “culture” and “alignment”.
Recreating that collective cultural purpose in a merged enterprise starts with everyone contributing to a new shared narrative.
Mergers magnify the pressures of change all business face. We can boil these pressures down to what management thinker Stephen Bungay says are three performance gaps – the Knowledge Gap (the difference between what we think we know and what we do know), the Effects Gap (what we expect will happen and what really happens) and the Alignment Gap (what we want people to do and what they actually do). All relate to culture – “the way we do things around here”.
If we can narrow those gaps at the outset of a merger or acquisition, then we can help avoid the expensive and embarrassing post-merger disasters of flawed strategy, plunging profits, poor growth and damaging defections.
But reaching for the control button isn’t the answer. The truth is you can never have enough data, you can never command enough detail, and you can certainly never exert enough control over your people. Fear compounds confusion.
Paradoxically, we have more chance of getting it right during tough times if we swap detail for clarity of purpose, give people freedom to act rather than controlling what they do, and let people best placed decide how they’ll achieve your shared goals. In short, create a “new way of doing things around here”. Shift the culture. This sounds scary for most traditionally-trained managers and leaders. “How can I get anything done, if I can’t control what they’re doing?”
So instead of putting strategy first, and hoping you can simply manage the culture “thing” later, put alignment through shared meaning at the top of your to-do list.
Bring your new people together to share stories and find common ground through uncovering their values and principles.
Guide them in discovering a new shared narrative that will shape an underlying meaning – something everyone can stand for. This process is something like accelerating our personal experiences of meeting, courtship and marriage – getting to know each other, creating a shared history, and agreeing we want to create something lasting in the future. That’s the simple foundation for a new, clear strategic purpose.
Now, as the leader, you can concentrate on continually and clearly communicating your strategic purpose – what you want and why you want it. Your people can now to focus on how they can get things done together, and they can have the freedom to adjust their daily decisions according to changing circumstances.
Long-term merger success isn’t entirely dependent on culture, but putting a new shared meaning first will dramatically improve your chances.
About the Author: Graeme Thomson is Director of Strategy at The TAI Group. Visit The TAI Group, like us on Facebook, and follow along on Twitter @TheTAIGroup. This post is one of a series on meaning, collaboration and high productivity in today’s workplace.