There were an astounding 62,000 mergers and acquisitions (M&A) in 2021, worth an even more remarkable volume of $5.1 trillion. It’s a shame, but despite all the careful planning that goes into combining two companies, 70%-90% of those businesses are doomed to be “abysmal failures”— a result of a few common issues:
- Ineffective risk management
- Unclear operational strategy
- Lack of communication between stakeholders
- Poor project management
- Misalignment between company cultures
That’s right. Among the top five reasons your newly formed business could fail is “cultural misalignment” (kinda’ like when you get remarried and your kids refuse to get along as step-siblings). The impact is just as real as operational and strategic misalignment.
Cultural Misalignment: How Does Frankenculture Happen?
The most frightening scenario when it comes to culture combinations is Frankenculture: a disturbing culture that isn’t fully formed. Half one culture, half the other. … Or if you’ve gone through multiple M&As, a mish-mash of multiple parts.
- Frankenculture happens when business leaders and their employees make assumptions instead of intentionally forming a new culture. This typically plays out in one of two ways. The acquiring company assumes assimilation is happening and that the other company will adopt its culture. At the same time, the newly-acquired company assumes correlation is happening and that they are maintaining their culture.
- Everyone assumes assimilation is happening but there is no set or clear company culture for them to assimilate.
What Does Corporate “Cultural Misalignment” Look Like?
At Liger, we often see our clients struggling with cultural alignment. Our marketing firm routinely works with large companies whose workforce has been “acquihired.” Teams from multiple companies join forces and are expected to work together with little or no understanding as to how they should work together from the cultural perspective. They may have vastly different work styles, philosophies, and cultural values.
Think about a team that values casual business dress, punctuality, and corporate formalities working with a start-up culture that wears whatever they want, works whenever they want, and frequently uses four-letter expletives. Yikes! Better yet, what if the team from “The Office” went to work at the Pearson Hardman law firm in “Suits?” Now, that’s a scenario ripe for office squabbles and misunderstandings.
When corporate culture is unclear, friction is bound to happen. One of the common rubs we see in M&As is between employees who are used to being consensus-driven versus employees are are used to quick, autonomous decision making.
Imagine you’re accustomed to being consulted before your team makes a decision and moves forward. Your voice is valued and your objections are taken into consideration. Now, imagine your new, more autonomous team member starts criticizing all the red tape they have to go through to get anything done, and they start making decisions independent of the team.
It’s not difficult to imagine employees from the consensus-driven company will be frustrated when their voices aren’t heard before decisions that impact them are made. The effects of this kind of cultural misalignment are truly frightening: increased friction and an overall decrease in productivity—something no business wants.
What’s the Best Change Management Strategy for Integrating Cultures?
Choose Your Integration Style.
You need to be thoughtful and intentional about structuring and blending your franken-team. Before you even put teams together, you need to think about what you want the culture of the “new company” to be. There are three ways you can go with this.
The Three Integration Styles:
- Assimilation: A smaller company is expected to conform to the culture of the larger, acquiring company.
- Correlation: The culture of each company remains largely independent, sharing best practices after the merger.
- Co-creation: Two (or more) organizations collaborate to define and align around an entirely new organizational culture.
Each of these approaches has its place depending on the nature of the industry and how the companies plan on working together. Consider the pros and cons when it comes to your teams, and then choose the route that best suits your situation.
If you choose co-creation, leaders on both teams will need to spend a good deal of time meeting to determine the new culture. The process could require them to gather input from both teams through internal surveys or focus groups, determine a new mission, vision, and values (MVV), and design new internal policies.
Communicate the Culture—Repeatedly.
Once you have determined the culture, you need to internally communicate it to your whole team. It’s best to work with marketing and communications professionals to design the best ways to do this within each company. Liger has walked numerous companies through this process, seeing better alignment and reduced friction as a result of good communication.
Change can be challenging for most people, so if you’re communicating a different culture, you have to figure out the best ways to share what’s new and give them time to take in the information and accept it. Messaging a major culture shift is involved and it’s a process.
Besides sharing the information, this communication may include things like culture-building and team-building activities, “town hall” meetings, or contests and competitions that build employee engagement. If you have a marketing and communications team, let them do what they do best and put a plan together!
Whether you need a completely new mission, vision, and values or a refresh of your cultural narrative, Liger can walk you through creating a solid narrative that’s easy to share. … And we’ll even put an internal communications strategy together for communicating the culture to your team in a way they can engage with it, as well as understand and embrace it.
Contact us for a quick chat about your marketing and communications challenges and goals.