Lexington, KY - Every organization has a culture-by default or intention-and that culture can sometimes mean the difference between phenomenal success and a death spiral. Toss a merger or acquisition into the mix and you can get either the best of both or a fatal battle of wills.
Let's take a look at the potent example of the Daimler-Benz and Chrysler merger in 1998. The fused company was originally billed as a "merger of equals" with a combined valuation close to $100 billion. Synergy in product development, purchasing, and sales were touted as pillars upon which the company would grow revenue and profit.
Reality proved otherwise. Chrysler had a free-wheeling culture painted on the backdrop of tightly controlled costs. Daimler-Benz's elitist culture of robust engineering and pristine quality ran counter to that of Chrysler. The Daimler-Benz management team acquiesced to justifiable rank and file resistance of merging sales outlets, R&D teams, and more. The resultant hands-off attitude allowed Chrysler to flounder without solid direction.
Ultimately the illusion of an equal merger was exposed and the German management team attempted to take control of the entire company. But it was too late. Key people had already left and the former Chrysler became a money pit to be spun off to private investors at a fraction of their decade-earlier valuation. Two years later they declared bankruptcy.
We experience mergers and acquisitions in our own city and wonder how they will fare. Wild Oats went to Whole Foods, Wachovia Securities to Wells Fargo Advisors, National City Bank to PNC, and Woodard, Hopson & Fulton to Dinsmore and Shohl, to name a few. We have yet to see how some of these will play out.
First Steps
After an acquisition, the management team of the acquired company must first understand the new culture. What are its values, such as: short-term view vs. long-term, value of innovation and creativity, empowerment, communication flow (hierarchical vs. free flow), risk tolerance and willingness to accept mistakes, individualism vs. teamwork, reward system, and more? Then you must communicate the new cultural values and the reason and history behind the culture.
Communication needs to be frequent and consistent, over many media, including in person, on videos, in e-mails, and in printed displays. Stories are the most powerful and frequent method of communicating a culture and the leader must learn the stories used in the culture of the overtaking company, find new ones that support this culture in the overtaken company and relay those on. As a leader you must continually reinforce the new culture and its benefits, showing organizational support.
Taking the Reigns
If you are coming in as a new CEO of an organization, it is most important to understand the existing culture, its values, stories, and nuances. Listen. Then, knowing your organization's long-term strategy, determine if you should make any cultural changes. Beware your ego wanting to put its "brand" on the organization. Cultural changes should be made for a very good reason, and the reasons should be communicated effectively to all employees.
Go slowly and have patience. Think long term-culture changes take years, not weeks or months. Through the nature of our instant communication and tighter interconnections, we are becoming conditioned to accept change much more rapidly. However, when the pace of change is too rapid, we feel fatigued and embattled, unable to respond well and appropriately.
Keeping the Customers in Mind
As you shift from one culture to another it is imperative that you keep your customers in mind. Once they become aware a change may be in the offing their antennae will be alert to new values, procedures, and policies. The local Whole Foods Market understood this well as they made the transition from Wild Oats. "From the beginning we understood that the change was good for our customers as long as they did not have to sacrifice what they loved," said Linda Russell, Marketing Coordinator & Community Liaison. "Whole Foods Market strived to ensure we took good care of our customers and that the transition was as seamless as possible.
For example, some breads we had carried as Wild Oats were not products sold by Whole Foods Market. We brought them back in order to keep our customers happy."
Organizations as Machines or Living Organisms
I have observed leaders with a mechanistic view-pull this lever, jam the throttle forward another area, brake on a third, and out pops a new product or distribution channel. That's fine in an era of command and control but this type of culture tends to bring short-term results rather than long-term organizational viability.
Contrast this view with that of an organization as a vibrant, living organism. Evolving processes emerge from living organisms, rapidly responding to internal and external forces. Let us not forget the words of Charles Darwin, "It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change."
A learning orientation and culture of adaptability can often mean the difference between shuttered doors and steady long-term growth. Our current world economic environment has changed forever and is no longer tolerant of strategic missteps, making a cultural learning orientation even more important.
Research has shown that the personality factor of openness is correlated with adaptability. A similar relationship must exist for organizational culture. If your culture encourages the emergence and implementation of new ideas in response to customer or market conditions, adaptability will become second-nature.
What are the values in your culture? Do you appreciate creative thoughts and willingness to express ideas and opinions counter to your current strategy? Are you clearly and consistently communicating your values? Do your customers know your corporate values? A little introspection, analysis, and thoughtful action may bring great rewards.
Joel DiGirolamo heads the firm Turbocharged Leadership and can be found on the web at www.turbochargedleadership.com