For those of you who know me and follow me, you know that cultural due diligence and the merging of distinct cultures after an acquisition is a hot button of mine. (Click here for one of my musings on the topic.) As much as I try to talk with development executives and internal integration specialists, I am often met with blank stares and comments like “well, we have a communication plan”. Don’t get me wrong, communication plans are critical, but so are cultural integration plans that start with cultural due diligence.
Amazingly, I’m not the only one who thinks these things are important, although sometimes I feel like I am. Recently McKinsey published an article entitled: Merge to Grow: Realizing the Full Commercial Potential of Your Merger, where they show research that proves that companies who pay attention to culture meet their merger goals (long and short term) in much higher numbers than those who don’t.
Well, you know how I feel about Big Box Change Management. And Big Box consulting firms in general, but I like to give credit where credit is due. McKinsey certainly nailed it. And not just because I know they are right and agree with them.
In their research, they mainly focused on merging the commercial organizations – which completely makes sense. But they took it another step further when they named “Actively Manage Cultural Differences” as number 7 in their top 7 steps to getting a merger “right”.
I’m not discouraged that this topic was number 7 out of 7. I’m encouraged that it made the list at all. NOW maybe you executives out there will start paying attention. This is FREE advice from McKinsey. I’d take it and run with it. (Click here to read the full article.)
I’m a proponent of conducting cultural due diligence when you are still in the buying process as it will give you insights into how this potential acquisition will fit in with your current culture (and thus how much work it will take to merge the two cultures in your quest for a true ROI).
McKinsey doesn’t mention cultural due diligence, although, in order to fully integrate your merged cultures, you need to conduct cultural due diligence. I’m a proponent of conducting cultural due diligence when you are still in the buying process as it will give you insights into how this potential acquisition will fit in with your current culture (and thus how much work it will take to merge the two cultures in your quest for a true ROI).
So, the next time an organizational consultant says the words ‘cultural due diligence’ or ‘cultural integration plan’ when discussing your merger, instead of looking at them as if they’ve just grown two heads, you’ll sit up and pay attention. They know what they are talking about, and if you follow their advice, you may just have a successful merger on your hands.
If the two players after the merger can not combine the different corporate cultures, the results are expressed in terms of fragmentation, uncertainty and loss of commitment, all elements that can affect production performance. Cultural risk is associated with the need for operational integration, which makes the possibility of bankruptcy high if no means and objectives have been defined; to the integration of the various divisions, each of which represents a corporate sub-culture; finally, this risk is linked to the way in which integration is implemented. Naturally, the difficulties are amplified in the case of cross-border mergers, where the best solution seems to be to find points of contact between the different national corporate cultures, without imposing that of the buyer and stifling the culture of the target, an element that could cause a depression of the economic performance of the new company.
Culture, culture, you’re so fine…
You’re so fine you blow my mind…
Hey culture — hey culture.
The perspectives on major culture shifts involving process and tools has really flipped on its head. There are people that say we have core processes and we must reinforce and align these core processes for a success culture. Then there are people that say we can’t rely on these core processes, but on the tools that solve little problems in the organization; and have these tools drive culture.
Personally, I feel we need both to change culture. Though from past experiences, I found mobile notifications a more direct method to changing corporate culture than the tools or processes many prescribe.
Totally agree Chris. I’m always a little leery of ‘either/or’ thinking. Often the answer is something in between. Thanks for sharing your thoughts. And I love your play on that song that I know the tune to, but not the title. 😉