“We used to dance; now we march”: How M&As can kill culture

If you're not careful, you can destroy the very thing that made the acquisition valuable in the first place.

by Mieke Jacobs and Paul Zonneveld
Last Updated: 18 Mar 2020
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SMEs

A deterioration of culture after a merger or acquisition can manifest itself in different forms: from killing the culture of the acquired partner, leaving them feeling subject to a hostile takeover, to a general regression in cultural maturity of the entire combined organisation.

Killing the culture of the acquired partner is particularly common when incumbents try to buy the innovator in their field, the disruptive competitor or the ingenious start-up (in other words, the partner that is inherently different and became attractive for that very reason). 

For example:  

-- Oil & gas majors are investing in renewable energy

-- Chemical multinationals are buying multiple water purification companies

-- Virgin plastics producers acquire recyclers

-- Pharma giants annex players in biotechs, immunotherapy and even medicinal cannabis

-- Big 4 consulting firms integrate cutting-edge boutique consultants

Long-standing companies might have become blind to their own systemic dynamics that prevented them igniting the innovation or transformation needed. As a result, they fail to notice, understand, honour or safeguard what made the disruptor disruptive. 

When you try to buy something that you miss or have lost along the way, and integrate them into your existing system, you risk killing the very thing you wanted to buy: their innovation engine, their unique governance and relationship structure, and their specific culture – one that fosters reinventing the future, risk-taking and cross-fertilisation beyond company borders. 

Despite good intentions on day zero to build on the strengths of both parties and position the innovator as critical for the next strategic waves, acquired companies generally become absorbed by the dominant culture. Seldom does the innovative spirit transfer to the larger whole.

“We went from dancing to marching”, were the words of one of our clients. He had joined a visionary firm with a track record of impressive results, by creating shared services for major clients in different industries. They did groundbreaking work, forged new paths and were not bound by conventional approaches. Until they were acquired. 

The cultural clash between the innovative, state-of-the art company and the disciplined, listed major player was huge. One year after the acquisition, every single senior leader and subject matter expert had left, taking their knowledge base and client relationships with them. 

When this happens, it can leave the acquirer with little more than an empty shell. 

When acquiring, businesses need to bear in mind that the culture of the organisation they are buying can be the reason it’s so innovative and successful. Cultural features of dynamic innovators include:

-- Purpose: A fundamentally different purpose or reason to exist. ‘What is society inviting us to do?’, rather than ‘How can we maintain double digit growth?’

-- Connection: A strong narrative that connects all stakeholders to that purpose, that engages them in a dream, in an activist story for a new and different reality 

-- Inclusion: An organisational design tailored to the needs of departments, functions and people. Not an overgrown dinosaur, burdened with entitlement and special assignments, but a new work environment that is agile

-- Order: Criteria to define order in decision making, based on what the organisation needs to achieve for its longer-term purpose, rather than job titles, tenure or nationality

-- Exchange: An energy exchange and flow that enables the combined organisation to live, grow and develop. Flexible working conditions, a high level of trust, cross-fertilisation beyond the company gates

Bringing two organisational systems together requires you to thoroughly understand the history and true motives of the acquirer, to take a deep dive in the founding story, timeline and identity of the acquired party and to consciously build the new system and its culture.

Mieke Jacobs and Paul Zonneveld are leadership and organisational transformational facilitators and co-authors of new book Emergent

Image credit: Ed Jones/AFP via Getty Images

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