How company culture changes following a merger remains an unsolved mystery. At least, that’s what the multitudes of literature, articles and recent publications on the subject could lead us to believe. I find that excessive. Sure, big culture projects are a particularly challenging part of megamergers, but lots of my clients deal with much smaller projects. The question of company culture still needs to be dealt with seriously in these cases, but it’s possible to be pragmatic and practical, yet effective, by taking a few things into account. These things are what I want to talk about in this article series.
Which culture should survive?
I was part of the M&A team in Basel when Roche bought Genentech in early 2009. We were prepared for the transaction, but not for what followed it. Severin Schwan wanted Genentech’s culture to be a fundamental part of the new company. It’s the only example I know of such a big deal, for which the buyer’s culture was expected to take a step back, in order to be replaced. In fact, the last few decades of PMI projects have shown that attempts to bring two cultures together equally, so to keep the best of both worlds, are generally doomed to failure. As the saying goes: “there can only be only one.” So, does the loser get wiped out? Not exactly: it is, of course, necessary to be slightly more level-headed when dealing with this kind of project. I also don’t believe that two company cultures can exist alongside each other. It is, however, possible to create a new, shared culture, taking certain elements from the target company’s culture. It’s possible to build a better culture, but it won’t construct itself. Here are the requirements for a successful change in company culture:
- Both parties must be aware of what actually constitutes their culture.
Those involved need to have cracked their own “culture code” in order to decide what should be integrated or thrown away, and where. Because company cultures have many layers. Processes and projects reveal only one of these layers. Values, norms, symbols and rituals are also an integral part of company culture.
- What came first, the values or the processes?
Despite what you may suspect, practices form values. Therefore, cultural changes must be implemented from the outside in. That means that management needs to set an example in proactively adhering to new practices. This is the only way to change old habits. And maybe you’re now thinking: change old habits? How?! Right, and this is why changing culture is so difficult. Perseverance, discipline, practice and quick wins are the key to success.
- Management must play a central role.
Simply making one inspiring speech about what needs to be done differently now, just isn’t enough in a culture change program. You must perform the new, changed behaviour yourself. Not just once, but constantly. Top management must consistently back and actively support the culture change program in the long run.
Let’s go back to the beginning: which culture should survive? Just one. Optimisation is allowed. Watching and waiting for it to sort itself out, isn’t.
