Merger. When 2 Cultures Come Together.

A merger is the integration of two organizations into one. The reasons to do so are numerous: economies of scale, industry capacity reduction, growth, acquisition of know-how … But the data are impressively dramatic. Most mergers fail and destroy value. One of the main reasons is because there is not enough focus on cultural compatibility.
I propose these 10 “guidelines for culture management during mergers”.
  • Integrate “culture” in the process of the due diligence. Do this early on.
  • Assess both cultures to detect differences and more importantly the common ground.
  • Take mutual appreciation as point of departure. Avoid the pitfall to focus on weaknesses. Search for compatibility, synergy, commonality.
  • Try to appropriate cultural differences and commonalities from the very beginning, during the merger negotiations. Negotiators should be very aware of how the culture of the other company works.
  • Appoint someone to deal with culture change. Make sure that this is someone with impact.
    Don’t confuse this person with a change manager. Change is very often about culture. But someone who deals with culture engineering will continuously look for ways of reinforcing the culture, independently of any project.
  • Define a third culture, next to the existing two cultures. Avoid that one group has to adapt to the culture of the other group. Both merging groups should evolve versus this new third culture. Make sure that this is clear for everyone.
  • Make sure the new culture is tangible. Look for early beacons of culture change. Many small initiatives, will make the culture change. Ut is also important to detect inconsistencies between the current operation model and the target operational model.
  • Make sure that important decisions are made in a culturally neutral way. The risk exists that one group will impose decisions over the other. This will create a quilt-culture instead of a homogeneous culture. For every strategic decision a cultural risk assessment must be made, and actions should be define to neutralize negative fall-out.
  • Design processes and interfaces between the various parts of the organisation with the third culture in mind. Develop ways to detect cultural short-circuits.
  • When designing a new culture, adopt an empathic way of working. Think about how the new culture will feel like. Emotion, Experience, Effort are three elements to integrate in the culture design. Take into consideration the doubts of people and address them early on. This is more important when the merger took place between former competitors.
The success of a merger should not be a matter of coincidence. Even though the integration of two organizations does not follow predictable paths, organizations can do a lot to avoid the collision of two cultures.

This blog appeared earlier on