Last December, the Wall Street Journal officially declared 2015 the “Biggest M&A Year Ever.” USA Today reported that $4.85 trillion in “corporate wedding vows” were exchanged. The Atlantic’s review of what it calls the “Merger Bonanza” points out that we may very well be in the middle of the 7th biggest wave of rapid merger activity over the last century (other notable periods being the consolidation of steel and oil in the early 1900s, the diversification surge of the 1960s and the changes from deregulation and globalization in the 1990s).
Those gigantic numbers (trillions?!!) mean that large groups of people are coming together to work in new teams, navigating new corporate cultures and establishing new roles and responsibilities. (Interestingly, when a company's culture starts changing, all of a sudden employees seem love the old one that before, they barely even noticed.)
In almost every situation, mergers and acquisitions mean corporate culture shifts, which then of course means friction, fear of change and new expectations. Long-term, shifts in workplace culture threaten any company that is absorbing another, being absorbed, or joining another large, successful company on a global scale.
What can be done to make the chances of success and long-term profitability better?
Could a little Corporate Anthropology make M&As really hum?
Smart companies understand the magnitude of the shifts that come with M&A and will look for proactive ways to get out in front of challenges so that any ensuing tension is net positive and problems are turned into opportunities for growth.
Here are a few issues that typically come with M&A where corporate anthropology can help:
Integrating IT Systems: Ask any M&A team what keeps them up at night about a merger deal and you’re sure to hear "Integrating IT." Invariably, there are technical hills to climb, unforeseen software challenges and delays that threaten timelines. No matter how much teams plan or talk through schedules and protocols, there will be tense moments, questions and problems.
Knowing this in advance enables the M&A team to proactively tackle the equally monumental task of understanding and integrating cultures between companies. If leadership teams, marketing teams and IT teams will all need to be interacting to resolve unforeseen challenges, how much better would it all go if the first communication between those teams is around building bridges across internal cultures rather than starting in the sticky, finger-pointing depths of stressful IT problems?
At Simon Associates Marketing Consultants (SAMC), we always like to begin M&A culture change work with a baseline assessment of the existing culture in each company, department and leadership team involved. To get that baseline, we use the OCAI online assessment, a powerful tool developed by professors Robert Quinn and Kim Cameron of the University of Michigan that has been used by over 10,000 companies worldwide to initiate necessary and very productive conversations around culture change.
Getting on Top of Details Early: What’s the plan? That’s the first question any employee on either side of a merger or acquisition will start asking themselves and everyone else they work with—-not to mention the first question everyone on the outside will start asking the employees. One big mistake that can sink deals is letting the big ideas and the money take center stage at the expense of the individuals who are expected to work together and make it all happen on the ground.
The sooner a plan is set in motion for integration, even if it’s before the deal is official or announced, the sooner the integration work can begin. That means less questions, less confusion and less looking backward. Instead, more hope, more clarity and more looking forward.
One corporate anthropology tactic we often emply that can help here is "Deep Hanging Out." While it sounds simple, it is molded in the vein of classic anthropology, which is based on participant observation. Once an M&A deal is put in motion, we set aside time to visit leaders and top talent on key teams involved—we hang out, take notes and learn everything we can. Then we use what we learn for smoothing transitions that are sure to be bumpy but can ultimately be in everyone’s best interest.
Clarity Around Roles & Responsibilities: Once an M&A deal is public, or even beforehand, it’s reasonable to expect that top performers will start getting offers from outside companies. One very real nightmare scenario for an otherwise promising merger is for top talent to be sucked away by good offers that look even better when the future at home is unclarified and uncertain.
The smart approach is a proactive one: early on, start talking to your key people about what their roles will be and what kind of culture and company you want to build. Not doing so risks losing the very people you thought would be helping lead the transformation.
In this kind of situation, one of my favorite tools to use from the corporate anthropology quiver is the Culture ChangeMap™. Extensive research shows that the difference between effective and ineffective culture change is the use of several sources to influence establishing a new culture, not just one source. Building a roadmap to make sure those influences are in place and saying the same thing is critical to communicating and establishing new roles and responsibilities within and across departments.
In M&A deals, especially large ones, friction and challenges are inevitable.
Companies that plan ahead and spend as much time thinking and planning for the cultural implications as they do the financial ones will find more long-term success and more profitable results.
You can read more in this Business Week article where I was quoted. The companies discussed reflect many of our clients who are coping with the aspirations of roll-ups and the realities of cultural challenges.
As always, please let us know if you would like to learn more about corporate anthropology and how it all works. Another great resource for you is my new book, “On the Brink: A Fresh Lens to Take Your Business to New Heights,” where I talk extensively about corporate anthropology, innovation and culture change. Order your copy from Amazon today!
President, Simon Associates Management Consultants