Platt Perspective on Business and Technology

Intentional management 18: aligning management, leadership and corporate culture 3

Posted in HR and personnel, strategy and planning by Timothy Platt on April 6, 2015

This is my 18th installment in a series in which I discuss how management activity and responsibilities can be parsed and distributed through a business organization, so as to better meet operational and strategic goals and as a planned intentional process (see Business Strategy and Operations – 3, postings 472 and loosely following for Parts 1-17.)

I began discussing corporate cultures in the context of how they impact upon and shape effective management in Part 16, and continued that in Part 17 where I considered a basic scenario in which a manager with a different type of workplace background is brought into an established, stable business as a new hire – and with the baggage of having developed essentially all their workplace experience and expectations in the context of very different corporate cultures than they face now. I turn here to at least begin to consider how this plays out in the larger and more disruptively widely impacting contexts of mergers and acquisitions.

I debated which of these alternatives to begin with, and chose acquisitions, where a larger and more commanding business buys out a smaller one, as this at least at first glance can seem to hold more in common with the “acquisitions scenario” of bringing in a perhaps more senior but still very much outsider manager, as discussed in Part 17. Here I turn to consider business acquisitions per se, and as in Part 17 I do so by way of a working scenario.

• A larger business (call it Company A) buys out and takes over and absorbs a smaller one (call it Company B) into its overall systems and its overall business structure, in order to capture and contain a source of value that is important for it if it is to reach is own overall strategic and operational goals. They do this because attempting to build matching sources of value, comparable to what B can offer, from scratch on their own would either be difficult and more costly or impossible (e.g. because of patent protections that the smaller acquired Company B holds, as just one possibility.)
• A’s methods and approaches and their corporate culture are arguably going to become the dominant ones wherever any challenging clash arises between their managers and executives and those of B with their executives, managers and personnel.
• But there is a trick and a trap in this. If an acquiring business like A simply seeks to force its acquisitions into conformity to what have been its successful ongoing core operations and to its core culture, and where B has been successful in creating value from their ongoing successful model and from their business culture, A might crush the very sources of value that it had just paid for in this acquisition, and perhaps paid for quite dearly.
• This holds for the possibility of accidently disassembling the strategic and operational systems that had made this acquisition’s success possible as a now previously independent business entity. That can be an obvious point to watch out for.
• But just as importantly, this can happen if a locally working and successful corporate culture is simply broken and replaced – leading to staff and management demoralization and the breaking of crucial communications and action links that made this acquisition work, as B’s best people begin to leave and move on. (Note: it is essentially always going to be the employees who you need the most and who would be the most difficult to replace, who will leave as they are the ones who can find the best alternative offers elsewhere. They, after all, are the people that all of your competitors are actively looking for too. But the goal here should be to maintain and to continue supporting the now-subsidiary B as a source of value and limit where possible this hemorrhaging of employee value.)
• The idiomatic expression: throwing out the baby with the bathwater comes to mind here and I cite it to attempt to reinforce the message that I seek to convey here. If you run a business that acquires a smaller operation, that has its own distinct operational and strategic ways and its own corporate culture, do so with an awareness that this system works for them and that this, collectively might be why that business is worth acquiring in the first place. So at least start out focusing on what this acquisition would offer and what it would in turn need from your business and both to continue to succeed and if it is to do even better at what it does moving forward. Learn about it, and in the context of bringing its managers up to speed on what your business does and how and why, so these two operations can understand each other and work together. Cultivate functional links between the businesses and at all levels where that could create sustaining value, and be content to let differences, including corporate cultural ones reconcile and resolve themselves more organically and without overt pressure to conform. So start out focusing on outputs and inputs for this newly acquired operation, and not on changing what it does and how, between them.

When essentially equal businesses merge, and their most senior executive leadership teams have to combine, and with resolution of what start out as duplications for essentially every C level position, and for a range of other, lower but still significantly placed managers and executives too, this becomes a somewhat different challenge. The keys to managing that are threefold:

• Understanding that differences, including unanticipated ones will emerge, as well as both expected and unexpected points of similarity and convergence,
• Patience and a willingness to accept that both merging business’ approaches have worked and have created very real and very significant value in their own contexts,
• And a willingness not to rush into change simply because differences might create at least short-term challenges and confusion at times. The goal here is to find a way, and on both sides, to minimize the costs of this merger from collision of differences, while maximizing gains from bringing together differing and complementary strengths.

This all sounds very nice in the abstract, but real world experience shows that it can be difficult, and certainly if either side approaches this naively for the potential challenges. So as in the case of the acquisitions scenario just discussed, focus on a higher level certainly, on inputs and outputs – on what each side needs and can offer the other and with a goal of preserving their capacity to create and offer value through this transition. Then, on a more measured scale support and encourage a more active joining as employees and managers on all levels begin to connect and work together, across what had been the boundaries of their once separate tables of organization. In this, operational and strategic connection and unification might need to proceed rapidly, but even there preserving the comforting familiarity of each side’s corporate culture while doing that, might significantly facilitate and smooth those more strictly business-function transitions.

A core set of collaborations and unification steps and processes that I write of here, is going to have to be set up and running from the start. But with time, that can be expanded out as people from both sides find value in collaborating. This, I add is definitely a place where a well-designed version 2.0 interactive intranet could offer real value. I am going to discuss this in my next series installment, and in anticipation of that, cite two reference postings and the book and other recommendations I offer there: Connecting an Organization Together, Version 2.0 and Creating Value from Constructive Conflict 2: thinking through the creative commons as a practical, effective business resource. I have discussed modern intranets in a variety of contexts in the course of writing this blog. I will focus specifically on how they can be used to build constructive bridges in mergers and acquisitions contexts in my next series installment.

Meanwhile, you can find this and related postings at Business Strategy and Operations – 3 and also at Page 1 and Page 2 of that directory. Also see HR and Personnel and HR and Personnel – 2.

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