(Sixth in a Series on Culture)
“Are you beef or chicken?” My client, the integration leader, didn’t realize it at the time, but with this ice-breaker during the initial integration kick-off meeting, he perfectly illustrated the important and pervasive impact of sub-cultures on M&A integration success.
“Sub-culture” is defined as a cultural group within a larger culture, often having beliefs or interests at variance with those of the larger culture. Sub-cultures pose additional integration risks and complexity because no matter how obvious or nuanced differences may be, sub-cultures are notorious as a leading cause of cultural flashpoints, conflict and resistance. Some call these “co-cultures” instead of “sub-cultures” to avoid any risk of implying a class-structure bias.
Whatever you want to call them, organizations are “chock-full” of sub-cultures, and each tends to have certain distinctive perceptions or practices. Left to themselves, these tendencies may escalate to become barriers, disagreements or dysfunctions that you don’t have time or bandwidth to deal with during integration.
"Being 'beef' vs. 'chicken' really meant something. You could say it was a matter of pride. Who wouldn't?"
Now back to the story. We had been engaged to lead the integration of a major food products conglomerate with multiple business units based on product type. The deal-type DNA was a classic product-line extension. A dominant brand in another segment was acquired to accelerate market share growth in a new, but adjacent segment. The initial integration kick-off meeting included key leaders of both the buyer and the acquired company.
Since the buyer was a multi-division conglomerate, representatives were asked to introduce themselves to their new colleagues with the typical name, rank and serial number type of information, but with one key difference: “are you beef or chicken?” In that organization, this essential information was more than an address. Both the beef unit and the chicken unit were legacies of prior acquisitions. Each had a unique and distinctive residual culture, business model and operating processes. Being “beef” vs. “chicken” really meant something. You could say it was a matter of pride. Who wouldn’t?
This points out why you can’t rely exclusively on a single, corporate-wide culture “typology.” Each organization is comprised of many different sub-cultures driven by many different factors as illustrated in Beef or Chicken: Sub-cultures in M&A. For example, have you considered the potential impact of these sub-cultures?
- Geographical region: Watch typical beliefs or biases about Southern cultures, West Coast vs. East Coast, and rural vs. urban.
- Headquarters vs. field office: I remember a VP in a buyer company with a dominant and formal headquarters culture who insisted that newly acquired field offices adopt the “home office’s” formal dress code, primarily based on a desire for consistency, while ignoring the field’s perception that the HQ mandate was both heavy-handed and illogical for their day-to-day business needs.
- Professional discipline, function or department: Engineers are different than sales people; and, accountants are different than customer support people. So what? Don’t let these functional or professional viewpoints result in disparaging or derogatory interactions. You’ll need all teams working together effectively to resolve cross-functional dependencies.
- Role level or education level: Experiences early in my career taught me that sometimes the most significant differences between “top-dog” and “rank-and-file” show up in respect and access. Make sure your communication and on-boarding efforts are inclusive and appropriately targeted to all levels and audience types.
- Performance level: Bet you didn’t expect this one, but it can be tough. Less-well performing units or individuals may be cynical, threatened and disengaged. Special handling may be necessary, or these viewpoints could spread to healthy units.
Adequate awareness and understanding of sub-cultures is a great starting point for proactively managing them. Fortunately for insightful integration executives, these additional strategies are proven to help:
- Language matters. Watch potential “us vs. them” language and labels. After closing, recast terminology to shift away from legacy company name (when appropriate) to city, function, leader’s name or other common team name. Otherwise, you may unintentionally institutionalize “beef or chicken,” or ABC, Inc. vs. XYZ Co. for years to come.
- Engage, interact and get to know. Purposely create a variety of integration and on-boarding events between and among both buyer and acquired company teams. Over the years we’ve used a variety of events or tactics to achieve this, including on-site representatives; integration mentors/buddies; training and orientation exchange trips between staffs of both companies and to multiple locations; temporary duty “exchange assignments”; and periodic joint meetings to get both top-down and bottom-up dialogue and action planning around the NewCo’s vision, values and essential business objectives. In almost every instance, the feedback is so positive and the results so productive that additional similar actions are soon rolled out.
- Continually discuss the “True North” culture question. “Which culture attributes, beliefs and behaviors will help or hinder the business going forward?”
- Align based on what creates value. Be courageous in aligning what and where value can be created, but be OK with differing non-essentials, especially among distinctive sub-cultures.