The "True North" of Culture

Mark Herndon headshot
By Mark Herndon
Chairman, M&A Leadership Council
Jul 28, 2017

(Fifth in a Series on Culture)

It’s time to talk about the “True North” of culture, those foundational values, beliefs and behaviors you must understand and embed in your organization if you want to drive high-performance results. Components included in the final bedrock level of our Cultural Iceberg model (see Defining Culture – An Integrator’s Model), get at the real “you,” organizationally speaking, and these attributes have a pervasive and powerful impact on just about everything else.

Unfortunately, many acquirers never get to this point at all. Either they are reluctant to do anything about culture due to failed prior attempts, or a valid assessment deteriorates into a battle over “right/wrong” and “us/them” instead of keeping focused on the ultimate objective – aligning and mobilizing the entire NewCo entity on those attributes that matter most.

"In high-performing organizations ....  trust is built through candor, transparency and integrity as opposed to tolerance for the incongruent actions of those with power."

Let me start with some caveats. First, this is a complex and multi-faceted topic, far more comprehensive than we can deal with definitively here. What you’ll hear from me gravitates more to the practical and applicable stuff that you can more readily get your arms around during an M&A integration. But there’s plenty of great research and expertise that will sort this out slightly differently.

Second, we are going to start with the assumption that everyone at least generally understands that your personal worldview, along with your national culture and other deeply held convictions, combine to create an indelible template of your core values and beliefs. These have a distinct bearing on corporate culture, but my experience has been that those fundamentals are things to understand and work with, or around, rather than change.

Finally, I will readily acknowledge that I’m not a big fan of “culture typology,” or the practice of defining an entire culture such as a “collaborative culture” or a “control culture.” These culture-type observations may be entirely valid and accurate, but like our culture iceberg model itself, we need to drill into more specifics and deeper levels to deal effectively with sub-cultures or to get at actionable items for alignment and integration.

Fortunately for leaders, many authorities have already done the research and demonstrated through practical experience the specific attributes, practices, values, beliefs and behaviors that can drive higher-performance results. Our purpose is not to advocate for a specific model, but for a specific due diligence, strategic alignment and integration process that will get you and your next deal to the True North of a higher-performance culture.

But let’s look at a few specific attributes for illustration purposes. For each, evaluate to what extent your organization really believes this, and to what extent you have instituted specific skills, practices and incentives to bring these about.

  • Strategic Clarity and Direction: High-performing organizations have leaders that create and articulate a compelling, logical vision for the future and carefully translate that in a personally meaningful way to employees. They back that up with a top-down analysis, plan and process for reaching those goals, but carefully balance that with legitimate forms of bottom-up participation and involvement to gain insight, understanding, and mobilize for implementation.
  • Engagement: High-performing organizations are more typically open environments where information is shared more than concealed; where trust is built through candor, transparency and integrity as opposed to tolerance for the incongruent actions of those with power; and where the challenge to grow personally and professionally is backed up with substance and action.
  • Accountability: High-performance organizations are characterized by clear authority structures and efficient decision processes; by clear alignment of unit, team and individual performance commitments; and by the incentive and consequence systems that signal your belief that success should be shared in a meaningful fashion.

Getting to the point where your values, beliefs and behaviors are well understood on both sides of the deal requires both some art and science. Interviews, observations, research, group input and dialogue with key leaders and team members on both sides of the deal are still some of the best ways to identify and define what really matters. In our work we routinely uncover unique aspects of a company’s “legends and lore” that both encapsulate and demonstrate bedrock values and beliefs, often many years after the initial event.

I know you can relate with this. Just think about a business crisis or extraordinary event that your organization has successfully navigated (i.e. think about the Tylenol® product tampering crisis and what McNeil and parent company Johnson & Johnson did to overcome that…still a celebrated example of corporate social responsibility and doing the right thing more than 30 years later). Other things to look for include what actually gets rewarded and recognized and the degree to which these are in-sync with your stated leadership and performance expectations.

Finally, remember that along the way you will need to both redirect and clarify potential diversions. To redirect, you’ll need to be ready to discover differences, without dwelling on them. As illustrated in this week’s downloadable resource, continually ask the key “True North” culture question: “Which culture attributes, beliefs and behaviors will help or hinder the business going forward? And, you’ll need to respect what can’t or shouldn’t be changed. To clarify, you must continually remind the organization about the “True North” of culture: what are our new expectations and directions and why; and, what will we do to consistently build, role model, reinforce and recognize these expectations and directions?

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