CFO Insight LLC
Culture – the soft side of any business – is not easily quantifiable, but can be a transaction killer when it comes to successful integration. Culture is the informal side of the business… the things that are done, and the way that things are done in an organization. Sometimes the culture is documented so that all constituents can easily interpret simple statements… “Our products are guaranteed to give 100% satisfaction in every way” is a simple statement that LL Bean presents on their website. Their culture is simple – “Satisfy the customer…” - and employees are empowered to do so.
Consider their statements and their actions, and compare them to other retailers that you have worked with. What attitudes do you experience, and how effectively is your transaction being processed when you are a dissatisfied customer?
Small entrepreneurial companies have cultures that allow them to succeed by being flexible, focused and results oriented. Every order is essential to their success … every customer is critical … perhaps essential to fund the next payday, or the next new product … every single transaction is a necessary success … unlike some major companies where an order – perhaps your order – is one of 100,000 processed today. When you deal with the larger company, do you feel that you are receiving personal attention? Culture differences…
Now force two dissimilar cultures together without adequate planning. The small entrepreneurial company culture will anticipate, and react to business opportunity immediately through a short but effective chain of command, while the larger company will begin to research the challenge, process the decision through a decision hierarchy, which may allow immediate action, but also may delay action until proper approval is obtained.
If a large company acquires an entrepreneurial company, they may impose ‘big company’ process on the target immediately. In such a case, the entrepreneurial spirit acquired may be crushed … the value of the acquisition diminished or destroyed.
If the large company were to allow the entrepreneurial company to continue to perform ‘as is’ the new parent company employees would question why such behavior were tolerated.
The result of such disharmony – potentially lost acquisition value through inefficiency, employee turnover, and customer turnover. This can be avoided.
The solution is to find common ground so that both companies understand the value of culture going forward. Select the leaders (formal and informal) to review both cultures and discuss the keys to acquisition’s value. When you align both companies on the target’s keys to value, leaders may discover that the culture represents a major part of the target company value. If unique culture is a key to value, leaders can be coached to allow the culture to thrive when both cultures are considered. Culture change requires strong leadership, cooperation and exceptional communications. Focus the companies’ energy on a common purpose – increasing company value – to unite diverse teams of professionals. Use the executive workshop format as a platform to raise and resolve the issues.