MERGERS – AN OPPORTUNITY FOR REINVENTION
In the months that follow a merger, the integration of two disparate cultures is as thorny and important a challenge as any that the leadership will face. Important because the logic of the merger usually depends on genuine integration, or the new firm will never be greater than the sum of its parts. Thorny because the two cultures often prove less compatible than they seemed before the deal was done. One might be older with more formalised processes, the other younger, less formal, more flexible. We came across just such an example last year.
In truth, though, all organisations become less nimble as they grow, whether they are part of a merger or acquisition or not. To keep the wheels on they develop systems and structures which threaten the entrepreneurial flair that first brought the firm to life and made it stand out. Innovation may be the word on everyone’s lips, but the focus on customers isn’t quite what it was, and the urge to keep doing what already works is ever harder to resist.
Assuming the post-merger leadership team has an accurate reading of these two challenges, I argue they have the potential opportunity to reinvent the culture to that of a scaled start-up. This paradoxical idea combines a start-up mindset with the benefits of size, helping organisations to keep their best people, delight their customers and outperform the market. Examples include MailChimp, ShutterStock and dozens of established businesses that rediscover their entrepreneurial roots.
The integration process starts by writing a cultural blueprint for the new organisation. This can appeal to both firms because both typically have to change: neither can occupy a status quo. The process is long and uncomfortable and resistance is inevitable, but I suggest the first priority is to win over the staff who will have the biggest impact on the organisation’s internal Net Promoter Score (a measure of employee loyalty).
LISTEN TO THE OUTLIERS
Kurt Lewin’s model of planned change (“unfreeze, move, refreeze”) is shaping the thinking of change consultants 70 years after he wrote it. There is a lot more to Lewin’s work than this, but the headlines encourage the idea that the fastest route back to stability is a strategy to shift the thinking of every employee. I’m all for unifying visions and communications plans, but I often see firms squander time and energy when they try to influence all staff equally. I want to argue instead for an initial single-minded focus on two much smaller groups: the enthusiasts and the doubters.
ACCENTUATE THE POSITIVE
Take a selection of enthusiasts from the new firm’s top managers and future leaders from both legacy organisations. In a series of workshops they road-test a strawman blueprint which describes a possible future culture. Its boldness is exciting but also designed to draw criticism. What emerges is more practical and more widely liked. When the leadership team signs it off, staff around the firm hear the news. But its approval only has traction because it’s endorsed in turn by the enthusiasts. Day-to-day, on the ground, they begin to change what they do. Just as importantly, what they say starts changing too, because language doesn’t just describe firms, it also organises them. The result? ’Culture 2.0’ now has legitimacy from the top and a ‘change network’ of future leaders invested in its success.
ELIMINATE THE NEGATIVE
The doubters also require careful attention because they have the power to wreck the Net Promoter Score. The leadership team does more than ask what they think, it commissions gap analysis to identify the barriers that stop the doubters from engaging and takes action on ‘pain points’ like the separate performance management systems that survived intact, or email systems that were never merged. As these barriers are removed, one by one, resistance loses some of its sting. This is a process we can now measure remotely; it’s important to track habits of language because they sustain certain ways of thinking. But instead of using pulse surveys where responses are contaminated by social pressures, we can now assess employee attitudes via services like Glassdoor and Behavox. Anonymised, through sentiment analysis (using technology to identify and categorise opinion), real-time data is increasingly helping leaders to understand how the feelings of their workforce are evolving – so they can judge if their efforts are bearing fruit.
NO SILVER BULLET
Kotter & Schlesinger wrote a famously bracing HBR article in 1979 called ‘Choosing Strategies for Change.’ It was so popular that HBR re-published it in 2008. Today I think we’re clearer that a good strategy is only the start. It’s interesting that Len Schlesinger went on to become Dean of the No 1 American university for entrepreneurship where he distilled a new, humbler approach into four steps: Act, Measure, Adjust, Repeat. It moves away from the beautiful strategy you perfect before you begin and turns into something more like systematic experimentation: an iterative process that learns as it goes along. If an idea works, the firm embeds and builds off it. This is made possible by the real-time feedback for managers that sentiment analysis provides. Now the firm needs to make only micro-changes to the direction of travel: enough to reassure staff that it’s listening; not enough to disconcert them. Cultural change has begun and attention can be returned to the majority.
I see leaders building powerful new narratives that change the language of their organisation and allow it to think differently. But no decision beds in without millions of informal interactions to support it. Focus on the enthusiasts and doubters because, in the end, it is their stories that will shape the things to come.
By Tim Phillips, Managing Partner at Gate One
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