Another week. Another deluge of press releases announcing another mega-merger. This time between Heinz and Kraft.
Inevitably the press releases read like a playbook of PR buzzword bingo.
Economies of scale
And the phrase so beloved of Wall Street analysts….Efficiencies.
Efficiencies. Such a benign word in print.
Not so benign if you’re the 2nd SVP of R&D in the new entity. Or the brand manager of the former “Loss Leader” brand that’s now been characterized just as “Loss”
Or when the “L” and “I” of that wonderful accounting acronym LIFO means you.
There’s no denying the potential economic capital upside of these mergers. But it’s the downside of the human capital that warrants attention too. And I’m not merely talking the lay-offs and plant closings. I’m talking about the impact on the folks who remain too.
So often these mergers are couched in terms that make it seem like an exercise in Brand Architecture and a way of aligning which brand, sub-brand goes where in the brand structure.
But is less about where something fits than how it fits.
And that how is Culture.
And whether the two merged cultures can fit together as snugly as the new Wal-Mart product planogram your new organization is salivating over.
In our practice we talk about Culture in simple terms. Culture is really nothing more than “the way we do things around here.”
The things we consider important.
The values that define how we behave – or want to behave.
How we treat each other. And treat our partners, vendors, franchise partners.
How we define - and treat - our customers. And how critical we believe that is to our continued success.
That’s Culture. And it sets the tone for how your organization acts internally. And that directly impacts how your brand executes and acts externally.
Its one thing when you’re merging the manufacturing operations of the famous 57 with the manufacturing operations of powdered cheese and dry macaroni.
Now consider how serious that Culture alignment is when your organization – and brand – stares into the faces of millions of paying customers directly each and everyday. Like the recent merger of Burger King and Tim Hortons.
You don’t think an alignment of Culture is critical when determining what’s important in how that company considers, acts and behaves over the top of a store counter hundreds of times a day?
Here's a few business examples that ran aground on the rocks of mis-matched Cultures. While all these examples aren’t specifically M&A’s, they do point to the power of Culture.
Publicis & Omnicom. When the immolation of your proposed merger becomes an op-ed piece in The Economist, you’ve officially achieved the business equivalent of a hasty, drunken Britney Spears wedding in Las Vegas. Seemed like a good idea at the time but now all you’ve got left is a massive hangover and a huge messy amount of legal bills to deal with.
Unilever and Ben&Jerry’s. The classic “we’ve agreed to disagree” press releases following a fall-out over GMO and GMF food labeling highlights that even the best business relationships can run afoul over a difference in values and beliefs. And nothing defines Culture more than the values and beliefs that actually drive the behavior of an organization. Remember Rule 1 of strong businesses folks – “Do then Say”.
Saturn & GM. To a weary (and wary) auto-buying consumer the Saturn promise of “A Different Kind of Car. A Different Kind of Car Company” was a siren song. And boy did hundreds and thousands respond by snapping up the cars and attending the annual Saturn owner’s picnics in droves. This brilliant article from Wharton highlights how the dichotomy in opinion, worldview and day-to-day practices (I hear Culture in there) inevitably drove this brilliant operation into the ground.
Like me, your LinkedIn feed likely features that delightful meme of Peter Drucker with the famous “Culture Eats Strategy” quote. Perhaps an over-simplification of the sage advice Drucker was giving but it is true.
The most well-intentioned strategy (or M&A) hasn’t a chance if it runs headlong into an immovable and intractable Culture.
How well-aligned do you believe the Cultures are of the recently merged organizations are? Do you believe aligning Culture is as important as squeaking out that last ounce of operational effectiveness?
Weigh in folks.