Successfully merging corporate cultures in today’s environment of consolidation takes more of a social science degree than a business degree. Fields like cultural anthology, social psychology, and sociology have long studied and described the way groups – and members within them – think and behave. Insights from traditional and well-validated social models are invaluable tools for navigating both the expected and unanticipated consequences of bringing new teams, cultures and brands together.
Fundamentally, teams and companies are complex and political “mini-societies” versus mere collections of employees working together. Knowing this is 80% of the battle. And all societies have rules and norms, although the nature of norms changes according to the type of society in question. Rules and norms follow from a collectively-understood tenet or “purpose or values” of the society, and, as such, they regulate societal behaviour. But all societies are not created equal, and nuances in social complexity introduces subtle and not so subtle challenges for leaders.
Merging Cultures is Merging “Tribe-doms”
Bands, tribes, chiefdoms and states… these are social typologies coined by anthropologist Elman Service. A band is usually a very small, often times nomadic, egalitarian group with little to no formal leadership. A collection of multiple bands is called a tribe, which function quite unlike old cowboy movies depicting warriors surrounding a chief. Most tribes have no formal leadership, as they, too, are egalitarian societies. A chiefdom is a political unit headed by a chief, who holds power over more than one community group. As the name chief implies, chiefdoms are not egalitarian but instead involve social rank, with the chief and his family holding power. Finally, international law and relations define a state (or country) as a geographic political entity possessing political sovereignty, i.e., the society is not subject to a higher political authority.
Companies are inherently fragmented or compartmentalized by function, although separate functions strive to operate as an integrated whole given shared or collective interests. In anthropological speak, companies are arguably akin to “chiefdoms,” with its various corporate, regional and asset level functions and teams functioning as highly vocal “tribes.” In practice, this means that merging company cultures is really an exercise in dealing with “tribe-doms,” and the trick is to avoid the predictable and dangerous tribe-dom warfare that ensues when different and competing societies, err companies, clash for status, power and survival.
The Best Defense is a Good Offense
Sun Tsu’s classic treatise, Art of War, noted that, “The supreme art of war is to subdue the enemy without fighting.” In other words, preparing for confrontation by knowing your opponent well can bring victory without a painful battle. In this context, your “opponent” is not the other company being acquired; rather it is the clear and present obstacles to integration. Loyalty, cooperation and rapport are strongest within a group than between groups. This is a critical truism of social interaction at any scale, as well as the opponent leaders must battle in corporate mergers. On a global scale, states often maintain diplomacy and accommodation among each other due to shared business or economic partnerships or interests, even though their value and belief systems may significantly contrast. Business is indeed a great peace-maker and -keeper. But corporate mergers must go beyond shared economic interests in order to be successful, since organizations need to integrate internal systems and cultures. This is drastically different and perhaps more complex and risk-prone than states working together.
Joint goal-setting and goal-realization are among the most effective strategies for building bonds between adversaries, or rival groups. With this mind, four steps grounded in organizational-psychological theory can help avoid the inevitable chaos and “tribe-dom” warfare that results from unprepared corporate mergers left unchecked. Cautious work must be done before, during and after a business and cultural merger:
- Only square pegs in square holes: Mergers and acquisitions are substantially comprised when motivated purely by financial metrics. For example, companies will not align and perform effectively as a collective if they are metaphorically going different directions, at different speeds, using different modes of transportation and obeying different rules of the road. Instead, the smoothest mergers occur when tribe-doms have in advance of a merger a good deal of collectively-shared business and people practices. Therefore, leaders should look beyond P&Ls to proactively and comprehensively vet acquisition targets in terms of overlapping or complementary missions, visions and core values.
- Remove the apprehension that ambiguity brings: Managing expectations alleviates much of the anxiety and uncertainty that is inherent to marked change. Groups splinter, factions erupt and people invent counterproductive stories and explanations in the absence of timely and credible information that speaks to the well-being and self-interests of a tribe-dom. Therefore, once a merger is planned, leaders must inform members of the tribe-doms of the purposes of the merger and any plans of action that follow from the intent. This includes articulating how the merger will build on collective values, strengthen or protect the survival of the tribe-dom, as well as how it benefits individual members of each tribe-dom.
- Have tribe-dom members change perspective: Social science has long known that closer bonds form among individuals who share similarities based on their identity – such as the department (or tribe) in which they work, and the company (or chiefdom) that employs them. Therefore, diversity for its own sake complicates cultural mergers. Therefore, leaders need to know that research shows the secret to unlocking the positive effects of diversity is to promote perspective-taking. When diverse competing teams or functions take each other’s perspective, they performed more creatively and effectively than teams whose members were similar. Perspective-taking is critical when introducing previously rival tribe-doms together, since it helps to reduce individuals’ tendencies to think primarily in their own self-interests, and instead, to think about the well-being of the respective tribe-doms. The idea is to frame messaging consistently in terms of collaboration, exploration and expansion, versus messaging that is oppositional, competitive and argumentative.
- Introduce a common “enemy”: Lastly, aspirational and motivational lingo and approaches are commonly espoused in business books, but the reality is that the most effective and quickest way to foment and sustain a collective and positive company (chiefdom) spirit among a group of self-interested tribes is by introducing a new, rival group or entity. Maybe it’s a specific competitor or a new market – leaders can be flexible and creative when choosing an enemy be it real or symbolic. But, fighting an enemy forces alignment and cooperation among previously disconnected tribe-doms to a common cause. This is the epitome of joint goal-setting and realization.
Ultimately, the chiefdoms that we call companies need servant leaders to successfully plan and execute corporate mergers. These are the chiefs who put self-interest aside to give members of each tribe-dom support, collective mission and a voice. Tactically it looks like the management of the economics underlying a P&L, but strategically it is about thinking and acting consistently and proactively as a cultural steward of a mini-society. What a tremendous responsibility that is.