Time to say goodbye – Now corporate culture integration starts

Time to say goodbye – Now corporate culture integration starts

It is time to say goodbye – Now culture integration starts

Nokia was once the dominant force in the cell phone world

The company was founded nearly 150 years ago and it went through a number of iterations before it became the cell phone giant most of us think of now. But now Nokia is no longer a cell phone company.

Nokia’s devices and services business has moved over to Microsoft as part of a deal worth more than $7.5 billion. The deal values Nokia’s handsets division at around $5 billion, which is obviously a painfully small fraction of what it was once worth.

The cell phone maker’s failure to react when Apple first launched the iPhone back in 2007 led directly to the company’s collapse. Microsoft’s $7.5 billion acquisition is a sobering reminder that even the strongest companies can fall.

It is time to say goodbye – Now culture integration starts

But the story about Nokia is not over jet. Now the big challenge comes: How well do the two companies fit together?

Why is it so difficult to merge two cultures into a cohesive and coherent whole? Why is it so important for leaders of a merger or acquisition to focus on leading cultural change proactively and carefully?

Studies show that most mergers, 70% or more, fail to deliver their intended benefits and destroy shareholder value in the process. In fact, one well-regarded study has shown that only 21% of mergers actually return anything to stockholders, and the rest are neutral or negative. Another study shows that no more than one-third of mergers or acquisitions are a clear success; one third are clear failures, and the remaining third demonstrate no benefit at all from the transaction.

Post-merger and acquisition activities often fall short of putting in place the most important element to effectively executing the intended business strategy contemplated by the combination in the first place: that is working with the culture of the organization.

To mitigate risks during mergers and acquisitions, cultural integration should begin well before the deal closes.

#1 – Understand the acquired culture

Identify the power centers in the acquired company, how they communicate, what they reward and how they make decisions etc.

  • What should stay? Write down the aspects of the organizational culture that should be preserved
  • What should go? Write down the aspects of the organizational culture that must die
  • What is missing? Write down aspects of the organizational culture that seem to be missing or weak.

#2 – Put a cultural integration plan in place

It’s difficult to start this process with your counterparts prior to a deal going through, but that time is critical. The strategic plan is always a part of the process, but rarely is one focused on cultural integration. By collectively identifying the strengths of the two companies, you will be able to identify where the biggest risks lie and to put plans in place to help mitigate.

#3 – Evolve culture

Many times, the expectation of the acquired company is that they have to conform. Unfortunately, it is very difficult for people to change. Instead of insisting that new employees conform, take the time to focus on the “new” culture. Educate both parties to overcome the immediate and justifiable “us and them” mentality. Shifting toward a culture that leverages components of both sends the message of “we”.

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About The Author

Torben Rick

Experienced senior executive, both at a strategic and operational level, with strong track record in developing, driving and managing business improvement, development and change management. International experience from management positions in Denmark, Germany and Switzerland.

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