Great! You’ve bought (or are in the process of buying) a business. The tangibles are easy; does the due diligence bear out the cash outlay for the deal, and is the product well-positioned in the market? These things are easy to benchmark (assuming you’ve got good data, but I’ll dig deeper into that later). But then there’s the ghost of corporate culture. What is it? Should you maintain the status quo, or should you torch it and focus on cultural change?
Old-timers (the geezers who came of age during the late 1980s and 1990s) had IBM as the sort of lodestar of corporate culture. The rules were to wear a dark suit, or a blouse with a big bow for the ladies, and keep your suitcase packed (I’ve Been Moved was the in-joke for decades). Of course, it’s hard these days to believe that the epitome of buttoned-up button-downs paved the way for today’s tech companies, where everybody works remotely and has a collection of vintage band shirts for Zoom calls, but that’s progress for you.
Conservative ties, free cappuccinos, and whatnot are all part of a given organization’s corporate culture—the values and beliefs they hold, management strategies and employee communications, origin myths, and the charismatic founder (Jobs and Woz in the garage, y’all). Even the corporate logo and trademarks are part of the culture. Seriously, who among us doesn’t still see that IBM-blue font and think of that company?
Is Corporate Culture Really That Important?
Let’s go back to IBM. People who worked there were willing to dress like robots—and uproot their families all the time—to fulfill whatever mission Thomas Watson (yep, that Watson—not the one on the other end of the phone) or Louis Gerstner or Arvind Krishna is pushing. So while it’s possible that your buyout could lead to that iconic corporate culture, you’ve got to handle every aspect of a cultural shift with the deft touch of a neurosurgeon, especially if legacy employees feel like you’ve already butchered their beloved widget factory.
Why Is It Such a Big Deal?
You could make the argument, and I have, that corporate culture is just more jargon that they use to ante up the tuition at business schools. That said, the term sets the internal framework for supporting the business objectives—you know, the reasons you bought this company. Your culture is pretty much your calling card for hiring, and you’re going to attract and retain the team you want by letting the world know what you value in your staff.
Example A: If your corporate culture incubates and values innovation, then you’re more likely to gain a competitive edge in the patent and intellectual property arenas, leading to the most creative minds seeking you out.
Don’t discount the value of informal social media when you’re launching a new corporate mission; it’s like softcore (and free) public relations.
How Do I Figure Out the Company Culture?
Well, I’m assuming that you’ve learned a lot about the culture during your formal and informal processes. For example, is the team collaborative, or is there a well-defined hierarchy? Does the environment foster innovation, or is it measured? Does the company focus on results or process (here’s a pro tip: if it’s process, run like the wind)?
A research team at the University of Michigan has developed an intense assessment of corporate culture that identifies four different types of culture in a Competing Values Framework. I’ve done the research so you don’t have to, but it’s a fascinating deep-dive into how companies operate culturally. Another pro tip: you want a balanced cocktail of the four to really succeed. The trick, of course, is in the balancing act during your cultural change process.
This is also known as Adhocracy culture. It’s a dynamic environment that values freedom, innovation, and initiative from every employee. Agility is a core value here, and success is measured by creating new products.
A collaborative culture is also somewhat clannish. It’s like one big happy family, squabbles and all. Founders and leaders willingly assume mentorship roles. Also, the company has a strong tradition of loyalty. Clan collaborators focus on the human element and provide excellent customer service and employee training. Honestly, I wouldn’t expect much of this culture in a takeover.
But I would expect to find a lot of hierarchical cultures in the company I’m buying. Why? Because these organizations have a formal organizational structure, and everyone is encouraged to stay in their lane. Here, process and following the rules is more important than disruptive chaos, along with doing things the way they’ve always been done.
Market cultures focus on getting it done. It’s a competitive environment and absolutely results-oriented. Market cultures define success as sales and a rising stock price. This isn’t a bad thing, but it can result in tunnel vision.
How Do I Know If I Need to Prioritize Cultural Change?
Here’s your third pro tip for the day because I’m on a roll. You definitely need to initiate a cultural change, but not a cataclysmic earthquake that sends all the legacy employees leaving in droves.
I already know that the culture needs to change because the founder was failing. That’s simple corporate Darwinism. I’d bet that the culture you’re buying is heavy on the org charts and process. But that’s a sure path to failure in an innovative and creative tech world where the vibe is more romper room than boardroom. I’m not saying you need to promote the WeWorks model (please don’t), but that talent has certain expectations that don’t precisely align with a culture that demands a dress code and on-site presence. I am curious about Tesla’s demand that employees come into the office—is that a real thing or just Elon’s way to get people to quit without admitting he needs to cut staff?
As I said earlier, your task is to extract the positives of the existing culture and integrate them into a new standard. You don’t “fix” the culture; you fine-tune it.
Conventional wisdom may say that you need focus groups, task forces, and committees to address how to move forward with cultural change. I say BS. You need to observe, see how things work, and figure out how to integrate what works while ditching what doesn’t. Committees don’t know how the sausage is made and are utterly useless in outlining strategic priorities and new best practices.
How Do I Actually Implement Cultural Change?
Here’s the good news. Your new employees fully expect a change in the corporate value proposition. The bad news? They’re also ready to mutiny at your first misstep. Here’s how you read the room so you’re treading that fine line without falling off the high wire.
Know What You’re Changing (And Why)
I’ve already told you what I think of the internal kumbaya committees. Still, a culture consultant (yes, that is a thing) can conduct a cultural audit to assess the situation with precision and expediency. This type of professional assessment determines what’s working, what’s not, and how to implement cultural change positively. If management follows the control/hierarchy model, you’ll want to shift that top-down structure to a more collaborative one, where collective wisdom, mentors, and cohesion are core values.
Focus on Similarities
Take a good look at your own management style, and figure out how that plays into your cultural shift. Build on the similarities and forget about finding the perfect cultural fit; instead, look for compatible outlooks when you’re bringing new staff on board and trying to get buy-in from existing staff. A results-oriented culture does not align well if you focus on the magic of the process as the key to success.
Don’t stay hung up on the details; every culture evolves over time. What you’re trying to do here is make sure that everyone is at least singing the same song, even if the keys are different.
Make Results a Priority
I can’t stress enough that you will meet resistance from legacy employees. I’m not going to bore you with all the psychological reasons why, but there will be resentment and reluctance. Fight back like this:
- Never use “because I said so” as a reason to do anything. These are professional adults, not toddlers.
- Explain why the changes make sense and how they will lead to better results, more sales, bigger market share, and all the good things the previous owner couldn’t produce.
Check your ego and understand that even though you bought the company, you don’t have all the answers. If you’re hell-bent on erasing every nuance of the existing culture, plan on a years-long time frame to fully execute your vision.
Turnover as a Positive Move
When legacy employees just won’t adapt to your changes, you’ve got to let them go. I’m not interested in who makes that decision (although letting them quit is easier on your finances). As I said in an earlier piece, I’m not a fan of looking to retrain and replace discontented employees. As the song says, let it go. Don’t waste your time on employees who just don’t want to embrace change. Instead, invest that energy in finding replacements who share your values and outlook.
Final Thoughts on Implementing Post-Acquisition Cultural Change
Changing a culture isn’t easy, but neither is being an entrepreneur or VC. If you’ve been paying attention, you see a thread running through these ideas: you’ve got to have a clear and concise concept of what your goals are—and why—before you ask your team to internalize those goals and initiate the changes. That cultural audit will go a long way toward clarifying your fuzzy spots and help you identify the exact changes that will boost your culture.
Tell Your Personal Story
Communicate your goals with your employees so that they have a clear understanding of what makes you tick. Share your failures; that can go a long way towards building the community it takes to foster a positive corporate culture. When your staff knows what drives you, how you’ve succeeded, and what’s important to you, it’s much easier to find the alignment that moves your company forward.