Mergers and Acquisitions Culture Clashes - Diagnosing and Dealing with Them


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As part of our series on the role of culture in Mergers and Acquisitions, we are delighted to bring you renowned organizational psychologist, author and thought leader, Philip Mirvis, Ph.D. Join Bryan Adkins, President of Denison Consulting, as he hosts Dr. Mirvis in the session: “M&A Culture Clashes: Diagnosing and Dealing with Them.” In this webinar, Dr. Mirvis will discuss "culture clashes" in mergers and acquisitions: how to spot them during due diligence, how to diagnose them once a combination is underway, and how to deal with culture differences in putting companies together. Culture clashes can be a barrier to making mergers work. They can--and should--be understood and managed. Here we'll look at how culture can be assessed through measurement tools and managed through different integration strategies.

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Mergers and Acquisitions Culture Clashes - Diagnosing and Dealing with Them

  1. 1. M&A Culture Clashes: Diagnosing and Dealing with them<br />Philip H. Mirvis<br />Fortune magazine “merger maven”<br />with Mitchell Marks <br /><br />
  2. 2. M&A Culture Clashes: Diagnosing and Dealing with them<br />Philip H. Mirvis<br />Fortune magazine “merger maven”<br />with Mitchell Marks <br /><br />
  3. 3.
  4. 4. Merger hit rate<br />65-85 % of Mergers and Acquisitions Fail<br />Vs. precombination earnings of 2 cos.<br />Vs. promised returns by executives<br />Vs. costs of capital<br /> WHY?<br />
  5. 5. Combination Phases<br />
  6. 6. Define the End State<br />acquired<br />
  7. 7. Company A<br />Engineering & Marketing<br />Quality<br />Matrix<br />Planning<br />Professional<br />Collegial<br />Teamwork<br />Our Way<br />Company B<br />R&D<br />Speed<br />Functional<br />Ready, Fire, Aim<br />Entrepreneurial<br />Political<br />Star System<br />My Way<br />Theoretic Synergies<br />Leading Edge Technology<br />Broader User Base<br />Faster Time to Market<br />Product Reliability<br />Technology Transfer<br />
  8. 8.
  9. 9.
  10. 10. Think<br />Organization <br />& Culture<br />
  11. 11. How and where to Integrate?<br />
  12. 12. Degree of Integration<br />
  13. 13. What’s happening in this picture?<br />Company A<br />Company B<br />
  14. 14. Physical Signs and Public Behaviors<br />Norms and Values Private Behaviors<br />Beliefs on ‘Human Nature and Reality’<br />“Layers” of Culture<br />
  15. 15. Culture Clash: Stages<br />Perceive Differences<br />Magnify Differences<br />Stereotype<br />Denigrate<br />Same or Different?<br />Very Different!<br />They are all that way<br />We are good; they are not.<br />
  16. 16. Perceive<br />Differences<br />Economic Consulting<br />Business Consulting<br />
  17. 17. Magnify Differences<br />Stereotype<br />
  18. 18. We vs. They<br />
  19. 19. Win vs. Lose<br />
  20. 20. Diligent Due Diligence<br />Synergies: Strategic and Financial “Fit” <br />Organizational and Cultural Fit<br />Complementary organization structures/systems<br />Depth of management talent<br />Understandings of the market<br />Cultural norms and values<br />HR relations, stakeholder issues<br />Do your homework- Internet, reporters, academics, retirees, former employees, etc.<br />Culture Surveys!<br />
  21. 21. The Denison Organizational Culture Model<br />Mission<br />Defining a meaningful <br />long-term direction <br />for the organization<br />“Do we know where <br />we are going?”<br />Adaptability<br />Translating the demands of the business environment into action<br />“Are we listening<br />to the marketplace?”<br />Consistency<br />Defining the values<br />and systems that are the <br />basis of a strong culture<br />“Does our system<br /> create leverage?”<br />Involvement<br />Building human capability, ownership, and responsibility<br />“Are our people aligned<br />and engaged?“<br />
  22. 22. Software Acquisition<br />Overall strong profile<br />Key areas for leverage: Teamwork, Empowerment, Creating Change, Agreement and Coordination & Integration<br />Need for Strategic Direction & Goal Alignment<br />Integrated IT Company<br />Stronger Internal Focus<br />Key areas for leverage: Teamwork, Empowerment, Core Values, Agreement and Goals & Objectives<br />Need for Strategic Direction, Capability Development & ADAPTABILITY<br />
  23. 23. Software Acquisition<br />Integrated IT Company<br />
  24. 24. Culture & Integration<br />High<br />Combine<br />Carefully<br />Combine<br />Quickly<br />Coordinate, Combine<br />Slowly<br />Integration:<br />How important<br />to Strategy? <br />Savings? Synergy?<br />Combine as Needed<br />Separate<br />Low<br />Hard<br />Easy<br />Culture Clash: <br />Ease of Integration?<br />
  25. 25. Post merger cultures<br />Multicultural<br />Integrated: Distinct but all part of the family<br />Pluralistic: Many tribes, in confederation<br />Segregated: Superiors and inferiors<br />Monocultural<br />Melting Pot: One “happy” family<br />Pressure Cooker: One family or else<br />Ethnocide: Kill ‘em off<br />