When Your Organization is Undergoing M&A, Do You Think About Cultural Integration?

“Ask any executive or manager if they’ve seen a project, acquisition, startup, etc. come crashing down (or at least significantly underperform) because of people or culture issues. Their answer undoubtedly is , “Absolutely! I see it all the time.” You would think more attention would be paid to people and culture. It’s simply not the case.” Lori Dernavich

Trying to merge two very different cultures will result in significant attrition and an increased probability of failure. There’s nothing new there. It makes one wonder why companies are not investing more in cultural integration as part of the process?

Unfortunately, decision makers have had good reason to avoid investing in cultural integration. Is cultural integration important? Sure, there are numerous studies proving it is. Is it important to do it as early as the DD stage? Sure, without a doubt.

But I wonder why, if it is that important, don’t we see every M&A out there insisting on focusing on cultural integration. There are some pretty brilliant leaders out there after all. Why don’t most leaders insist on including this aspect in their decision?

I’d like to propose it’s not just ignorance or insufficient foresight on the part of leaders, and that change experts are only now starting to keep up with their side of the deal. Only a few years back, Six Sigma, one of the most reliable tools out there when it comes to assessing processes and cultures, reported a 70% failure rate, attributed directly to the integration stage. I can’t begin to tell you how many change efforts, large and small, I have seen fail during the implementation stage. It’s only in recent years, now that we better understand what it takes for people to shift from doing X to doing Y in a lasting way, that we are starting to see better success rates when it comes to integration. I firmly believe that, while we used to talk about “culture integration,”  the systems we had to meet this goal were misrepresented. With the tools we had at the time, we could frequently, at best, target sharing our assessment of the two cultures with the leaders of the M&A, try to tell them on how important it is for them to make needed changes, and then pray they listen. My point is, we didn’t have access to the science that supports the “integration” part.

Unfortunately, cultural assessments can be done fairly efficiently, and potential areas of conflict can be identified and mitigation plans recommended fairly early, but without getting people to make needed changes, well intentioned remedies die on the vine, or get pushed out and addressed only after some of the damage has already set in.

As with many technological developments in history, I believe science has finally advanced enough to answer some tough questions. New developments in brain science give us keen insight into what it would really take to address the integration part of change.

  • To understand integration, we need to understand change on the individual level: at the end of the day cultures don’t change or adjust, people do. For integration to take place, we have to stop treating people en masse and start focusing on how individuals change.
  • To understand integration, we need to understand brain change: adopting new values requires reinforcing actual new neural pathways in the brain. To get people to adopt new cultures, we must design change efforts to follow the requirements of creating new neural pathways.

With the right change system, M&As have a much greater chance for success. Instead of trying to force leaders to see the importance of cultural integration as part of M&As, how about designing change systems that are so good that leaders would be insane not to use them?

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