Alan O'Neill: 'Why attitude is more important than strategy'
The DNA of your company is what will make or break it in the marketplace - so it's wise to take it seriously
This time last year, I was invited to speak at the annual management conference for a German B2B services company. It had recently made a number of acquisitions and was in the process of consolidating and merging activities. A shared back-office services centre was already established and generating cost savings. The next step was to explore synergies in products and services in order to better serve customers.
That makes sense, doesn't it? Well of course it does, except that one important consideration needed to be prioritised. And that's organisational culture.
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When one company buys another, it doesn't only take over its products, people, structure, customers, business model and its balance sheet. It also takes over its company culture, which inevitably has some good and not so good attributes. In my keynote, I challenged the combined group to acknowledge this and to put culture before strategy.
What is organisation culture?
Culture is often described as 'the way we do things around here'. It's a set of behaviours which can help or hinder effectiveness and progress.
Every organisation of every size has a culture, whether it has ever been articulated or not. For example, this parent company has a very dynamic commercial and entrepreneurial focus. This contrasts with one of the acquired companies which has a more relaxed approach to growth. The acquirer also has lots of silos whereas one of the acquired companies is very collaborative.
In addition to the challenge of organisational culture is the added dimension of national culture. Given that the acquirer is a German company with a strong Germanic culture - very process driven - it now has to respect that the acquired companies have variations in national culture. For example, there are subtle differences which come to the fore in Latin countries which are very different to north European ones.
In summary, if this reality is not attended to there is a big risk the synergies that were expected from the combined entities will not materialise. This makes a strong case for developing one culture that is consistent across all entities.
Such a new culture can still respect the heritage and DNA of each entity and, indeed, national cultures.
The trick is to develop a culture which supports the new vision and is dynamic enough to be inspirational, inclusive and relevant - and that it sets the tone for an appropriate set of behaviours.
Tips for Culture Renewal
I'm a strong advocate of using a values-centric approach to shaping culture. After all, we all live our own lives by a set of personal values - respect, integrity and so on - and in every situation we find ourselves we react according to those values.
For example, if respect is a value you hold dear, you're unlikely to bully another person. Take that up a level.
Organisations too have come to realise that a carefully selected and unique set of values similarly offers a framework for how people should behave.
If you decide on 'accountability' as a key business value or principle, that will guide your team to take personal ownership for their actions, and not to pass the buck. If you believe you are too inward-looking and not putting your customer at the heart of all decision-making, then 'customer- centricity' needs to be called out.
Here are some considerations when renewing your company's attitude:
1 As a starting point, it is important to understand the vision for the company and the market dynamics in which it operates. For example, is the industry fast-moving with lots of disruptors or is the market at a mature phase with lots of big players? These are just sample questions to illustrate that understanding market context is important. The German company mentioned here started life by breaking a monopoly. This entrepreneurial and urgent spirit needs to continue going forward.
2 With a general appreciation for the attributes needed to grow the business, it is now time to consider what culture is needed to both deliver on the vision and respects the original DNA of the founders. What set of values do you believe will help to drive the desired behaviours?
Think here of such things as customer- centricity, pace, respect and accountability. Keep in mind that you are not yet deciding on the values. At this early stage, you're just brainstorming as there is a process for agreeing a definitive set of values.
3 Form an internal steering group to guide the process which is representative of a number of functions. This should be led by an internal champion.
4 Communicate widely to the organisation that this programme has started and be clear on the context, the benefits and the next steps.
5 There are then four phases involved in renewing the culture which include discovery, design, delivery and developing/embedding.
Discover: Establish the gap between the desired culture and the current culture;
Design: With input from the wider team, design a new set of values or guiding principles for the business. And plan for how they will be brought to life;
Deliver: Roll out the new culture, which of course will take years to embed;
Develop it further by embedding it into a new way of working.
The Last Word
This challenge of culture renewal doesn't just apply to mergers and acquisitions. It is also a challenge for organisations that have never actually defined their culture. For example, I am also working on a similar programme with an Irish company which has an ambitious growth agenda, but uncertainty on how to achieve it.
Check back next week, when I'll share more detail on what is involved in the initial phases of discovery and design.
Alan O'Neill, author of Premium is the New Black is managing director of Kara Change Management, specialists in strategy, culture and people development. Go to www.kara.ie
Sunday Indo Business