Mergers Need Clear Purpose For Cultural Compatibility

Scott GoodsonJuly 27, 202215513 min

Merging a company is hard to do. Yet it can be incredibly fulfilling and empowering for leaders and for employees. Mergers present both opportunity and anxiety. Possibilities are endless for leaders to transform both entities and use the new start to set a new direction with a performance culture. At the same time, change creates anxiety as many people are forced to think outside their default behavior zone. Mergers put human behavior on the front lines. That’s why they can quickly spiral out of control if the leaders have not outlined their goals in an emotional way that breaks through.

Employees inside most companies have built up a wall of indifference to corporate messages. These communications typically lack emotional, meaningful, inspiring purpose, leading to a dearth of trust and understanding.

What you can end up with is an unmotivated, tribalistic or even toxic culture that undermines a merged company’s objectives. Just look at Amazon’s $13.7 billion deal to buy Whole Foods.

When the online retail giant acquired the organic grocery chain in 2017, there was a high level of interest and intrigue. On the face of it, the marriage could yield some interesting results: organic groceries at scale and lower prices.

To others, the coupling seemed like a case of strange bedfellows, with one company focused on logistics and relentless efficiency, the other on warm customer service and being America’s healthiest grocery store. Though Whole Foods CEO John Mackey called the whirlwind courtship ‘love at first sight’, others were wary.

As Craig Crossland, associate professor of business at Notre Dame, wrote on CNBC.com at the time, ‘As Whole Foods begins to rub up against the parent firm, there’s likely to be a substantial culture clash’.

And indeed there was.

By early 2019, Whole Foods employees were claiming they were being treated like robots, that their dedication was being exploited, and scorecards to measure Whole Foods’ compliance with Amazon’s new inventory system were being used punitively. Less than a year into the marriage, Whole Foods employees were taking steps to explore unionizing. Amazon responded with a video coaching Whole Foods management on how to spot and discourage potential union behavior, and by April 2020 Amazon was reportedly using heat maps to track stores at risk of unionizing.

‘The two companies may have seen the value in capitalizing on each other’s strengths, but they failed to investigate their cultural compatibility beforehand,’ wrote Michele Gelfand, professor at the University of Maryland and the author of Rule Makers, Rule Breakers: How tight and loose cultures wire our world.

Of course, we can’t know for certain if these pains could have been avoided.

Sometimes meeting in the middle is impossible and one partner simply dominates, shaping the other in its image. But we know from our experience that when employees are given a clear sense of purpose, crystallized by a movement inside the organization, the purpose becomes relatable in human terms versus business terms, and this helps the merger succeed.

By bringing employees together during a merger with a Movement Inside, you can:

  • Build a new culture focused on solving a bigger need in the world;
  • Drive a new customer/market/community-based understanding and focus;
  • Bring meaning to the work;
  • Unite two different cultures over a purpose activated.

Focusing on culture through an activated purpose has helped shepherd companies through corporate mergers of different stripes.

Contributed to Branding Strategy Insider by: Scott Goodson and Chip Walker, excerpted from their book, Activate Brand Purpose: How To Harness The Power Of Movements To Transform Your Company

The Blake Project Can Help Build Your Brand From The Inside-Out: Please email us for more about our purpose, mission, vision and values and brand culture workshops.

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