Over the last few years, the agriculture industry has experienced a dearth of M&A activity unlike anything seen before. This unprecedented state of mass amalgamation has touched nearly everything and everyone, from local discovery and start-up company roll-ups to global life-science powerhouse consolidations. And in its wake lay the employees, customers, vendors and others who must now figure out their new normal.
Unfortunately, while most organizations involved in M&A activities spend significant time strategically planning and executing the legal, operational and physical consolidation efforts required to turn two into one, few strategically consider and plan for cultural alignment.
Though culture might seem like a “soft” element of your business, it is required for creating an intentional collective of consistent beliefs, behaviors and focus, versus a mixed bag of potentially misdirected thoughts, actions and efforts. This is important for any business, but an especially important consideration for companies undergoing M&A.
To illustrate this, I like to use the example of Kool-Aid, as it’s commonly used as a metaphor for healthy cultures. For example, when speaking with clients about their company culture, many express the desire to get employees to “drink the Kool-Aid” (which is, in turn, a reference to the Jonestown cult tragedy, where followers so deeply believed in the vision, purpose and values of Jim Jones that they were willing to follow him to the grave ).
Regardless, a strong, healthy corporate culture can be equated to a well-made pitcher of a specific flavor of Kool-Aid, with the flavor representing the unique vision, purpose and values of an organization.
So, let’s say Company A has crafted a great cultural pitcher of Grape Kool-Aid, whereas Company B has crafted their own cultural pitcher of Orange Kool-Aid, and they decide to merge the two organizations. While most of the strategic planning for the merger pertains to the combining of operations, some time is also spent discussing culture, where its agreed that the two cultures are complementary and will ultimately blend nicely to create a new and improved cultural pitcher of Cherry Kool-Aid.
Outside of recognizing cultural similarities and opportunities to “learn from each other,” leadership does little to intentionally define how they are going to be blended. Unfortunately, as anyone who has poured two flavors of Kool-Aid into a single glass would know, mixing Grape with Orange does not make Cherry: it makes Grorange (a brown-colored concoction that doesn’t taste anywhere near as good as the original flavors). Therefore, the synergistic blending that leadership expected doesn’t occur, and what they’re instead left with is a less-than-desirable new culture that has lost many of the benefits and strengths of the originals.
Now, let’s say instead of a merger, the decision was that Company A (with the Grape cultural Kool-Aid) was going to acquire Company B (with the Orange cultural Kool-Aid), would the outcome have been any different? Unfortunately, while most would assume that Company B would naturally embrace and take-on Company A’s culture, it just isn’t true. As culture is so deeply rooted in the ways we think, act and believe, existing cultures don’t just disappear. Unless Company A’s Grape culture was intentionally driven, promoted and supported as if it were new to all, the resulting mix would still be a blend of Grape and Orange Kool-Aid (just with a little less Orange poured in this time).
Ultimately, when bringing two cultures together, the leadership of an organization must make one of two decisions:
- Create a new, intentional master-culture that will be applied to both organizations. In this case, the new Cherry cultural Kool-Aid would not be Grape + Orange, but a brand-new flavor with its own unique set of cultural pillars (read our recent blog post for more on creating an intentional culture).
- Protect one of the existing cultures as the new intentional master culture for both organizations. In this case, the cultural Kool Aid could be either Grape or Orange, but not both. In addition, the flavor chosen to move forward would need to be intentionally launched, promoted, enforced and supported as if it were new to ensure clarity of its prominence and importance to all.
While you may be thinking that this analogy is overly simplified and/or doesn’t apply to your business, I encourage you to embrace the reality that cultural misalignment, due to a lack of strategically setting and driving an intentional culture, has laid waste many M&A’s that “looked good” on paper. Furthermore, even if you aren’t directly involved in M&A activities, remember that intentional culture can also be a significant differentiator for your ag business, especially at a time when your M&A-focused competitors may be struggling with theirs.
To learn more about the power of an intentional culture and how to harness it in your business, read our recent eBook, “How CEOs Drive Lasting Change.”