One of the shrewdest steps John D. Rockefeller conducted, historians say, was the Cleveland Massacre of 1872. In less than six weeks’ time, he acquired 22 of his 26 Cleveland oil refinery competitors. The business move worked for Rockefeller, the subject of this month’s Uniquely Cleveland, and gave his Standard Oil Co. a corner on the market. By 1878 Standard Oil was refining 90 percent of the oil in the U.S.
Standard Oil grew to be a behemoth and by 1911 was broken into 34 companies when the U.S. Supreme Court found it violated the Sherman Antitrust Act.
But what wasn’t so shrewd in today’s terms was this: of all that oil, not a drop was for company culture.
The rapid growth of the oil company shows how mergers and acquisitions have come a long way since the time when offers were made that couldn’t be refused.
Merging cultures when companies were acquired was of no concern in Rockefeller’s scheme. He acquired to squash competition and people where expendable. Today, company culture is a top concern.
When a merger looks like it was a solid financial and strategic fit — and then fails, it’s typically the result of the human element of intangible cultural issues that affect the company’s assets.
Merging cultures is another matter from starting fresh; and the hardest job of all may be sorting out a disorganized culture.
“Trying to force a culture that doesn’t exist, from a value perspective, is impossible,” a CEO told me once. “Then you can build your culture around that.
“It’s a constant battle to make sure that your culture is right, and you have to have opinions from all levels of the company, and you have to get people to speak up on their own behalf. It’s tough. Otherwise it’s just one person’s point of view. That’s not really a culture; that’s more of a directive.”
Endless material has been written about Rockefeller, who in all fairness, became a remarkable philanthropist in his later years. There are many lessons to learn from his business strategy and operation. Perhaps he knew that his strength was to give directives and let the oil spill where it may.
Dennis Seeds is editor-at-large of Smart Business magazine.