Several years ago, our team purchased a Nashville-based company. It was our third acquisition in less than two years. We were gaining experience while growing rapidly. A common question arose on the deal team: How could we align the collective goals and roles toward our purpose and mission without destroying the culture of either company?
We began by trying to understand their culture and how it was expressed. One example was an annual event where teams competed to design and build the ultimate putt-putt golf hole. Families, significant others and friends played a round while laughing and doing their best to make tricky shots.
What seemed like a kitschy idea on the surface was a cultural expression of the things they held dear — creativity, teamwork and community. It was a great idea, so we incorporated the practice into our own company. The result? A simultaneous appreciation and shared understanding that we both can learn.
Culture is a buzzword these days, but too often companies go about culture creation in all the wrong ways. They shell out the cash for a breakroom ping-pong table or yoga mats. They provide work-from-anywhere flexibility, unlimited PTO and organic snacks. And yes, these might be good things, but none of them will create long-term cultural shifts if the expressions aren’t tied directly to your corporate values. And in growing companies,particularly those growing by acquisition, the issue of culture creation in a world of variable values is tricky business.
How, then, do you create healthier cultures? In my 20 years as president of Net Health, I learned that creating healthy culture requires investment in programs, processes and ways of being where people feel seen, celebrated and encouraged to challenge themselves to grow.
An exercise in cultural anthropology
Just as investment bankers tell the best version of a company’s story, those tasked with due diligence must uncover the culture story behind the pretty decks and well-curated data rooms. Consider:
- Are the employees engaged? If so, what is driving this?
- Do clients buy because they must (i.e., scarce resource) or because they want to (i.e., best product)?
- Do customer engagement scores indicate a long trajectory of renewals or a looming decline?
These help us understand their culture story. But, perhaps most important, a question is whether the cultural archetype of the acquisition target is a good fit.
All organizations have an overarching cultural archetype — sales-driven, technical, academic and creative are a few. When combining, how will these philosophies align? Will the artists and wonks get along? How could this different mindset shift the culture of your company?
Imperialist or integrative?
Before you close the deal, a wholistic integration plan must be developed. Yes, certain areas need to have a hard and fast approach but “What cultural expression of the new company can we integrate?” Identify those things and then share them with the whole team. Highlighting the positive cultural positioning of the acquired team, maybe implementing some of their cultural components will build bridges.
As you buy or sell, take careful stock of the culture behind the brand. Think about integration as a form of culture creation, a lead indicator for value creation. It’s possible to make coming together not such a long putt.
Patrick Colletti is co-founder of Net Health