Business Storytelling Through Uncertainty: Mergers And Acquisitions
The gaming industry is all excited with the news that Microsoft will acquire a “powerhouse”. … [+]
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The gaming industry is ecstatic at the news that Microsoft is set to acquire “powerhouse” Activision Blizzard Inc. for a whopping $70 billion. WSJ writes that the merger will seek to “shake up the gaming industry by expanding the software giant’s library of blockbuster video games and increasing its efforts to attract consumers to its cloud gaming service.”
How many times have you heard this story? Company X acquires Company Y for megadollars. This merger is poised to be…one of the most ambitious…most profitable…to transform the Z industry. With superlatives used in the stories of mergers and acquisitions, we are lured into imagining the stunning impact the newly combined company promises to have – whether that be changing the landscape for consumers everywhere or becoming the dominant player . The win will be amazing.
How will the story end?
Similar to the hopeful story of mergers and acquisitions is the story of failed mergers. Company XY’s “highly anticipated” impact never materializes. The increased market reach and expanded capabilities never materialized, disappointing investors and employees alike. The merger failed due to…
While the rationale changes from deal to deal, how the merging of the cultures of the two companies has been managed is often a key component.
In most early M&A reports, experts say it’s a good deal when the finances, profitability, and capabilities of the two companies match. But most of the time, corporate culture is overlooked or underestimated as a crucial ingredient.
Consider the case of the greatest merger of all time: AOL and Time Warner. When it was announced, people called it a historic deal that would revolutionize the media and the internet itself. But today, the $350 billion deal is known as a historic flop. The merging of the cultures of two companies on top of the dot com bust cycle has killed the chances of the two companies merging.
“The lesson is to treat company culture as you would include technology assessment, financial assessment, customer account and satisfaction, legal contracts, etc. in your due diligence,” says Mike Simmons, CEO of andros, a recently formed healthcare technology company that acquired another healthcare company , Glenridge Health to expand its capacity. Simmons also stressed the importance of direct communication. “We were clear from the start. We took over Glenridge. Our culture is implemented here.”
Tight vs. loose culture
In a recent study published in the Harvard Business Review, researchers found that loose and tight corporate cultures have a profound impact on merger success. Relaxed corporate cultures often value creativity and innovation, while tight cultures value hierarchy and efficiency. The researchers “found that fusions with more pronounced tight and loose pitches performed worse overall. On average, acquirers in narrow margin mergers saw their return on investment decline by 0.6 percentage points three years after the merger, or $200 million in net income per year.”
Storytelling as a source of meaning
Whether or not a merger and acquisition involves a tight and loose company, every merger brings with it uncertainty for its employees. When it comes to takeovers and mergers, people have an innate tendency to tell themselves (and those around them) stories. Storytelling is a meaningful act. In uncertain times, we need stories the most.
“Stories help us smooth out some of the choices we’ve made and create something meaningful and sane out of the chaos of our lives,” says Dan McAdams, a psychology professor at Northwestern University.
Raise cultural awareness through stories
Many years ago, a former client from Brazil who was raised in a German family and community had no awareness of her own unique culture until she moved to another province for a new leadership role. At this company, she was amazed at the seeming disrespect and sloppy habits of her team: meetings started late and were always deluged with personal stories from the weekend or exchanges on the latest movie.
But what she saw as an inefficiency that needed to be corrected was actually a cultural value for community and team building. When she tried to implement what she believed to be common sense rules, her team saw her as uptight and unfriendly. She later realized that she wasn’t the effective manager she wanted to be because she wasn’t aware of her own cultural differences or the cultural norms in her new company.
“Stories convey the culture, history, and values that unite people… the stories we share are an important part of the bonds that connect,” write Vanessa Boris and psychologist Lani Peterson, Psy.D in Harvard Business. Company events and meetings where stories are exchanged create opportunities for team building and understanding between company cultures. In organizations and businesses, Boris and Peterson continue, “The stories their leaders tell help cement relationships in a way that factual statements in bullet points or numbers do not.”
Creating spaces for storytelling can help raise awareness among managers and employees alike of cultural differences between the merging companies. Boris and Peterson explain that stories “create familiarity and trust and allow the listener to step into the story where they are, making them more open to learning.” Being open to learning about these different corporate cultures, is one of the first steps necessary to manage the on-site impact of a merger or acquisition.
Additionally, stories can help teams navigate the challenges and changes that occur during a merger or acquisition. Research has found that stories, especially hopeful stories with detailed struggles and turmoil, help people have hope and gain wisdom from challenging events.
What stories are told in your organization?
In mergers and acquisitions, the stories being told are important. “We tried to get middle managers to tell the story of the acquisition and the vision of the larger company to their own teams,” says Mike Simmons, CEO of andros. “This is hard to get right, and ultimately we could have done better by being more intentional in helping them tell the story in their own words. ”
Although the acquisition and onboarding of the new hires was ultimately successful, Simmons believes the transition could have been smoother and quicker if he had better equipped his middle managers in this way.
With or without guidance, employees and managers fill in the blanks and answer their questions with stories. How will you empower your employees and managers to tell the story of change?
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