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90% of Mergers Fail Without These 5 Crucial Elements

May 11, 2017
Co-Authored by: Rachana Dixit

90%: That’s the failure rate for mergers and acquisitions, according to Harvard Business Review. So how can you ensure your newly merged organization is part of the other 10%? First let’s look at all work every organization does – the due diligence process, the legal and regulatory work, the double and triple checking – this is all important, but it is all just process.

train tracks merging

To be part of the 10% and drive a successful and lasting integration, you need to step back and look beyond the numbers, the org chart, and the project plan. More specifically, be deliberate about defining and creating the corporate culture you want the new organization to embody. Go deep here – define what the outcome looks like, because it will become your North Star.

At SHIFT, we specialize in co-creating high performance corporate cultures, and through our work, we know that these five elements are crucial to getting culture right, especially after a merger:

  1. Organizational mindset: Think “weave” vs. “take over.” Think about each organization as a separate system that you are weaving together, versus one company taking the other over. Both organizations bring value to the table, and it’s essential for this to be front and center of the organizational and leadership mindset.
  2. Get really clear on “the why”: It’s imperative that everyone understand “the why” behind the merger and, equally, can connect to their role in making it successful, and why it’s worth making hard changes. Your “why” should be defined in such a way that the whole organization is inspired to move forward together.
  3. Equip for transparency: Different levels of risks exist in different industries and within different companies, making radical transparency difficult, if not impossible, to achieve.Reframe what “transparency” is by giving people a road map of what to expect. Neuropsychologists will tell you that the brain reacts to social threats the same way it reacts to physical threats, and a lack of certainty is a trigger for the brain to leap into action demanding fight or flight.Transparency isn’t about telling every employee everything. It’s about providing certainty and a path – people need to see the map. They may not need the details, but they do need general outlines– a big vision understanding will ensure that your organization knows where you are heading and is focused on getting there with you.
  4. Be intentional: When companies merge, it’s a unique opportunity to reset and create a new culture. This culture should naturally be a blend of both parties; be intentional in your design and consider what is great about each– be clear about what the unified culture will look like. Don’t let this opportunity go to waste, be thoughtful, craft a clear vision, and speak it clearly (and often).
  5. Routines/rituals/rhythms:  When creating the new culture, think about what new routines, rituals and rhythms you can instill that are entirely unique to the new company, not carryovers from either of the individual organizations. Establishing these serve multiple purposes: they disrupt what is familiar with the new, they don’t prioritize one legacy over the other, and they serve as tools you can employ to craft the culture you want – one that reflects the organizational mindset and outcomes you wish to achieve.

Ultimately, you have to mark beginnings and endings. It is not frivolous– it is crucial.

Need help with your organizational mindset, getting clear on your “why,” equipping for transparency, creating an intentional culture, or establishing routines/rituals/rhythms for your newly woven together organization?

SHIFT is ready to help.

Topics: Culture Change, Engagement, Environment, Leaderhip