Podcast Ep 61 | Integrating Cultures When Companies Merge

Many lead­ers tend to focus on finances and process­es when acquir­ing a com­pa­ny. Often, they don’t con­sid­er cul­ture. Yet cor­po­rate cul­ture can actu­al­ly cre­ate major prob­lems and can even sab­o­tage a good merg­er. Even two com­pa­nies with good indi­vid­ual cul­tures can cre­ate a tox­ic envi­ron­ment when they merge, lead­ing to A play­ers leaving.

And iron­i­cal­ly one of the rea­sons peo­ple buy a com­pa­ny is the top talent.

So when acquir­ing a com­pa­ny, hav­ing a plan for the cul­tures to merge is one of the most impor­tant things you must do.

This week on The Growth Whis­per­ers we’ll review sev­en impor­tant things to con­sid­er dur­ing the process of inte­grat­ing cul­tures when com­pa­nies merge.

EPISODE TRAN­SCRIPT

Please note that this episode was tran­scribed using an AI appli­ca­tion and may not be 100% gram­mat­i­cal­ly cor­rect – but it will still allow you to scan the episode for key content.

Brad Giles 00:13

Hi there, wel­come to the growth whis­pers where every­thing that we talk about is build­ing endur­ing great com­pa­nies, all the tips, tricks, tac­tics, every­thing that you need to know and to under­stand if you’re inter­est­ed in build­ing a com­pa­ny that’s going to last and build­ing a com­pa­ny that you want to keep. My name is Brad Giles. And as always, I’m joined today by my co host, Kevin Lawrence, Kevin, how is life in sun­ny Cana­da today?

Kevin Lawrence 00:43

It’s it is awe­some. And it’s very sun­ny and warm, which is some­thing we real­ly cel­e­brate in Cana­da, cuz it does­n’t hap­pen as much as it does oth­er parts of the world. So yeah, it’s a great yeah, great day. That’s all you know, what, it’s always a great day, you know, it’s part of the thing is, I always believe it’s a great day. So I might sound like a bro­ken record say­ing that, but 99 times out of 100. It is. So yeah, things are real­ly good and good chance to enjoy the sun. Got some good times with some friends not and fam­i­ly and life is good. My son had his grad­u­a­tion par­ty last week, grad­u­at­ing high school, we had to have a qui­et lit­tle par­ty because you’re going to have 10 humans, they can’t have a nor­mal grad­u­a­tion cel­e­bra­tion, like most peo­ple get to. So that’s a that was a big deal. Last week, we got to do some fun and some fun with his friends. It was actu­al­ly it was good. How are you Brad? How are things in your world?

Brad Giles 01:40

Very good. eight degrees this morn­ing, which is quite cold for where I live. I know that in Cana­da, that might be a sun­ny day, but life is good here, a cou­ple of COVID out­breaks again, across the coun­try, which is noth­ing to be fair in rela­tion to some oth­er parts of the world. But the new strains of the virus are becom­ing more and more vir­u­lent, and escap­ing, they’re talk­ing about, if you’re at the end of a hotel cor­ri­dor, the room to room trans­mis­sion chances much high­er out and so peo­ple want to go to hotel rooms and be not at the end of the cor­ri­dor. There’s lots and lots of things like that, because a lot of peo­ple are in hotel quar­an­tine. Real­ly. And it’s being trans­mit­ted in the hotels. Yeah. Yeah. So yeah, there’s a lot of stuff. But every­thing is good things are boom­ing. And going well, as always, though, we begin with a word or phrase of the day. So Kevin, tell me about your word or phrase of the day.

Kevin Lawrence 02:44

Yeah, all mine today is seat time. And as you know, I talked about a pas­sion for cars and rac­ing and you know, time in the seat gen­er­al­ly has a good cor­re­la­tion with mak­ing you faster in a race car or any­thing. But that’s not what I’m talk­ing about today, as you’re just inter­est­ing sto­ry about War­ren Buf­fett, who is, you know, con­sid­ered to be the most suc­cess­ful investor in the world. Inter­est­ing­ly enough, because of the pow­er of com­pound­ing, his con­sis­tent returns are very good, but not the best. The rea­son that his wealth is accu­mu­lat­ed like it is, is because he start­ed invest­ing when he’s 10. And I believe he’s now in his 90s. So it’s, con­sis­tent­ly get­ting good returns above aver­age returns. But over an 80 year peri­od, it turns into some­thing mag­i­cal. And it real­ly makes me think about many of us in what we’re doing. You know, I’ve been doing this thing. Now, I don’t like to count the num­bers. But I think it’s, it’s well over 25 years of work­ing with CEOs and exec­u­tives, in scal­ing com­pa­nies, and seat time, good seat time, good prac­tice, good dis­ci­pline, prac­tice, becomes very, very pow­er­ful. And that’s why, you know, gen­er­al­ly when we think about wis­dom, we think of peo­ple that are, you know, over 50, rather than under 50. Not that we don’t all have wis­dom. So just think about that sto­ry about War­ren Buf­fett and basi­cal­ly, is that a major­i­ty of was wealth in there seri­ous num­bers came in the last 10 or 20 years after, you know, 60 or 70 years of doing it is when his real wins came in. So because he’s liv­ing the liv­ing so long and healthy, and I hope he con­tin­ues for a long time. That is a huge com­po­nent as well. So it’s less about his, how well he picks stocks, and just that he’s owns them for longer peri­ods of time, because there’s oth­er stock pick­ers who are invest­ment deci­sions who actu­al­ly have a much bet­ter track record in terms of, you know, he has an aver­age of about rough­ly, you know, 20 ish per­cent growth year in that range. But there’s anoth­er gen­tle­man who’s in this He’s 60%. But he’s not as old as War­ren and has­n’t been invest­ing as long. It was real­ly inter­est­ing. So the val­ue of com­pound­ing over time.

Brad Giles 05:09

Wow, then you, mine is nowhere near as sophis­ti­cat­ed as yours. I don’t throw my toys out the court very often. But I hap­pen to do that this week with a lead­er­ship team. So my word is prepa­ra­tion. Okay. In fact, I would say it would have been sev­er­al years, sev­er­al years since I’ve lost my call with a team. And but this this, this week gone I, I had a very spe­cial occa­sion where a team had lost mon­ey for the for their busi­ness, this quar­ter, or this quar­ter­ly work­shop, they’d lost mon­ey. And there was two mem­bers in par­tic­u­lar, who joined the team about a year ago, and over the past year, they had­n’t done any of their home­work in prepa­ra­tion. And so I’m yeah, so I’m going around the room. And I’m say­ing, so tell us about it. Tell us about your reflec­tions on this par­tic­u­lar item agen­da, like we would one of them was read­ing and anoth­er was a ques­tion. And we went around once and they said, I haven’t done it. And then we went on a sec­ond time. And they said, I haven’t done it. I haven’t done it yet. These peo­ple. For the last four quar­ters, were say­ing the same thing. They just weren’t com­ing pre­pared. And

Kevin Lawrence 06:25

I could only imag­ine, oh,

Brad Giles 06:29

and they are and they are not doing their job and los­ing mon­ey. And so yeah, so mine is prepa­ra­tion, my word.

Kevin Lawrence 06:40

So what does it look like when you as some, you know, throw­ing the toes toys out? los­ing it freak­ing out? what­ev­er you wan­na call it? So what does it look like? What does that sound like? I would love to have seen that in that room

Brad Giles 06:52

a bit, you would? Well, because we’re not their boss, an advi­sor or coach is not their boss. And so it, it’s about cre­at­ing a cred­i­bil­i­ty chasm, it’s about being care­ful with your words, it’s about talk­ing about their behav­iors, and not who they are. It’s about say­ing, you know, you’re dis­re­spect­ing this envi­ron­ment, it’s about this is how much prepa­ra­tion I do to come to today. And I’ve asked you to spend 30 min­utes read­ing and con­sid­er­ing so that we’ve got actions and you’re dis­re­spect­ing your boss, you’re dis­re­spect­ing your peers, and you’re dis­re­spect­ing me by not even beyond being able to do that. And, and so it’s just, it’s, it’s, it’s let­ting them know that they are, you know, effec­tive­ly doing the wrong thing. And yeah, you know, in a calm con­sid­ered notes not count­ing can see.

Kevin Lawrence 08:01

Well, you know, I’ve had a few of those, Brad where I, I’ve called, where I lit them up, and I’m just like, you guys, this is unac­cept­able. This is a seri­ous meet­ing, tak­ing seri­ous time where the busi­ness and we are all invest­ed in mak­ing the com­pa­ny bet­ter, but only works if we all come pre­pared. Yeah. So you need to think about if you want to be on this team, it’s an expec­ta­tion that you come ready to go and stuff hap­pens once in a while. But this is the sec­ond time. Yeah. So my request is if you don’t if you’re not will­ing to pre­pare next time, then unin­vite your­self from the meeting?

Brad Giles 08:40

Yeah, yeah.

Kevin Lawrence 08:41

And that’s like an adult con­ver­sa­tion. But yeah, I’ve had sim­i­lar sit­u­a­tions and like you, I’ve, I’ve thrown my toys out a num­ber of times, and much less. So I’ve kind of man­aged myself bet­ter now. But in and I work with bet­ter, bet­ter teams. I work with some oth­er teams who are in their own stand­ing, but it’s very frus­trat­ing. And unfor­tu­nate­ly, what you’ve touched on and what I’ve also learned is, we got to be care­ful not to do the CEOs job. And some CEOs aren’t com­fort­able with cre­at­ing that kind of ten­sion. And I’ve got I’ve learned to be care­ful not to do their job too much. Although at the end of the day, it is my meet­ing that I’m run­ning, but it is it’s their com­pa­ny, but it’s a fine line. But yes, it’s you know, when you care, it’s infu­ri­at­ing when peo­ple show up like they don’t care. Yeah, yeah. Good one. Well, speak­ing of car­ing today, we’re going to be dig­ging into a top­ic that relates to real­ly car­ing and that’s about, you know, car­ing for your new col­leagues when you merge two com­pa­nies togeth­er or you acquire a com­pa­ny and how do you show up with that car­ing in a way or you bring them in and make a stronger com­pa­ny going for­ward? So the offi­cial title Brad in make sure we get this right how How do you inte­grate cul­tures when com­pa­nies merge or a com­pa­ny is acquired? So so the first thing we got to call out on this, and we most peo­ple know it, there is rarely a merg­er, rarely, I have been a part of one, at least, poten­tial­ly two that were legit merg­ers, but in almost all cas­es, it’s an acqui­si­tion of a com­pa­ny is the more a more pow­er­ful one in the trans­ac­tion acquires anoth­er one. So we know that. But what we want to look at from the per­spec­tive is how do you take two great teams of peo­ple and bring them togeth­er? And whether it’s 1000 employ­ees and 10 or 500 employ­ees and 500 employ­ees? con­cep­tu­al­ly? How do you real­ly do the work of bring­ing them togeth­er because it’s often a messy, messy process. And not only is it painful for the peo­ple, but the com­pa­nies end up not being very well inte­grat­ed. And, and there’s still because it becomes us in them and sub­cul­tures and all kinds of real­ly weird stuff. So we’re gonna dig into this and you know, any­thing, any kind of thoughts that you would kind of lead us off with here, Brad, from, from your perspective?

Brad Giles 11:19

Yeah, so I’m run­ning a work­shop last week, Thurs­day and Fri­day with a team. And one of the slides that I use when we’re talk­ing about core val­ues. I say that they should be between three and sev­en. Now, I know Kevin, your take we’ve spo­ken about this before is you want three core val­ues. But let’s be fair, we both agree, if you can read

Kevin Lawrence 11:40

a five, three to five, I think if you go beyond five, you’ve exceed­ed the word core. Now you’re just get­ting into val­ues. But that’s but we could, we don’t need to debate that just agree that I’m right. And then we can move on. Yeah,

Brad Giles 11:51

yeah, yeah. Okay. So where were we, what we are agreed on, if you’re get­ting eight 910, you’ve got too many. Okay, so, yeah, I’ve got this. And I show a few slides, where, where were their case stud­ies or their exam­ples of com­pa­ny’s core val­ues to set the time. And then I show an exam­ple of how not to do it. And it’s this, this poster that’s got 22 core val­ues on it, because it’s, it’s, it’s out­ra­geous. It’s a joke, like, no one would remem­ber what half of those core val­ues are, let alone how to behave. And so I use that as an extreme exam­ple, so that I’m in this work­shop on Thurs­day. And I show it to this lead­er­ship team. And then there’s one lady, she says, Oh, my God, I was in that team when we built those. I know, I’m, like recoiled a lit­tle bit. It’s been an inter­est­ing week, let’s be fair between that. And then the toys. But I recoiled a lit­tle bit. And I was like, Okay, tell me about that. And she said, it was the biggest night­mare ever, because we start­ed off with good core val­ues, and we were strong. And then we acquired a com­pa­ny. And then they, the exec­u­tives thought it was a good idea to merge the val­ue. So we brought on some of their val­ues. And then we acquired anoth­er com­pa­ny, because they were an acqui­si­tion mode, and then we merge some of their val­ues. And she said, we did that. And it was a night­mare. And we lost, the cul­ture was ter­ri­ble. And we lost so many good peo­ple from our com­pa­ny, and the acquired com­pa­nies, because the cul­ture became so terrible.

Kevin Lawrence 13:30

Yeah. And that’s peo­ple who did­n’t under they were doing the best they could, but they did not under­stand cul­ture, and real­ly what core val­ues are meant to be and do? Yeah, it’s incred­i­bly impor­tant. I’ve seen all kinds of crazy, crazy things when it comes to By the way, I had a sim­i­lar sce­nario, where I had a slide of what not to do, and some­one else had been there. And I’m try­ing to remem­ber which one it was. And that’s, you know, very care­ful of show­ing too many exam­ples, too many bad exam­ples, but I had a sim­i­lar one, it’ll come back to me which one it was. So, you know, one of the points that we start off with, we’re going to bring com­pa­nies togeth­er. And look at those com­pa­nies where you just basi­cal­ly buy the assets. And you know, and you know, your 1200 employ­ees, you buy the assets and three employ­ees come over. We want to treat those peo­ple with respect, but that’s a lit­tle bit dif­fer­ent. We’re real­ly when there’s a notable scale of com­pa­ny that’s com­ing in, no mat­ter how it’s going to work. But the main thing is, you got­ta have a plan. This is not a project for the account­ing team. This is not a project for the sales team. This is a com­pa­ny-wide thing to real­ly max­i­mize it and make it work well. And so you need like a 12, whether it’s a 12 day plan or a 12 month or 24 month one, you need a plan, because there’s a num­ber of steps and it takes time. In many ways. It’s just like onboard­ing an employ­ee, but you’re onboard­ing a whole batch of peo­ple that come with exist­ing sys­tems and exist­ing Cul­ture So, and with that plan, remem­ber that you’re try­ing to real­ly get the hearts and minds aligned. And then the sys­tems are, that’s just work. But get­ting the hearts and minds aligned is where the val­ue is. Because then you have them with you, instead of think­ing you’re, you know, bad peo­ple or fool­ish or what­ev­er it hap­pens to be. So, you know, a real­ly real detailed plan. And ide­al­ly, the team that is lead­ing this, this would be the acquir­ing com­pa­ny, that team as part of get­ting the acqui­si­tion done works on this plan. Ide­al­ly, they have a good rough draft of it, that they run by the com­pa­ny that’s being acquired, or the part­ner that they’re merg­ing with, and involve those peo­ple in the thought process on how to make it most effec­tive. That’s just, you know, ear­ly, ear­ly stages of get­ting buy in from those peo­ple, rather than forc­ing it down their throat.

Brad Giles 15:56

And isn’t that what you’d want to hear if you were part of the acquired com­pa­ny, if you were the one that was being pur­chased, you’d want to hear, okay, the cul­ture won’t be the same. We it can’t be, but we’re gonna work very hard to make sure that we can make this thing work, it will give you a real sense of opti­mism, that would be pre­ced­ed by a sense of vul­ner­a­bil­i­ty, what’s going to hap­pen, you’re still gonna have a job? Is it going to be a hor­ri­ble place? Yes, I’ve had, I’ve heard bad things about that com­pa­ny that’s buy­ing us have had their ter­ri­ble com­pa­ny, espe­cial­ly if

Kevin Lawrence 16:27

they’re a com­peti­tor. Yeah. Right, you’re one of them could be eas­i­ly per­ceived as a mon­ster. And, and there will be sto­ries about exec­u­tives on one side or the oth­er. And you know what, because when you got a com­peti­tor, your job is not to love them up. Your job is to go against them. So there’s, there’s all kinds of things. And again, there’s still going to be anx­i­eties. But real­ly to have a thought­ful plan, think­ing about get­ting those hearts and minds engaged, before you get into the process stuff.

Brad Giles 16:57

And when I’ve been involved in these deals, as a coach advi­sor for the lead­er­ship team, we’ve spent, you know, in the pre­ced­ing two quar­ters, we’ve spent full days work­ing on the cul­ture aspect, how are we going to effec­tive­ly bring these two cul­tures togeth­er. And at the out­set, I tell you, the teams had­n’t done any think­ing about it at all. And by the end of those two days, they were like, this is an enor­mous job. And we’ve got to get it right, it’s so impor­tant, because we could lose many peo­ple on both sides of the equation.

Kevin Lawrence 17:31

Cor­rect. You could lose many peo­ple. But worse, you could miss out on mas­sive oppor­tu­ni­ties, because you’re just think­ing of it from a tac­ti­cal point of view, which takes us into our next point is he got to have the humil­i­ty to look for great­ness on the oth­er side. And you’re prob­a­bly I think, at this point, a boat 50 merg­ers or acqui­si­tions I’ve been involved in through my clients like a lot, and I was­n’t hands, it was­n’t deep, deep, and all of those, but they’ve been a bit a part of them. And, and one of the things that we found the most valu­able is, is the more dom­i­nant com­pa­ny often assumes they’ve got it all sort­ed. And then they want to just con­vert the new com­pa­ny to their plat­form, we set up an expec­ta­tion was, well, we got to start, okay, we got to go min­ing the gold under this oth­er com­pa­ny and bring things togeth­er. Because this com­pa­ny has been around for a long time as well, it makes lots of mon­ey as well, there’s got to be some good things there. And, and, for exam­ple, in one of the com­pa­nies that we acquired, and it was an out­stand­ing com­pa­ny, but they had an amaz­ing learn­ing cul­ture and learn­ing and devel­op­ment sys­tem that they had built. Yeah. So instead of assum­ing that we’re bet­ter, and we’re big­ger, and we’re smarter, and blah, blah, blah, you know, we were hunt­ing for it, and some­one found this gem and what they did, and we found ways to inte­grate it into the over­all com­pa­ny. But it’s but it’s more of a mind­set than any­thing of just tru­ly look­ing for the good so we can max­i­mize it. And that only lasts for a few months. Yeah, but that is a crit­i­cal step and start­ing off in the right direction.

Brad Giles 19:09

Yeah, I, what comes to mind when you men­tioned that there was a per­son I know, their com­pa­ny was acquired by a much, much big­ger orga­ni­za­tion. And they had that humil­i­ty is so impor­tant, because they looked in and fig­ured out that the man­age­ment sys­tem, the way that they were run­ning, their man­age­ment sys­tem was so effec­tive that they said we want you to come and imple­ment that into four or five of our oth­er com­pa­nies. And we want you to run that process. So yeah, it’s it that humil­i­ty is step num­ber two or our sec­ond point for a good rea­son because it’s very easy to just say, okay, so that means that we’re going to need anoth­er three work­sta­tions in the sales team or anoth­er 30 work­sta­tion young sales area, but it’s so much More than that,

Kevin Lawrence 20:01

and you’re just not respect­ing the oth­er peo­ple, like at the root of it, you know, you need to hon­or and respect to what they’ve done. Now, you might ful­ly let go of all the sys­tems and process­es they have, that might be the final deci­sion, maybe. But you got to start with respect and to get you on the right page, which takes us into the sec­ond piece is, you know, and you know, we were talk­ing about this before we both the dilem­ma is you’re real­ly got to know the tal­ent, ide­al­ly, before the deal clos­es. So, you know, as part of due dili­gence, in many cas­es we do and peo­ple go and meet the peo­ple and fig­ure out who’s who in the zoo. In an ide­al sce­nario, we go and do full on top grad­ing inter­views, and real­ly under­stand who the top play­ers on so we did one, and I, US com­pa­ny where we were num­ber one, we acquired num­ber two fun­ny thing. After the acqui­si­tion, you know, we’re talk­ing to the exec­u­tives. And they’re like, oh, we’re so glad you bought us. Yeah, cuz we were destroy­ing them in the mar­ket. Yeah, at the same time, the com­pa­nies hat­ed each oth­er. So we had a lot of work to do. But so what we did after get­ting each, each of the key lead­ers talk grad­ed, we knew who the A play­ers were. And we assigned key peo­ple to work with those peo­ple build rela­tion­ship with those peo­ple stay close to those peo­ple. So we kept them at any cost. And the oth­er ones that weren’t as key were, you know, we still worked on it. But there was the at any cost list. Yeah, metaphor­i­cal­ly, because we knew we knew who those key peo­ple were, inter­est­ing­ly, there was a very senior per­son that you would have expect­ed was key, talked and act­ed like they were key. And they weren’t on the list.

Brad Giles 21:51

Yeah. Yeah. And there isn’t as much of a sur­prise there, because you did the work, because you did the prepa­ra­tion, going back to the ear­li­er word, right? Because, yes, you know, you had the plan, and that prepa­ra­tion, under­stand­ing the tal­ent, you know, I saw an arti­cle prob­a­bly three weeks ago, and it was an analy­sis of the com­pa­nies that Apple has acquired. Okay. And what they’re doing is they’re actu­al­ly the only thing that they are acquir­ing is tal­ent. Okay, I’ve heard about this. Yeah, they are not wor­ried by

Kevin Lawrence 22:36

the com­pa­ny, keep the peo­ple in check the business.

Brad Giles 22:39

Yeah, they don’t care about the busi­ness, what they do is they look and they say, in this spe­cif­ic tech­ni­cal niche, we are very, very weak. And then they look and they go, who can we acquire, and they don’t care about your rev­enue, they don’t care about your patents, none of that, what they most­ly all they care about is, and so there­fore they do the val­u­a­tion based on the qual­i­ty of the tal­ent. Okay, now, you’re not apple. They’re not apple. So the lis­ten­er isn’t apple. But the point is that the tal­ent is one of the real­ly impor­tant things that you are acquir­ing. So you’ve got to know Yes. And you got to be pre­pared to make the hard calls about tal­ent, if they’re not going to make it in your organization.

Kevin Lawrence 23:25

Yeah, and do the right things to pro­tect those ones who are crit­i­cal. And again, you don’t know who they are until you real­ly dig deep. So, so So real­ly, under­stand­ing what the tal­ent so the third one, and this is one, I’ve seen some amaz­ing, sim­ple ideas over the years that did­n’t, they’re so obvi­ous, but not com­mon. And that’s real­ly align­ing the rela­tion­ships between the lead­ers and the man­agers in the front­lines. And, and the sim­plest, best tip that you are fool­ish, if you don’t do it, is that it’s called the bud­dy sys­tem. Just like when you were in like, you know, kinder­garten grade one, you know, used to be that you have when you go out for recess, every­one would hold hands with some­body else. Now, they prob­a­bly don’t hold hands, that’s prob­a­bly not cool any­more. But you would have that per­son that bud­dy sys­tem, you know, as I remem­ber, as as as, you know, as young adults going out carous­ing to the bar, we would always use the bud­dy sys­tem to

Brad Giles 24:23

and you would try to find some­one to hold hands with

Kevin Lawrence 24:27

you in a dif­fer­ent way. Yeah. So, so, so So, but it’s basi­cal­ly, our CFO and their CFO have a week­ly meet­ing, where they talk and con­nect, and you’re basi­cal­ly start­ing to build bridges or con­nec­tions between peo­ple. Our head of sales and their head of sales are a per­son in charge of Latin Amer­i­ca sales and their per­son in charge of Latin Amer­i­can sales. Our Comp­trol­ler and their con­troller, our CEO and their CFO, our safe­ty offi­cer and their safe­ty Offi­cer like all of these peo­ple, build­ing bridges and rela­tion­ships, both with the intent to, you know, mind the good­ness and look for the bril­liance on the oth­er side. But hav­ing a set week­ly meet­ings so that they can be con­nect­ed, because instead of when some­thing goes wrong going and you know, com­plain­ing of the com­mand chain of com­mand to how these peo­ple are idiots, they’ve got a direct con­nec­tion to say, Hey, can you give me a hand with this. And so basi­cal­ly, it’s like, you take the whole orga­ni­za­tion and you lock up, almost every­one gets a bud­dy, or most of the key peo­ple get a bud­dy. And it’s mag­i­cal, because it accel­er­ates the learn­ing curve, it accel­er­ates the, the cul­ture and help peo­ple get in sync with the cul­ture. And it just solves a lot of problems.

Brad Giles 25:46

And that’s a real­ly impor­tant point. And the ques­tion to that is, who’s respon­si­ble for merg­ing the cul­ture and every­one real­ly has a role to play, and very specif­i­cal­ly, line man­agers or want to call out line man­agers have a role to play, and need to have pri­or­i­ties that need to be exe­cut­ed in a merg­er around cul­ture? So it’s very easy for line man­agers to say, yeah, we’ve acquired this com­pa­ny. And yeah, I’ve got this oth­er team. But you know what, I got all this oth­er stuff to do, you don’t under­stand. I’m too busy. I don’t have time for this cul­ture stuff. And it, you know, every­one has to have a role to play. If you’re man­ag­ing peo­ple, it’s not just the CEO or the senior peo­ple. Yeah.

Kevin Lawrence 26:42

Awe­some. So basi­cal­ly, how do you find this oth­er ways to align rela­tion­ships, you could have the account­ing team me with the whole account­ing team and have a brain­storm about a process or a pol­i­cy or what­ev­er the heck it is, like there’s, there’s meet­ings, but the basic of the one to one with the key peo­ple, it real­ly, real­ly, and then also, then peo­ple don’t feel lost in the sys­tem. It real­ly helps. So the next one is align­ing the core val­ues. And, you know, Brad’s exam­ple, up front, I love it. You know, they brought eight com­pa­nies togeth­er, they kept all of their val­ues and mashed it into one mas­sive list. It was­n’t eight, but it looks like it was eight. And that’s just wrong. Because, you know, tru­ly core val­ues, as Brad agreed should­n’t be like three to five on a list. Right? Not Not Not 23. I know, Brad thinks it can go up to sev­en, which is okay, we’re allowed to have dif­fer­ent views. But what­ev­er it is, it’s a hand­ful. And keep­ing it sim­ple. And, and so we’ve seen a few dif­fer­ent things. in an envi­ron­ment where it’s a pure merg­er, or a pure reset, which is less com­mon, we’ve start­ed to clean slate. So we brought two com­pa­nies, prob­a­bly eight years ago, two com­pa­nies togeth­er that were both bought by pri­vate equi­ty. And they want­ed to lit­er­al­ly merge them as a plat­form to build on, which we did. We did a ton of acqui­si­tions after that. But we start­ed with a clean slate, new pur­pose, new B hag new core val­ues, every­thing was fresh. And so we start­ed from that, and we did a bril­liant job. And but that is rare. But that is one way to do it. The oth­er one and maybe Brad, you want to talk about this one, as is where you kind of onboard peo­ple on to the exist­ing val­ues of the more dom­i­nant orga­ni­za­tion. You want to talk about that one?

Brad Giles 28:40

Yeah. I think that there’s no such thing as a merg­er. Okay. I think that may be in What 0.1%? There might be right, but it’s almost always an acqui­si­tion, there is almost one per­son who is doing the deal, there is mon­ey that is flow­ing one way or you know, assets that are flow­ing one way. And there is one per­son who will be the CEO at the end of that deal. And so if that is true that it’s all about acqui­si­tions, then the job to be done is to say, what is the dynam­ics? How are we going to make this work? What does the lead­er­ship team look like after­wards? And how do we bring the val­ues to a place whether or not they change is not even the ques­tion get to a place where we can unite this cul­ture. And if the peo­ple who were lead­ing the orga­ni­za­tion pri­mar­i­ly, it con­nects with their beliefs that are bone deep, the beliefs that they their deeply held beliefs, because if the lead­er­ship team is essen­tial­ly stay­ing the same at the end, the core val­ues are prob­a­bly unlike­ly to change. If the lead­er­ship, if the lead­er­ship team is a mash up of two orga­ni­za­tions, you may need to redis­cov­er the group’s qualities,

Kevin Lawrence 30:15

great fil­ter bread, if the lead­er­ship is intact, odds are you will onboard them to your core val­ues in a way through a process and dis­cus­sion of help­ing them to find the align­ment. But if your exec­u­tive team is chang­ing dra­mat­i­cal­ly with the with this oth­er team, you might reset it. Or you might reset it or give a notable edit revi­sion to it if the exec­u­tive team is chang­ing, notably, great, great way to look at it. But let

Brad Giles 30:43

me be clear, in my hum­ble opin­ion, the worst thing you can do is give the two sets of core val­ues to mar­ket­ing and ask them to solve the problem.

Kevin Lawrence 30:53

I would throw my toys out, I would yell First of all, I nev­er let mar­ket­ing touch this stuff. Mar­ket­ing, I come from mar­ket­ing. So I can say mar­ket­ing does not touch it until the very end when they’re locked up. Because mar­ket­ing puts per­sua­sion lan­guage and cus­tomer lan­guage on a core val­ues. Aren’t there our heart and soul? So yeah, you don’t do that. For sure. And just to mash them togeth­er. It’s in it. For us core val­ues are a strate­gic tool. It is the list by which we fire and hire peo­ple. If you have them, you get to stay. If you vio­late the core val­ues con­sis­tent­ly, you must exit the building.

Brad Giles 31:33

So don’t wor­ry about the oth­er worst thing that you can do is say, Well, here’s what we’re going to do. We’re going to do a sur­vey of every­body in all com­pa­nies and then get a pop­u­lar­i­ty contest.

Brad Giles 31:44

Yeah. And let’s try to fig­ure out exactly

Kevin Lawrence 31:47

that’s called a lack of leadership.

Brad Giles 31:49

Yeah. So don’t do that.

Kevin Lawrence 31:53

Now you might get some bad enter­tain­ment. If you’re get­ting mad. We’re get­ting into time. Yeah, exact­ly. Oh, my God, I do you know, I have to be care­ful get­ting mad. And I recent­ly as a side note, I got mad at a CEO in a meet­ing in a way that prob­a­bly exceed­ed appro­pri­ate­ness. Actu­al­ly, no, it did. And I end up I have to clean up after

Brad Giles 32:21

apol­o­gize because we bring pas­sion, and we need to be respect­ful and do the right thing. But, you know, the pas­sion comes with a few oth­er things. So let’s move on.

Kevin Lawrence 32:29

It does, okay. So a lot of val­ues, and you need to con­scious­ly onboard peo­ple to them or redo them, but you don’t just make a big­ger list. Go ahead, Brad.

Brad Giles 32:40

So next one is align­ing the strat­e­gy and exe­cu­tion. So what we need is one plan, the old phrase, okay, we need every­body on the same page. So if we’ve talked, just talked about the val­ues, okay? And to a degree, per­haps the pur­pose, okay? Are we redis­cov­er­ing are we onboard­ing, then we move on to, we’ve got to align the strat­e­gy and exe­cu­tion. So we need one sin­gle Sim­ple Plan that can unite the whole orga­ni­za­tion. Now, maybe there are dif­fer­ent indus­tries, maybe they’re in dif­fer­ent areas, but there are still some com­mon ele­ments that we can work on. So one sin­gle, so every­one is going in the same direction.

Kevin Lawrence 33:23

Yeah, so that would mean if you look at the longer term strat­e­gy, that this new com­pa­ny, if it’s, if it’s a merg­er, it’s all part of one, right, or a pure acqui­si­tion, where they’re fold­ed. Some­times you acquire com­pa­nies, and they still oper­ate some­what autonomous­ly or inde­pen­dent­ly. But it’s clear how they fit into the fly­wheel or fit into the strat­e­gy. Like they see their part in the strat­e­gy, which is crit­i­cal. So the align­ment might just come in the long term strate­gic piece, but they’re aligned, or they might be ful­ly aligned all the way through the tac­ti­cal lev­el. And the key piece, and when we’ve done, you know, some­times with some larg­er acqui­si­tions, you know, they will run a ton of ous­ly for a while, inde­pen­dent fair­ly inde­pen­dent­ly for a while. But what we do is we get them on our Aus­trali­a’s strat plan­ning frame­work, we get them tak­ing all of their think­ing, and they get their own one page strate­gic plan, we make sure that they have their own quar­ter­ly goals. And we get them, even though they’re doing a lot of stuff on their own. We get them using our strate­gic plan­ning ecosys­tem, get them on board with the lan­guage and the approach. And then some­times, that’s for ones that we don’t blend in right away that, you know, but they’re there. They’re aligned through the least the strate­gic think­ing and always tied into the fly­wheel and the B hag point is, is get them work­ing. So they’re, they’re more in sync with

Brad Giles 34:42

you. And so then once we’ve got the val­ues and the strat­e­gy and the exe­cu­tion line, we’ve got to think about the process­es and some­times this is where we’ve got to fall back to the humil­i­ty com­ment before like, we’ve got to be hum­bled it they might have a bet­ter sales process than us or a bit of finance process than us So with a hum­ble mind­set going in and under­stand­ing what is the best prac­tice amongst the two, which one is going to serve our needs bet­ter, and then align­ing and merg­ing the two, were appro­pri­ate­ly mak­ing sure that we have one sin­gle process for this, that every­one knows how to use.

Kevin Lawrence 35:20

Cor­rect. And note, for those of you that are lis­ten­ing today, this is the num­ber sev­en item on our list. For most peo­ple, it’s the only one. And that’s why there’s such a chal­lenge with inte­grat­ing acqui­si­tions. And it cre­ates way more fric­tion than it needs to is because we again, this is, this is the tac­ti­cal process. And we spent all the cen­ter ener­gy on the hearts and the minds in the strat­e­gy, then we get to this where a lot of peo­ple, okay, well look at the account­ing teams togeth­er, and we’ll line them up and get them on or eirp. It’s like, well, that’s not that that does­n’t work. Or you miss mas­sive oppor­tu­ni­ties, let’s say, and you cre­ate way more fric­tion than you need to. So yes, at some point, you align them. Alright, final­ly, num­ber sev­en, cel­e­brate, eval­u­ate and real­ize, Hey, this is new, you got to find ways to cel­e­brate all the stuff that’s work­ing, right. And real­ly, this is great, and acknowl­edge­ment of true things that are good, and eval­u­ate the stuff that’s not work­ing so you can tweak it, and then con­tin­u­al­ly re align peo­ple, bring them togeth­er, have brain­storm­ing, does have plan­ning meet­ings, what­ev­er it hap­pens to be for those key lead­ers to con­tin­u­al­ly get­ting aligned to what mat­ters most.

Brad Giles 36:37

And one of the things there is core val­ues awards can be some­thing that I cer­tain­ly use what a lot of com­pa­nies core val­ues awards, are whether or not you’ve redis­cov­ered or you’re reusing. If some of those awards can go to the new com­pa­ny, it can be quite ben­e­fi­cial or the acquired com­pa­ny, it can be quite ben­e­fi­cial. And then also call those sto­ries around that cel­e­brate eval­u­ate realigned con­cept. What are the cool those sto­ries get­ting those things out there?

Kevin Lawrence 37:11

Absolute­ly. So in sum­ma­ry, the idea here is that when you’re going to bring com­pa­nies togeth­er, acqui­si­tion, or more appro­pri­ate­ly, or some­times merg­er, is you got to align the hearts and minds to start with, and then kind of get the strat­e­gy piece and then get down to the process­es in the end. And it’s not just about align­ing process­es, because there’s peo­ple involved and we’ve talked about, you know, 12 day or 12 month plan, humil­i­ty to look for great­ness on the oth­er side, get to know that tal­ent, even before you final­ize the papers, you know, align­ing the val­ues in one way or the oth­er align­ing the strat­e­gy and exe­cu­tion sys­tems, and then the process­es and then final­ly, cel­e­brate, eval­u­ate and keep opti­miz­ing it and dilute it. Awe­some. That’s a pret­ty good dis­cus­sion. That’s a great bet. If peo­ple do that all the time on acqui­si­tions, it would make peo­ple’s lives a heck of a lot easier.

Brad Giles 38:06

Well, as Peter Druck­er said, cul­ture eats strat­e­gy for break­fast. And, you know, when acquir­ing we are going to end up being one big com­pa­ny, so we need to ensure that the cul­ture is right. What a good chat. All right, well, thank you for lis­ten­ing, every­one. This has been the growth whis­pers pod­cast. I’m Brad Giles and you can find me at evo­lu­tion part​ners​.com​.au and Kevin Lawrence you can find at Lawrence​and​co​.com. Of course, you can always find us as well on YouTube, if you search the growth whis­pers thanks very much. I hope you’ve enjoyed the episode today about com­pa­ny merg­ers and cul­ture. Look for­ward to chat­ting to you again next week. Have a great week.