Corporate Storytelling Through Uncertainty: Mergers and Acquisitions

The gaming industry is abuzz with the news that Microsoft will acquire “powerhouse” Activision Blizzard Inc. for a whopping $70 billion. WSJ writes that the merger will try to “shake up the gaming industry by expanding the software giant’s library of bestselling video games and bolstering its efforts to attract consumers to its cloud gaming service.”

How many times have you heard this story? Company X acquires Company Y for mega dollars. This merger is poised to be… one of the most ambitious… most profitable… to transform the Z industry. newly merged company promises to have – whether it’s changing the landscape for consumers around the world or becoming the dominant player. The profit will be breathtaking.

How will the story end?

Similar to the hopeful story of mergers and acquisitions is the story of failed mergers. Company XY’s “long-awaited” impact never materializes. The increased market reach and expanded capabilities were never realized, disappointing investors and employees. The merge failed due to…

Although the reasons vary from transaction to transaction, a key element is often how the merging of the cultures of the two companies has been handled.

In most early reports on mergers and acquisitions, experts consider it a good deal if the finances, profitability and capabilities of the two companies align. But more often than not, corporate culture is overlooked or underestimated as an essential ingredient.

Take the case of the greatest merger of all time: AOL and Time Warner. When it was announced, people called it a landmark deal that would revolutionize media and the internet itself. But today, the $350 billion deal is known as a historic flop. Merging the cultures of two companies, on top of the dot com bust cycle, proved to stifle the possibilities for the two companies to become one.

“The lesson is to treat company culture as you would technology assessment, financial assessment, customer account and satisfaction, legal contracts, etc., include it in your due diligence,” says Mike Simmons, CEO of andros, a health technology company that recently acquired another healthcare company, Glenridge Health, to expand its capabilities. Simmons also stressed the importance of direct communication. “From the start, we were clear. We acquired Glenridge. Our culture is going to be implemented here.

Tight or loose culture

In a recent to study published in Harvard Business Review, researchers found that loose versus tight corporate cultures had a profound impact on merger success. Loose corporate cultures often value creativity and innovation, while tight cultures value hierarchy and efficiency. The researchers “found that fusions with more pronounced tight-loose cleavages performed worse overall. On average, acquiring companies in mergers with tight and loose differences saw their return on assets decline by 0.6 percentage points three years after the merger, or $200 million in net income per year.

Narration as a source of meaning

Whether or not it is a merger and acquisition involving the merging of a tight and loose company, every merger will bring uncertainty to its employees. During acquisitions and mergers, people have an innate tendency to tell themselves (and the people around them) stories. Storytelling is an act of meaning. In times of uncertainty, we need stories the most.

“Stories help us soften some of the decisions we’ve made and create something meaningful and meaningful out of the chaos of our lives,” says Dan McAdams, professor of psychology at Northwestern University.

Raising cultural awareness through stories

Many years ago, a former client from Brazil, who grew up in a German family and community, had no awareness of her own unique culture until she moved to another province for a new role. of management. At this company, she was flabbergasted by her team’s apparent disrespect and sloppy habits: meetings started late and were always inundated with personal stories from the weekend or sharing opinions on the latest movie.

But what she saw as an inefficiency that needed to be fixed was actually a cultural value for community and team building. When she tried to implement rules she felt were common sense, her team saw her as uptight and mean. Later, she realized that she hadn’t been the effective manager she wanted to be because she hadn’t been aware of her own cultural differences or the cultural norms of her new company.

“Stories convey the culture, history, and values ​​that bind people together…the stories we have in common are an important part of the ties that bind,” write Vanessa Boris and psychologist Lani Peterson, Psy.D in Harvard Business. Corporate events and meetings where stories are shared create opportunities for team building and understanding across corporate cultures. In organizations and businesses, Boris and Peterson continue, “the stories its leaders tell help solidify relationships in a way that factual statements summarized in bullet points or numbers do not.”

Creating storytelling spaces can help educate managers and employees about cultural differences between merging companies. Boris and Peterson explain: Stories “build familiarity and trust, and allow the listener to enter the story where they are, making them more open to learning. Being open to learning about these different corporate cultures is one of the necessary first steps in managing the on-the-ground impact of a merger or acquisition.

Additionally, stories can help teams navigate the challenges and changes that arise during a merger or acquisition. To research found that stories, especially hopeful stories that feature detailed struggles and turmoil, help people have hope and gain wisdom from difficult events.

What stories are told in your organization?

In mergers and acquisitions, the stories that are told are important. “We tried to get middle managers to tell the story of the acquisition and the vision of big business to their own teams,” says Mike Simmons, CEO of andros. “It’s hard to do well, and ultimately we could have done a better job of more intentionally helping them learn to tell the story in their own words.”

Although the acquisition and onboarding of new employees was ultimately successful, Simmons believes the transition could have been smoother and faster if he had better equipped his middle managers in this way.

With or without direction, employees and managers will fill in the blanks and answer their questions with stories. How will you empower your employees and managers to tell the story of change?

James C. Tibbs