After an entrepreneurial telecommunications company had been acquired and merged into a larger and more established telecom group, I asked a senior manager how did the management culture change? He answered, that, prior to the merger, whenever a group called a meeting and one participant could not make it, the meeting went ahead anyway. After the merger, the procedure was totally different – whenever a meeting would be called and one participant could not attend, the meeting would be rescheduled and postponed. The manager distilled in a few words on how fast and nimble companies operate versus the staid and conservative ones. The entrepreneurial company takes risks and knows that to succeed, it must move forward constantly. The management teams from established and conservative companies take fewer risks and, therefore, they have more political issues – as if not to jeopardize their jobs.
Companies which fail to move forward quickly risk losing market share or new business opportunities. Scores of consulting companies advise companies on how to be more creative, but being creative is hard to implement when the corporate culture is risk adverse and does not move forward.
That same merger did not produce the results expected from the integration. Unfortunately, senior management did not take into account that the culture of the acquiring company would dominate the culture after the integration. The acquiring company decided to relocate the operations to the mid-West, even though the acquired company’s principal office operations only existed in the East Coast. Between the cultural change and the relocation, the new company lost many excellent and creative managers from the target company. And, since the purpose to acquisition was to catch up to the two top players in the industry, the company has stalled and now seeks a new strategy for growth or even survival.
Recent news suggest a similar scenario in the IT industry – Yahoo’s acquisition of Tumblr. And to quote Yogi Berra, Déjà vu all over again. Here we have an acquirer stumbling to regain a foothold against the competitors. It is acquiring another company geographically removed from the acquirer. The younger company is substantially more entrepreneurial and more nimble. We will see if Yahoo, being the acquirer, will stifle Tumblr or let it succeed in spite of Yahoo’s more established corporate culture.