579. Michael Rubenstein, Organizational Culture in Mergers and Acquisitions

In this episode of Unleashed, Michael Rubenstein discusses the importance of organizational culture in mergers and acquisitions (M&A). Michael's expertise is broader than organizational culture; he offers a bird's eye view of an organization to help move it to the next phase in their evolution which includes: Strategy, M&A, Value Creation, People and Culture, etc.  It’s all about moving an organization to the next phase in their evolution and includes: Strategy, M&A, Value Creation, People and Culture, etc. He believes that culture is the key to a successful integration and that it often goes unnoticed. He suggests that when assessing a company's culture, it is essential to identify the culture elements of the current company and the target company, and identify any gaps.

Key Points in Assessing Company Culture

To do this, Michael recommends conducting self-assessments and assessments of both companies, as well as conducting interviews with stakeholders such as leadership, employees, customers, and suppliers. These interviews can help identify critical issues that could be problematic or could be beneficial. A culture diagnostic is a process that involves asking open-ended questions about how decisions are made within a company. This can include whether the organization is meritocratic, where instructions come from the top, or more empowered, where people have more autonomy in their roles. It is also important to consider whether the decision-making process is customer-driven, or operationally driven.

Unpacking Elements of Company Culture 

Michael states that culture is a complex concept that encompasses behaviors, norms, and rituals. Behaviors involve people working together, collaborating, hiding information, and doing things for the greater good or their own benefit. Norms are standards that hold individuals accountable for values, self-integrity, and communication within an organization. Rituals are important and often involve stories and networking opportunities.

The Benefits an Organizational Diagnostic

An organizational diagnostic can help identify gaps in culture, which can be useful in assessing the current state of the organization and the target acquisition company. A visual representation of the organizational diagnostic can help identify gaps and areas for improvement. For example, if the company being acquired is more advanced than the current one in terms of collaboration, it can help probe and identify areas for improvement. Michael explains that a case study can help assess the impact of a mismatch between cultures and the success of a merger. In a successful merger, culture was a key factor, as the acquiring company focused on taking the best people, processes, and models from both organizations. However, in a failed merger, the acquiring company ignored the value of the best people and processes, leading to a loss of billions of dollars in acquisition costs.

The Importance of Culture in Organizations

Michael discusses the importance of culture in organizations. He suggests assessing gaps, identifying positive aspects, and assessing alignment. He emphasizes the need to create a sense of unity and use language that is meaningful. Rubenstein also suggests soliciting input from stakeholders about creating a future state and creating a cultural strategic weapon. Culture is crucial as it is unique and cannot be duplicated by competitors. He suggests using a culture lens to frame people processes and tools, and building initiatives around this. Michael's practice is a boutique advisory firm that focuses on culture across various industries. He believes that culture can either facilitate or kill any other initiative, whether it's about strategy, change management, or continuous improvement. In conclusion, culture is a crucial aspect of any organization, and it can be a powerful tool for fostering harmony and success. By addressing cultural gaps and fostering a culture of alignment, organizations can create a more successful and successful future state.

Timestamps:

00:12: Organizational culture in M&A deals, including diagnostic tools and assessing gaps

05:50: Organizational culture, behaviors, norms, and rituals

13:01: Culture in M&A deals and its impact on success

 

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