21 November 2023
Mergers & Acquisitions: Creating cultural synergy - CLONE
As we have seen, a successful merger or acquisition is reliant on synergy(1). It requires everyone involved to work towards the same purpose. As such, a cultural and complementary strengths-based fit is crucial. Integrating two organisations under a clearly defined purpose will help ensure a smooth transition.
The notion of purpose as a key driver of organisational success was popularised by Simon Sinek in his influential, 2009, book Start with WHY. The insight derived from his study of what the world’s most influential leaders have in common has evolved from a TED-talk trend into a coherent strategy for success. It is an approach that extends beyond the financial to captivate the hearts and minds of an organisation’s people.
"Great companies have great purposes. If you are working on something exciting that you really care about, you don’t have to be pushed. The vision pulls you."
When it comes to mergers & acquisitions, purpose helps create cultural synergy. Weaving a clear mission into the fabric of a new entity is cohesive, it bonds everyone together in working towards collective success.
Redefining success
Purpose-driven organisations are defined by their reason for existing. They seek to make a positive impact on the world around them, whether through environmental sustainability, social responsibility, technological innovation or improving the lives of their customers through their products and services. Hallmarks of a purpose-driven organisation are a focus on creating a positive workplace culture and fostering employee engagement and well-being.
"The business of business is improving the state of the world. If you are not helping make the world a better place, then you're not in business. Companies that prioritise a broader purpose are not just successful; they're sustainable."
Business does not exist in a vacuum
Society is changing. Both consumers and employees want to support businesses that align with their values and contribute positively to society. Top talent seeks employers that provide a sense of purpose to their work. In a world scarred by the pandemic and subsequent cost-of-living crisis, purpose-driven organisations stand out. They engage with their communities, adapt to address societal challenges, and prioritise employee well-being, ensuring continued relevance(2).
“Purpose-driven organisations bound by values are stronger than profit-driven organisations bound by rules.”
Competitive advantage
A merger or acquisition can significantly enhance a business's ability to outperform competitors by synergising resources, expertise, and market reach. Combining complementary strengths, such as diverse skill sets, innovative technologies, or expansive customer bases, allows the newly formed entity to create a more robust and competitive offering(3). Operating under the banner of a shared purpose is a proven driver for:
- Growth – purpose-driven organisations attract a loyal customer base by connecting with them on a deeper more meaningful level.
- Profitability – authentic commitment to a mission can command premium prices and foster customer loyalty, enhancing financial performance.
- Employee satisfaction – purpose-driven work leads to more creative, engaged, and satisfied employees, reducing staff turnover and boosting productivity.
- Resilience – a strong sense of purpose can be a north star that guides organisations through economic challenges and crises.
Retaining top talent through shared values
In a post-merger scenario, retaining the best talent is imperative. By aligning the mission and values of the merging entities, directors can create a workplace culture that inspires loyalty and commitment. This cultural cohesion is particularly crucial during times of change, ensuring the merger is not only a financial transaction but also a shared journey toward a meaningful purpose.
Purpose-driven organisations are magnets for high-performing individuals seeking meaningful work. These businesses have a track record of not only attracting but also retaining the best talent. That is because people find greater satisfaction when they believe their work contributes to a larger mission, leading to long-term commitment(4).
“An extraordinary business starts with extraordinary people. Extraordinary people start with purpose.”
Defining and articulating purpose to create cultural alignment
It is crucial that directors contemplating joining forces with another entity define and articulate a shared purpose. This involves identifying common values, a joint vision for positive impact, and a commitment to societal responsibility.
"Every company has to have a sense of purpose beyond just making money. It has to stand for something. It should have a reason for being that is about more than just profits. This purpose should be an essential part of the company's DNA."
Navigating challenges with a unified culture
Mergers and acquisitions often come with a myriad of challenges, from cultural clashes to operational integration issues. Purpose-driven organisations are better equipped to navigate them. Their shared commitment to a larger mission serves as a guiding force, fostering collaboration, and smoothing the transition process. A purpose-driven approach doesn't just lead to a successful integration; it creates a stronger, more resilient entity that can weather future storms with a unified and aligned culture.
In Brief
Purpose-driven organisations are at the forefront of a transformative era in business. They excel in growth, profitability, and employee satisfaction, while also remaining relevant and resilient during times of challenge. Businesses leading with a clear mission are poised not only to thrive but also to make a positive difference.
If you are a director embarking on the complex journey of a merger or acquisition, or simply looking to grow your business, the lessons from purpose-driven organisations offer a roadmap for success. As well as helping develop cultural synergy, the transformative power of purpose can go beyond individual companies; it can shape the future of an entire industry. By infusing purpose into the DNA of a merged entity, directors not only enhance their competitive advantage but also contribute to a positive, more progressive, business landscape.
For practical, how-to advice on creating a purpose-driven organisation:
1. Kate Hardcastle, Mergers & Acquisitions: HR is integral to success. https://www.seymourjohn.com/articles/mergers-%26-acquisitions%3a-hr-is-integral-to-success/a35
2. O’Brien et al. (2019) Purpose is Everything: How brands that authentically lead with purpose are changing the nature of business today. Available at: Deloitte Insights
3. Quinn, E. and Thakor, A. (2018) Creating a Purpose Driven Organisation. Available at: How to Help Your Team Find Their Higher Purpose
4. Global Expansion (2021) 9 Benefits of Mergers and Acquisitions Available at 9 Benefits of Mergers and Acquisitions (globalexpansion.com)
21 November 2023