A role of the target culture in post merger integration.
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I would like to discuss a case of Disney – Pixar Merger and how preservation of Pixar’s Culture made this merger a success.
Disney leadership recognized early in the process that Pixar’s success is uniquely based on its highly creative work environment. So instead of imposing Disney’s existing operations and system, they allowed Pixar to retain its distinct identity and autonomy encouraging its creative vibe to flourish in the familiar environment. Disney made it very clear that Pixar’s culture was the most important asset that will be preserved and cultivated.
Is this a common theme in many successful acquisitions? Thank you for your contributions.I believe this is common in acquisitions that want to grow market share vs. merge to expand capabilities. It seems like a successful strategy if the buyer does not make a promise they can’t keep – aka say “we love your culture!” but then require the employees to work twice as much or cut costs on all of their employee benefits. It’s a lovely concept that I believe takes skill and dedication to execute.
I think size and structure of acquisition plays a big role in whether the acquired organization is allowed to remain as a standalone organization and this retain its own culture. In the example case, the leaders specifically purchased Pixar to be a division of the broader Disney Corporation book of business as opposed to being integrated. They are big enough to be fine with duplications in cost centers.
In my experience, when there are too many redundancies and cost duplications noted as part of a smaller acquisition, the preservation of culture will lose out to the cost savings of dismantling the org and absorbing its remaining pieces. Financial synergies are the primary driver, and cultural preservation is a second tier (or third or forth tier) concept.
That said, it is wise for organizations to slow roll the integration process regardless of perceived potential synergies when culture is a known component of customer retention. I’ve experienced being acquired and the parent org waited a full year before they started to make changes. Only then did they change our logo, integrate back of house operations, etc., etc. They took the time to learn what made our org unique and that helped a lot when it came to employees and customers embracing the new culture.
I think it’s important to understand where the value of the deal resides. Knowing whether culture plays a big role in the value of the acquisition helps tremendously during integration planning and execution. In my experience there are just a few instances where a stand-alone model works for a period of time (eg, differentiated product or market). The flip of the coin is marginalization… and if the acquired company cannot sustain its stand-alone status, the full integration will be very disruptive.
I think that the success of cultural integration in acquisitions hinges on several factors. Promising to preserve a culture while making drastic changes can lead to disillusionment. The size and structure of the acquisition play a significant role in whether the acquired organization can retain its culture; for example, larger entities may have more leeway. However, for smaller acquisitions, financial synergies tend to overshadow cultural preservation. Understanding where the value of the deal resides is crucial; if culture is a key component, careful planning and a gradual integration process may be essential to minimize disruption and maintain employee and customer satisfaction.
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