In 2013, Kotter was called to help drive a post-merger culture integration of two former rivals. In an industry characterized by mergers that had not always delivered on their promise, the number one and number three players were coming together to form a formidable market competitor. The ultimate goal, as set forth by the new USA CEO, was simple: he wanted this to be “the most boring merger ever.” In other words, a merger that draws no extra media attention.
The culture integration required to make this possible is no simple task under any conditions but is particularly challenging when the merged companies have long been fierce competitors.
A key success factor for this ‘boring’ merger was combining the sales organizations of the two entities. As the culture nerve center of the new company, it was crucial to get the sales teams ready to go to market as one. As two of the top players in their industry, the sales teams of each respective company had long viewed the other as their main competition. Now, they would be expected to work together as one team.
The goals for this culture integration were to:
- Gain market share; in true merger parlance, one and one needed to equal more than two, and growth in market share would be the ultimate result.
- Develop strong internal brand awareness and association of this newly formed organization.
- Within the new sales organization, rapidly build the capabilities of the new sales team – enabling the whole team to represent the products of both legacy organizations under the new brand.
- Increase shelf space in brick and mortar stores and a deeper share of e-commerce volumes and partnerships. Going from two companies to one could mean reduced shelf space overall. The new brand needed to grow the amount of space they secured in brick-and-mortar stores.
- Create sales efficiencies. Each organization had its own tools, systems, and processes. They needed to identify which were the best and scale those across the new organization – and to get everyone bought into changing the way they’ve done things.
Kotter’s first step was to align senior leaders around their goals. While the integration itself was a fairly obvious goal, the more pressing question that needed to be addressed was what the merger would result in: what is the unique opportunity present right now that this merger is seeking to capitalize on and achieve? Once the leaders were aligned on their vision of the future, it was time to share that with the sales organization to get everyone fully behind the changes that would emerge. A team of 40 volunteers led the charge. They worked to build a Sense of Urgency – getting the whole sales team (and supporting functions) behind the shared purpose and excited to work under this new brand. Through strong communication (which included active listening to recommendations and concerns) and calling for new ideas, they built the movement for change within the organization.
With urgency for change built, they continued to charge toward the merger go-live date. Teams of volunteers tackled projects ranging from ensuring that critical systems went live on time, to creating holiday campaigns to accelerate sales. One team focused purely on training and upskilling so that when new systems were live, everyone was ready to hit the ground running. Another team found a way to make new products top sellers by utilizing the power of social media to build buzz and excitement that translated into sales. A third team, leveraging data and analytics in a new way, identified sales windows that had previously been ignored, generating sales and outmaneuvering the competition.
The results speak for themselves. In terms of “the most “boring merger”, this highly complex culture integration was completed on time and on schedule. Teams successfully integrated new sales and IT tools, and core operations functions, and built a culture of innovation and collaboration at the same time. The impact was realized when they succeeded in expanding their presence on store shelves and grew their combined market share.
Culture is increasingly playing a role in acquisition conversations – rightly so, as deals are largely an acquisition of capabilities. Yet in too many cases, culture is an afterthought – not borne of intentionality. The data is clear that successful culture integration is one of the most essential drivers of value realization post-merger. It was by staying laser-focused on the people dimension of the integration that these two organizations achieved what most deals aspire to, but rarely achieve a merger where the sum is greater than the parts.