Retail mergers and acquisitions are happening at a fast pace in 2017 and predictions indicate that pace will not slow down. Many of the acquisitions include large companies swallowing up smaller, more innovative organizations, such as Walmart acquiring Modcloth, Moosejaw and Jet.com. But do these large companies intend to swallow up the innovative culture that has made these unique retailers so successful? In a recent Editor’s Perspective, Retail TouchPoints Executive Editor Adam Blair outlined the culture clash that could impact innovation and employee motivation.
The RTP discusses what companies such as Walmart can and should do to ensure they are not breaking down innovative cultures that helped their newly acquired businesses to succeed?
Debbie Hauss, Editor-in-Chief: Merging cultures, business practices and groups of employees is a very sensitive subject, that can destroy a potentially great partnership quicker than company decision-makers might realize. And it’s definitely a top-of-mind topic for many executives. When searching “best way to merge two company cultures” on Google, close to 56 million results came up. In a Bain & Co. article, the firm reported that “culture clash” is the “No. 1 reason for a deal’s failure to achieve the promised value.” One of the primary strategies for a successful merger of cultures is to “diagnose the differences that matter,” the article explained. While that may sound like a difficult challenge, a lot of the recommendations focus on just talking to key stakeholders, including management, customers and employees. Video and audio recordings of employees “doing their jobs” also can be helpful for a meaningful comparison. The bottom line, though, may be making sure the management team makes culture integration a priority.
Alicia Esposito, Content Strategist: Before merger/acquisition discussions can even take place, both parties need to ensure it makes sense for everyone. How do your target audiences align? How will your businesses complement or augment each other? What support with the acquiring company provide to help the acquired company grow and evolve? However, there too needs to be a conversation around how an acquisition will be perceived by the customer base, and if any preliminary work or messaging alignment needs to take place. For example, I know a lot of my friends (and many media outlets) were upset by Walmart’s acquisition of ModCloth. The quirky online-only retailer established itself as a feminist brand, one that created products and marketing that supported an inclusive and empowering message for women of all ages, shapes and sizes. Given Walmart’s less-than-stellar track record of equal pay and employment opportunities, many consumers saw this as ModCloth going against its culture and core beliefs. Would some up-front planning prevent this negative backlash? It’s hard to say. But at least all parties would be completely aligned on how to address these situations and ensure all consumers that ModCloth would not depart from the values that made it so loved in the first place.
Advertisement
Glenn Taylor, Senior Editor: It’s amazing that with all the research materials at retailers’ disposal that there are still those that will go about purchasing another company that doesn’t fit. It’s one thing if the acquirer is buying a company that is a reclamation project of sorts and is being held back by culture, but it’s another where it’s clear that the culture is a driving force of the success in the first place. Too many times we see situations where a square peg just doesn’t fit into a round hole. Upon bringing aboard another retailer, there has to be some kind of survey/screening process regarding post-merger expectations from these employees. After all, if you’re looking to pick the brain of your newest set of employees, you would want them to remain part of the team going forward. There also can’t be any surprises either. Both companies have to lay out a strict set of goals/strategies in place that define the direction of the M&A going ahead. That way, if there are issues related, the companies can at least have a concrete area to start discussion.
Klaudia Tirico, Features Editor: I view mergers/acquisitions like a view a marriage, and in my opinion, two key components of a successful marriage (or relationship for that matter) are communication and compromise. These “two Cs” make sense for mergers, as well. Like some of my colleagues already pointed out, having conversations about expectations, realities, pros and cons is a must. I also believe it should go beyond the C-suite and to the employee level, as well. For example, sending out a survey to employees about what they like and dislike about the company’s culture to be able to keep them happy post-merger. And let’s face it, no business or personal relationship will work without compromise. We can’t always get what we want, but being able to meet half way is sure to make all parties involved feel like their opinions, wants and needs matter. Finally, as the Walmart/Jet.com “happy hour” situation exemplifies, nothing is ever set in stone, and if a majority of employees are not happy with a certain decision, there’s always an opportunity to tweak the rules. Like the late (and great) Aaliyah once sang, “If at first you don’t succeed, dust yourself off and try again.”
Matt Halchak, Editorial Intern: As with all things, communication is key in the process of merging. If giants like Walmart with established corporate cultures and expectations plan to acquire smaller companies or “trendier” start-ups, both sides must be prepared to be open and upfront about their priorities from the start. It is evident from the Jet.com/Walmart example that both CEOs were aware of the potential for a culture clash, but failed to identify a potential issue until after employees expressed their dissatisfaction. (That being said, Walmart demonstrated great flexibility in reversing its original decision). It is imperative that companies begin this process of communication before the acquisition or merger, rather than after, to avoid abrupt culture shocks that could complicate relationships. Beyond company-to-company communication, leaders must also be sure to communicate to their own employees to prepare them for any potential changes.
