Question: Are micro-cultures in one organization a bad thing?

I work for a diversified group (which started as a manufacturing company). It has grown over last three decades both organically and through several, mostly profitable, acquisitions.

Many of us veterans, look to our manufacturing genes, and the high-product quality culture as something that defines us. But recent unrelated acquisitions in banking and media may need us to redefine our values in a broader sense.

Or is this something best left to individual businesses?

8 Expert Insights

My experience suggests that there are usually some essential central cultural standards, stories, and themes that need to be understood and absorbed across all of the businesses.  At the same time, some of the cultural strengths of the acquisitions could be energizing and provide needed new perspectives to your manufacturing genes.  For instance, my friend, Bob Chapman, CEO of Barry Wehmiller Companies, is an advocate of lean+people-centric leadership.  The hybrid is enormously successful for them (with more than 60 acquisitions) and informs their 100 year old manufacturing culture to great organizational and financial benefit.

A terrible percentage of mergers and acquisitions fail specifically because they couldn't merge their cultures successfully.  In all of the M&A culture work I've done, the parent firm says all the right things about learning from their acquistions, but nearly always moves immediately to erase anything that doesn't fit the old mold.  It's truly rare that they actually sit down and perform a joint strengths analysis that engages both groups and develops a new concensus  about their combined strengths, their aims and crafts interactive agreements for how they will go forward.  

Without that kind of explicit, open analysis, visioning, and ground rules, you generally end up with covert resistance, toxic politics, and even sabotage of corporate initiatives.  You lose great people who are looking for healthier working environments and transparent functioning, and the much-touted advantages of the merger fall far short of the hype AND the potential.

So, I suggest that you engage in the kind of joint examination of cultures and visions that can net you the best general concensus on what everyone really needs and will thrive under.  In this process, you can focus on the most powerful positive gifts of the players, harnessed for a common goal, including, as needed, different flavors of the new combined culture in your different businesses.

Since your one organization is a diversified group with at least manufacturing, banking, and media components, it is unlikely that a single strategy could serve to define it. GE, on the other hand, with its consumer appliances, jet engines, medical imaging, and capital management is well known for its organizational capability in leadership. So it is certainly possible to define capabilities/values that transcend different businesses.

All organizations vary in their core process of value creation, i.e. the business they are in, yet they all require talent management, information management, change management, etc. It comes down to making a choice: Completely autonomous business units or some degree of centralized resources in common business support services. Regardless, the diversified group could define a common thread based on values/capabilities such as quality, accountability, leadership.

A terrific question and very much worth pondering as an organization.  I applaud that you recognize this as something to consider and address.

In responding, my comments presume certain things:

1. the more recent acquisitions that have taken the company into different arenas representing diversification from your original manufacturing roots were all done for good reason.  The fact that acquisitions have been 'mostly' profitable seem to justify the decisions that have been made.

2. Presuming that the group of which you are a part of is the one that oversees all of the diversified businesses, it is very important that this full leadership team understand, embrace and endorse the direction that the company is moving.  This is necessary in order for this group to be able to continue to effectively oversee the organization.  

The ongoing success of the company requires that those leading it be willing to change as the world in which they operate changes.  When individuals work to hold on to yesterday because those were the 'good old days' where they have the experience and success ...  and resist the change because it's unfamiliar or perhaps takes the organization into unfamiliar territory, they really either cease or greatly diminish their ability to be effective in their role.  Although each individual business might well deal with the issues you raise in greater detail, it is both mandatory and very important that the senior oversight team to be completely behind that business as its' success feeds into the success of the parent company.

Although this suggestion might appear self-serving to the coaching profession, this circumstance is an ideal candidate to work through this being facilitated by a coach.  It will help to create the solid and strong foundation on which the company will continue to evolve as led by one only attached to achieving agreement and clarification of the vision toward which it strives to achieve.

I admit to having used such a strategy, back in the day, when I was promoted to run a department that was both negatively viewed and non-core to the business.

Although the larger culture was very "performance" focused, I asked my staff to adopt a "let's be so good that no one notices" mantra so we could work "under the radar" on some basic improvements and lessen the unwanted attention -- which they embraced because they were tired of all the blame.  

As routine processes became increasingly consistent, I added core-business elements to our focus:

     • Empowering low level employees to ask internal customers for the "business justification" of their requests significantly reduce our workload -- and costs -- and improved staff's morale and business-like focus.

     • I made each employee responsible for providing feedback from internal and external customers about new product and service ideas....and then taught those employees how to write (and present up the chain) cogent, compelling business cases for the good ones.

     • In our annual budget process, I insisted that my managers differentiate between what we wanted and what we truly needed, simplifying my upstream negotiations, and greatly facilitating additional funding requests throughout the year.

     • When a 10% company-wide budget reduction was requested, we demonstrated how we could better improve the company's bottom line by INCREASING our spending -- and got approval to do so.

     • I also regularly invited senior leaders, including the president, to attend my staff meetings, giving us great insight into their priorities, concerns, and upcoming initiatives -- and how best we might support them.  

So, ironically, it was through sub-optimization that we became more integrated into the core business than hoped for. And while, admittedly, this is more anecdotal than Best Practices, sometimes it just is what it is!

Happy to talk  more with you if it would help.

Being inclusive is always of occurs to me that your question is really one for key stakeholders to answer along with questions about the ramifications of what changing the value set would have on the business. Perhaps a conference of the key players about this would be useful.

I particularly noted this about your question:  "high-product quality culture as something that defines us"   As I read this I see no divergence in the other business from that core value, media, manufacturing, IT, fill in the blank about the industry and it's the same...they are all focused on high product quality cultures if they're worth their salt, it's only the expression of how that value shows itself through services and products that varies...

I am always a proponent of aligned cultures.  Establishing a set of values for the broader concern then allows for a "trickle down" to the individual businesses.  Even though each company in the group may be unique in service, product, and/or operation, they are all "related".  Core values at the group level provide a set of criteria against which decisions are made at the group and business unit level.  Each unit may benefit from adding one or two, as their business dictates.  But the alignment of values comes from the top.

Culture defines the organization and the people who work in it.  If the organization has a centralized leadership team and governance, sense of a unified culture at the broad level is important for the brand, e.g. as you reference high product quality culture.  In a more decentralized structure or holding company environment, individual cultures by entity or business may be critical to effectiveness and identity.  There are always micro-cultures that influence production, as based on region, business unit, team.  'Glocal' may be a useful way to consider establishing culture.  Global or big picture perspective at the top with local or at the unit level execution of process.

Merging companies means merging cultures. Strengths of both cultures can survive IF there's a conversation that enables that to happen. It won't just happen.

Values are performance drivers and loaded with emotions. Learn more:

The power of having "shared values" is an important part of that merging of cultures. Everyone in the org, regardless of role, function or which culture/co. they came from, uses those values to guide decisions and behavior. The  values of the org need to be 1 set. The individual business groups (these may be the micro-cultures mentioned in the question) may have particular ways they express those values, however, those individual expressions need to be aligned with the whole or you'll end up with fiefdoms and lower trust, etc.

I recommend the leaders of the different groups align on the values, then have a series of conversations with everyone in company about the values, and what they mean. You must talk about the behaviors and meaning, not just toss some words like "high quality", "integrity" up on the wall.

Once org values are declared, then the individual leader's/ manager's job is to help their people align their individual values with the orgs.  if there's a huge disconnect, don't overlook it. It may be time for someone to exit the org.

Ensuring that values are honored is not a 'one time and done' task so create an ongoing structure and commitment to review, recalibrate and celebrate.