Eliciting Excellence

Why Culture Matters in the Alaska/Virgin Merger, and at Your Company…

(This article originally appeared in the Portland Business Journal.)

The recent announcement of the pending acquisition of Virgin America by Alaska Air raises some interesting issues.

On one hand, the acquisition makes sense strategically. But on the other hand, the leverage gained by the deal will only be realized if the two organizations can successfully be brought together culturally.

Merging or acquiring companies comes with a number of inherent challenges — new procedures, new systems, and new personnel. But the biggest challenge is melding the two cultures with one another. It’s not that one company’s culture is great while the other’s is poor — that’s rarely the case.

Generally both are good, but different.

A failure to successfully forge a new culture is the main reason mergers/acquisitions often fail to produce the desired leverage, and whether the merging of cultures is successful or not is dependent upon how well the leadership presents and establishes that new culture.

The challenge is that in times of change when people already feel they have no say, a command/control style of leadership is counterproductive. But so is a leadership style which seeks to build consensus. In a merger/acquisition, people are already suspicious and anxious. They already feel dictated to and somewhat helpless.

In order for leaders to establish a new culture they must gain buy-in through collaboration and ensuring alignment. Leaders must go out of their way to demonstrate integrity, earn the trust of those around them and show respect for all involved.

This process of crafting a new culture begins with defining that culture. Although most people consider organizational culture to be the values and behaviors a company aspires to, that’s not quite true. The truth is that a company’s culture is defined by the values and behaviors a company tolerates. And the leaders of an organization are the ones who do the tolerating. Culture is determined by the leaders.

In order to establish a culture, there must first be clarity around the values and behaviors which guide the organization. Too often, those values and behaviors exist by default rather than by design.

To start with, the leaders must identify the values and behaviors they want to be known for. We often operate on autopilot – acting and reacting out of habit rather than with intent. It requires self-examination with respect to how we act and interact in order to identify the values we embody. Once those values and behaviors have been identified, the real work begins.

A culture becomes established not when it is defined but rather by how the leaders live those values and behaviors.

Leaders must be especially diligent during these times to “walk the talk” and truly live the culture. In order to be as persuasive and as influential as possible, they must firmly establish themselves as having high integrity. Leaders who proclaim one set of values but behave in a different manner, belie those values and demonstrate a lack of integrity and demonstrate a different culture.

Likewise, if the leaders tolerate behaviors by others which are at odds with the stated culture, they also demonstrate a lack of integrity and a different culture.

It’s crucial for the leaders in a merger/acquisition to build trust and respect. It becomes critical to reassure each “side” of the company that the new culture is healthy and supportive of all involved.