Business Partnerships: How Conflicting Cultures Can Hamper Success
One of the enjoyable components of advising organizations is observing meetings. Unfortunately, some of the most painful experiences occur there as well. This morning was more the later.
Regrouping in the breakroom, I filled my coffee cup as Phil boiled water for tea. “Thoughts?” I asked.
“Ketchup and pancakes,” he replied.
I couldn’t have agreed more.
We know that some things are simply compimentary – like ketchup on a plain hot dog and bun – or pancakes and… well pretty much any other breakfast item.
But despite their favorable complimentary qualities, when combined, it makes for a pretty disgusting breakfast.
We Can’t Emphasize Values Enough
Like individuals, organizations have certain values that dictate their direction and success. When compatible organizations work together, it’s like adding the ketchup or the pancakes – they naturally compliment the meal. But if these companies’ abilities match but values radically differ… it’s all ketchup and pancakes.
Unfortunately, organizational culture is often overlooked during the partnership hunt. Consequently, potential conflicts aren’t discovered until it’s too late. Soon, any cost advantages become lost in a sea of differing expectations and methodologies. By taking a prospective partner’s culture in mind, businesses increase their chances of a successful, productive relationship.
It’s unrealistic to expect two corporate cultures to be identical, but similarities do exist. Organizations tend to favor certain general values and approaches and to be succssfully complimentary, these beliefs must approach one another. When they don’t, you have to ask yourself why these businesses are getting together in the first place – and experience says the answer to this question is likely “money.”
Since we’re on the subject, let’s make one distinction here: all businesses exist to make money (to imagine anything else seems painfully silly). But the purpose or “mission” of an organization is something else – the reason you’re doing the things you’re doing.
Mission sets the direction, aligns the workforce, and focuses decision-making.
Partnering, merging, or aligning businesses for the sole purpose of “making more money” userps this mission. Success is no longer be based on innovation, disruption, service, or any other ideal that may have previously been included in the mission. In fact, by definition, the only metric in “making more money” is money itself (although some might use earnings per share, sales revenue, or sales growth).
For instance, let’s say company “A” primarily cares about efficiency and cost-cutting. Ideally, this leads to higher short-term earnings, but at the expense of projects aimed at building long-term value. On the other hand, company “B” is more value-focused, emphasizing innovation, brand and customer loyalty. Both approaches are perfectly viable, but what would happen if the earning-focused company “A” acquires the value-centered company “B?”
Suddenly, company “A” wants company “B” to improve efficiency and reduce expenses. Meanwhile, the mission of company “B” has changed and they may resent the effect that these new demands have. As the parameters governing “B’s” business change, so too will it’s culture. As glaringing obvious as this mission friction may be, let’s now change the relationship of company “A” and “B” to make it more subtle (and also more common).
What might the effect be if the cost-focused company “A” hires the employee-centered company “B” to handle IT or outsourced customer care?
Again, to be judged successful company “A” wants company “B” to improve efficiency and reduce expenses. Similarly, company “B” may resents the effect that these new demands have on their ideas, programs, and employees. In the end, both bottom line’s are at risk – but the sparks of this mission friction (the symptoms that we can witnesss) are heightened demands and management oversight from “A” and increased turnover, reduced productivity, and deadline misses in “B.”
Ultimately, both parties will be faced with a choice to either terminate the relationship or deal with the symptoms of an endless cultural tug-of-war.
It’s simply not enough to partner with organizations that are regarded as profficient or labeled as industry leaders. In order to ensure a smooth partnership, the cultural match sould not be ignored. Ask questions like “what are our long term goals and how do we plan to achieve them?” “What makes our employees happy?” “How do our mission, vision and values coincide or differ?” Once both sides have an idea of how well they “fit”, the potential for friction is dramatically reduced.
Just like individuals, organizations who fail to consider cultural compatibility will eventually collide with each other. Partner- or vendor-audits may be a proactive approach to greatly improving the potential for solid, amicable and profitable partnerships… and avoiding the proverbial breakfast of ketchup and pancakes.
What are you doing to attract “A” Players? Share in the comments below.