The adage that “the only constant is change” is certainly true today. Acquisitions, mergers, global trade alliances, and consolidation are all creating a “culture of change.”
During my time at Walmart, we are most often remembered for rapidly expanding the Supercenter format. But it was also an era of significant acquisition. During that time, Walmart acquired Woolco Canada; Cifra in Mexico; Metro Germany; ASDA in the United King-dom; Seiyu in Japan; and operations in Indonesia, South Korea, and India. Some of these acquisitions went well. Others, not so much. And while there are many things that go into managing organizational change, three areas should be given careful consideration to provide the best chance of success.
Systems – It’s probably an understatement to say we are ‘slaves of technology.’ A former Walmart CEO is quoted as saying “…in the future, the only sustainable business advantage is SPEED” and in today’s world of shopping options, this has never been more true. The ability and necessity of managing and integrating information systems has never been more critical, and this is particularly challenging when combining two very different companies. The solution is crafting a robust transition plan, with outside help if needed, to manage systems and integration.
People – If you have never been a part of an acquisition or merger, you can’t appreciate how it affects those involved. It’s no secret duplication must be eliminated, especially labor for an effective return on investment. Walmart’s recent purchase of online shopping service Jet.com illustrates how this can occur at both companies, with a significant shakeup of senior management. So it’s not only the rank-and-file who are affected, but even the corner office.
The key tool in managing this transition is communication, as it becomes a very personal, individualistic experience for employees. In this instance, having a plan is not enough, outlining how information will be communicated is essential to managing change.
Culture – It’s difficult to think about a business as a living organism, but it really is. Each company has a culture unique unto itself. The older the company, the more ingrained the culture. This became very clear with Walmart’s acquisition of ASDA. The two companies were similar in many ways, but their cultures were very different. The same was true when Safeway acquired Dominick’s or Albertsons and SuperValu merged.
The Walmart/ASDA union had many examples of culture clash, from attire (blue jeans vs. Oxford shirts) and language (colloquial American English vs. ‘the King’s English’) to management style (Walmart’s ‘bottom up’ approach vs. ASDA’s ‘top down’). Walmart execs were certain they could teach ASDA leaders how to retail general merchandise; ASDA leaders were certain they could teach Walmart execs how to retail food. Fortunately for both companies, the Atlantic Ocean provided a buffer zone, or the entire deal could have been a disaster.
The adage that “the only constant is change” is certainly true today. Acquisitions, mergers, global trade alliances, and consolidation are all creating a “culture of change.”
During my time at Walmart, we are most often remembered for rapidly expanding the Supercenter format. But it was also an era of significant acquisition. During that time, Walmart acquired Woolco Canada; Cifra in Mexico; Metro Germany; ASDA in the United King-dom; Seiyu in Japan; and operations in Indonesia, South Korea, and India. Some of these acquisitions went well. Others, not so much. And while there are many things that go into managing organizational change, three areas should be given careful consideration to provide the best chance of success.
Systems – It’s probably an understatement to say we are ‘slaves of technology.’ A former Walmart CEO is quoted as saying “…in the future, the only sustainable business advantage is SPEED” and in today’s world of shopping options, this has never been more true. The ability and necessity of managing and integrating information systems has never been more critical, and this is particularly challenging when combining two very different companies. The solution is crafting a robust transition plan, with outside help if needed, to manage systems and integration.
People – If you have never been a part of an acquisition or merger, you can’t appreciate how it affects those involved. It’s no secret duplication must be eliminated, especially labor for an effective return on investment. Walmart’s recent purchase of online shopping service Jet.com illustrates how this can occur at both companies, with a significant shakeup of senior management. So it’s not only the rank-and-file who are affected, but even the corner office.
The key tool in managing this transition is communication, as it becomes a very personal, individualistic experience for employees. In this instance, having a plan is not enough, outlining how information will be communicated is essential to managing change.
Culture – It’s difficult to think about a business as a living organism, but it really is. Each company has a culture unique unto itself. The older the company, the more ingrained the culture. This became very clear with Walmart’s acquisition of ASDA. The two companies were similar in many ways, but their cultures were very different. The same was true when Safeway acquired Dominick’s or Albertsons and SuperValu merged.
The Walmart/ASDA union had many examples of culture clash, from attire (blue jeans vs. Oxford shirts) and language (colloquial American English vs. ‘the King’s English’) to management style (Walmart’s ‘bottom up’ approach vs. ASDA’s ‘top down’). Walmart execs were certain they could teach ASDA leaders how to retail general merchandise; ASDA leaders were certain they could teach Walmart execs how to retail food. Fortunately for both companies, the Atlantic Ocean provided a buffer zone, or the entire deal could have been a disaster.
Managing the convergence of two very distinct cultures is up to senior leadership—to do this well, there must be tremendous sensitivity. And while one might think this would only be the responsibility of the acquirer, the target firm can have a significant, positive impact on the culture of the other.
There’s another adage that says “you can’t create culture, but you can identify it,” and this is only partially true. Effective leaders establish the key principles that drive a company’s decision processes, but the ability to express these principles in simple, easily understood language goes a long way in helping to build and sustain a healthy company culture.
Of course, there are many other things that need to be managed in a “change environment,” but if you can work effectively on the three areas highlighted above, you have a better-than-even chance of an effective transition.
