Emerging Markets Business Summer 2016 | Page 80

Organizational CULTURE – OFTEN INVALID? BY RICHARD D. LEWIS S  ince the turn of the century, mergers and acquisitions (M&As) have grown apace, with bigger and bigger companies demonstrating appetite for growth. Even names like Jaguar, Nokia and Alcatel have been swallowed up. Survival of the fittest (or biggest) seems to be the order of the day. In the midst of such transformation, the organization or reorganization of the companies involved is a subject of great importance, which becomes apparent in the face of a striking reality: according to multiple research studies, more than 50% of international M&As are said to have failed, with lack of cultural understanding one of the root causes. BEWARE THE ANGLO-SAXON BIAS In this era of vigorous globalization of business, it is not surprising that organizational culture has become a buzz word, enkindling a vast amount of literature that attempts to describe and define it. In the references section of his admirable book, Organisational Culture and Leadership, Edgar H. Schein lists 237 books and papers written between the years 1950 and 2010, of which 107 were published in the 1990s and the 21st century. Almost all of these works are of Anglo-Saxon authorship, reflecting the wider reality of literature on the topic. Schein and others have confronted and analyzed a plethora of issues that affect a company in transition, and much of the resulting literature offers a series of possible solutions and not infrequent recommendations surrounding such issues. The issues presented are ones that normally arise (though not only) in an Anglo-Saxon environment and consequently are discussed, usually in the English language, from an Anglo-Saxon perspective. In the opinion of this writer, such a perspective is invalid when a strong non-Anglo culture is involved, particularly in an M&A situation, where transformative measures encounter reluctant or negative acceptance. Given the current and future economic preponderance of China, India, Japan, Germany and possibly South America, one has to take into consideration that existing organizational culture precepts are often non-applicable, even meaningless, in cultures comprising four-fifths of humanity. 78  Emerging Markets Business  Summer 2016 • Issue No. 1 The case of Daimler-Chrysler has perhaps been the most spectacular amongst these failures, rivaled by Walmart’s misfortunes in East Asia and Germany. Then there are deals that don’t even get off the starting blocks. The unsuccessful US$35 billion merger between US and French marketing and communications powerhouses, Omnicom and Publicis, has been one of the highest profile cases in recent years, but the list is long. Of course, many different factors led to the demise of these cross-border deals, but decades of experience have taught me that companies overlook culture at their peril. For international M&As to succeed where others have failed, companies must understand that organizational culture procedure is, by necessity, a two-phase operation. Phase one is the analysis and (attempted) alignment of both companies’ national characteristics, while phase two is the organization of this alignment. It is during the latter phase that the seeds of failure take root. Thinkers in the field have not failed to take into account the influence of national characteristics in multinational business. In fact, literature on the topic is extensive. However, they tend to adopt a distinctly Anglo-Saxon perspective, and the often cursory manner in which national traits are mentioned suggests they are grossly underestimated by writers with only second-hand experience of cultures other than their own. In my case, over the course of many years, I have worked in American, French, Finnish, Portuguese, and German companies, along with a dozen more dealing with major firms in Sweden, Spain, Italy, Brazil, Denmark and the United Arab Emirates. With the US counting amongst the few