Confusions & acquisitions: post-merger culture shock and some remedies.

The acquisition had been a great strategic choice. A U.S.-owned Swedish group was bought by a young entrepreneurial French company, with exciting new prospects for the future. A wave of new French technology was set to flood formerly unhoped-for Scandinavian markets. The young, dynamic French management looked like the perfect foil for an experienced Swedish management team. An agreement to create a highly sophisticated research centre for R&D was a dazzling project for both sides. It seemed to both parties that developing a truly European strategy and structure was at last feasible.

On paper it had all seemed fine, yet why, two years on, did the bubble burst? Why had no one anticipated that the French and Swedes would not be able to work together to achieve their new and challenging goals? How did communication between the two cultures break down so rapidly?

The Swedes quickly perceived the French management as hierarchical and somewhat arrogant. The French, for their part, were exasperated by what they saw as the naive, cautious, weak-willed behaviour of the Swedes -- and yet both sides considered themselves "easy to work with."

At the same time language problems erupted. English had been used by both sides as the lingua franca, but as mastery of English varied enormously in both companies, communication was plagued with misunderstandings.

Administration became time-consuming. The French insisted on a great amount of detail, often with little justification or feedback, yet refused to acknowledge rules on employment conditions and trade union relations in Sweden. As delegation style on the Swedish side and hierarchy on the French clashed, contact with top management was blocked by middle-management and even secretaries for "political" motives.

Many Swedes simply could not adjust to the new circumstances: tight deadlines, work overload, insistent queries and criticism, exposure to formal social gatherings. Yet in contrast, the French were often "positive" about such challenges as: quick decisionmaking under pressure, exposure to criticism, competing for attention, reaching goals, overcoming social and business obstacles. They enjoyed analyzing, discussing, questioning and arguing, and found the Swedes lackluster by comparison.

Finally, the dream of new clients and product growth was jeopardized by what the Swedes saw as a nonchalance for the customer. Shocked and dismayed by uncooperative French attitudes towards service and individual customers, the Swedes began to fear that this might threaten relationships with existing and long-established Scandinavian customers.

Does any of this sound familiar? This case illustrates that while executives call in experts to analyze market, financial and industrial product compatibility, they don't examine corporate or national culture compatibility until disaster strikes. Lip-service is paid frequently to the importance of communication, but confusion and lack of information can breed the wildest rumours. Making the necessary, often tough "people decisions" ranks low on everyone's list of priorities at the outset.

Alliances are an excellent breeding ground for all sorts of mishaps, in particular where corporate and national cultures differ. Combining disparate cultures is a frustrating task, and further complicated when merging companies have been fierce competitors in preacquisition times.

But how surprising is this? How straightforward is the task of merging two very contrasting and conflicting management styles? How can national and corporate cultures be integrated when trying to merge a product-driven organization with a market-driven one? Or an organization with few hierarchical levels, where people are promoted in line with performance, with a formal many-tiered company where promotions are based more on seniority? Developing a communication and action plan to guide people through the change period is not always a number one priority.

There is, of course, no easy formula for neutralizing cultural differences and the frictions and misunderstandings they cause. But putting a name to this phenomenon can be the first step. "Post-alliance culture shock" is now recognized by an increasing number of executives, and has led to a move towards a bicultural audit as a way of tackling some of the crucial issues raised above.

The bicultural audit: Toward 'culture-bridging'

The bicultural audit approaches the resolution of post-alliance management problems by looking at how compatible organizational values, structure, management practices and information flow are with the international strategy. Once tackled, audit data give executives the opportunity to analyze the difficulties they face and to work at developing the management and communication tools they need to make their alliance a success. From our experience, the process works in three stages:

Culture gap identification

Using questionnaires, interviews and/or focus groups, run in the corresponding language of the participants, the initial audit phase identifies gaps in perception of vision, values, structure, management practices and behaviours.

Culture gap analysis

An analysis of these data highlights common points to build on and inconsistencies that might weaken the alliance. On the basis of these data, the management teams can begin the culture-bridging process.

Culture bridging

Work sessions with the team negotiate ways of bridging the gaps, to:

* Define an appropriate structure and plan for the reorganization;

* Identify appropriate management styles and plan their implementation;

* Reinforce internal communication;

* Get agreement on a shared list of values, expected behaviours and performance criteria that will serve as the basis for performance evaluation.

Alliances only succeed where new loyalties can be developed together. The price may be to give up a well-loved name, but the payoff can be an exciting new vision and set of opportunities both partners can commit to.

Possibly some marriages should never have been attempted in the first place. But even in the best of cases, in our experience, the three most important elements for maintaining morale and gaining commitment to the new organization are: creating the appropriate structure, reinforcing internal communication and managing cultural differences.

In the above case, the organization used a bicultural audit to help management teams focus on the future, articulate the new vision and work strategically towards achieving some, if not all, of the ambitions that tempted them into the venture at the outset. More and more international managers are beginning to realize that investing time in communicating across cultures and building bicultural teams around shared objectives goes a long way to minimizing the dramas of such "Confusions and Acquisitions."

Marc Raynaud (France) is a partner and Michael Teasdale (U.S.) a senior consultant with Inter Cultural Management Associates (ICM). ICM is a Paris-based consultancy, which since 1983 has been helping organizations manage change in an international context.