I’ve previously discussed change management failure and how you can manage change through the merger of different corporate cultures. To balance the perspective, in this article I look at a merger that has been incredibly successful, despite the large organisational change and cultural differences of the two firms.
An animated merger avoiding change management failure
Disney had long coveted Pixar before any merger took place. The two organisations entered a production agreement which led to films such as “Monsters Inc”: Disney put up the money and helped distribute, while Pixar provided creativity. But then CEO of Pixar, Steve Jobs, clashed with Disney’s Michael D Eisner, and the joint venture game was called off.
It took three years for a merger to come back to the table, and then only when Eisner had been replaced by Bob Iger. Iger was more amenable to the Pixar powers. He had been through two mergers at ABC Network, and was able to talk lucidly about the problems and opportunities of a merger. Above all else, Iger was aware of the problems that the different corporate cultures might cause.
Manage change through suits vs. slacks
The stiffer, more ‘business like’ approach of Disney flew in the face of the relaxed atmosphere and t-shirt and slacks approach of Pixar’s executives. Where most mergers are dictated by the dominant force, Iger was more willing to accept the culture of Pixar as part of its strength. He immediately agreed to some ‘immovable’ requests. For example, Pixar employees kept their fantastic health benefits and weren’t forced to sign contracts of employment.
Disney made a whole ream of promises to Pixar. A year after the merger was sealed, Pixar executives reviewed that list, and found every single promise had been kept. With trust confirmed, Pixar became more open to doing certain things the Disney way.
Corporate culture remaining intact
Disney didn’t seek to destroy Pixar. It didn’t want to consume Pixar’s advantage. It allowed the Pixar name to remain (even on the gates to its headquarters), didn’t insist that telephone operators ended calls with the farewell “Have a magical day”, and never changed employees’ email addresses. In short, Pixar and its employees were able to maintain their own identity within the enlarged group. Executives were able to wear their slacks, though corporate duties did increase.
In return, and in time, Disney encouraged Pixar to alter some of its ways. Pixar had, before the merger, only released one film a year and balked at the idea of sequels: it said sequels destroyed the creative process. Within a couple of years, Pixar’s executives had begun sanctioning the release of sequels and more than one film each year.
Utilising merged strengths
In any merger situation, it’s natural for employees of the acquired company to feel nervous. It’s natural for them to wait for the inevitable: a dictatorial changing of the guard and new working practices forced upon them. Disney did something almost unheard of: it asked Pixar to show it how things should be done.
Senior Pixar talent was asked by Iger to examine and improve underperforming Disney divisions. He had bought a people business and was determined to use it to its best advantage. Pixar was asked to turn around a poor storied animation department, and create a new focus for computer generated animation.
In return, Disney has taken Pixar blockbusters, like “Cars”, and created a global phenomenon. No longer are Pixar winners created, aired, and forgotten. “Cars” has a major following around the world, and toys, books, and other spin-off products have added billions to sales.
What was once considered a high price to pay is fast becoming a bargain. All because executives were able to manage change and merge corporate cultures.
Benefitting from a merger of corporate cultures
In my last article, I wrote about the five things to do to manage change and different corporate cultures. Disney, and Pixar, did everything right:
- Each company highlighted their own values
- They approached the merger constructively, with Disney employing Pixar talent as it should be
- This helped to make sure that the best people stayed, as did Disney’s acceptance of Pixar employment conditions
- Both sets of executives and change leaders communicated effectively, helping to onboard key influencers
If you are about to enter into a merger situation, ensure you are prepared to accept there will be differences in corporate cultures, and understand that these differences can be a source of immense strength. Don’t do an AOL/ TimeWarner, but instead be animated like Disney/Pixar.