ORGANIZATIONAL CULTURE Organizational Culture and Leadership, 3rd Edition

THE LEARNING CULTURE AND THE LEARNING LEADER 411Leadership and Culture in Mergers and AcquisitionsWhen the management of a company decides to merge with or acquireanother company, it usually makes careful checks of the financialstrength, market position, management strength, and variousother concrete aspects pertaining to the health of the other company.Rarely checked, however, are those aspects that might beconsidered cultural: the philosophy or style of the company, itstechnological origins, its structure, and its ways of operating—all ofwhich may provide clues as to its basic assumptions about its missionand its future. Yet if culture determines and limits strategy, acultural mismatch in an acquisition or merger is as great a risk as afinancial, product, or market mismatch (Buono and Bowditch,1989; COS, 1990; McManus and Hergert, 1988).For example, at one point in its history General Foods (GF)purchased Burger Chef, a successful chain of hamburger restaurants;but despite ten years of concerted effort, GF could not make theacquisition profitable. First of all, GF did not anticipate that manyof the best Burger Chef managers would leave because they did notlike the GF philosophy. Then, instead of hiring new managers withexperience in the fast-food business, GF assigned some of its ownmanagers to run the new business. This was its second mistake,since these managers did not understand the technology of the fastfoodbusiness and hence were unable to utilize many of the marketingtechniques that had proved effective in the parent company.Third, GF imposed many of the control systems and proceduresthat had historically proved useful for it; these drove the chain’soperating costs up too high. The parent company’s managers foundthat they could never completely understand franchise operationsand hence could not get a feel for what it would take to run thatkind of business profitably. Eventually GF sold Burger Chef, havinglost many millions of dollars over the course of a decade.Another example highlights the clash of two sets of assumptionsabout authority. A first-generation company, run by a founderwho injected strong beliefs that one succeeds by stimulating initiativeand egalitarianism, was bought by another first-generation