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Monday, 3 January 2011

One Size Fits All? Not Always, It Doesn't!

Good to be back after the extended Christmas holiday.  Now is that time of the year when the newspapers review the past year (as well as making relentlessly gloomy predictions for the coming year) and the consensus seems to be that the turmoil in the Euro was the defining event of 2010.

Starting with Greece and followed by Ireland with Portugal and Spain on the edge, generated a great deal of discussion as to whether this marks the end of the Euro, the end of the Eurozone as currently structured, and even the end of the European Union.

This is not intended to be either political or economic comment, rather a look as to the reasons for the strange imbalance in the way that countries run, and it all comes down to the inherent national culture.

Is it coincidence that the problems have largely centred in the Southern Europe/Mediterranean countries while the Northern European countries, while still having their problems, seem to be taking the right actions to correct the situation?

Cultures in all these countries vary massively.  Without going into detail, attitudes in Germany and Holland, for instance, are not the same as those in Italy or Greece, implying that the "one size fits all" approach doesn't always apply on a macro scale

So what does that mean on a micro, or company basis?   Again, each individual company has its own culture, either formally or by default.  There are very few reasons to applaud top down management but in this case it is essential.  Unless the culture of a company is clearly defined, frequently articulated and driven from the top down, the default mode takes over.  It is one of the main functions of management to make certain that the culture is appropriate to the purpose of the business.

Vistage speaker, Walt Sutton, says that one of the nine primary functions of the leader in a business is to "build a society and define the seasons".  He explains this as making sure that you have the right people "on the bus" and defining how all the people should want to behave, in other words, within the culture of the business.

That having been said, each individual company has its own culture and each is probably different from the next company.  Ideally it is good to deal with customers and suppliers who have largely the attitudes and general approach and this can happen through an osmotic process.

The problems can arise in a merger (a synonym for acquisition) situation.  Again the "one size fits all" is more often than not a triumph of hope over realism.  another Vistage speaker, Barrie Pearson, who ran what he called a corporate finance boutique, said that "50% of all acquisitions fail and half of the rest are not successful".  Why?  Because insufficient thought has been devoted to the variables in the cultures in the two businesses.

One of my members told me that when he considers an acquisition, the due diligence process, as well as covering the obvious functions such as finance, operations and sales, makes a specific objective to define the culture of the business and to assess its possible effect on the joint company.

The counter argument to all this?   Take a look at one of the brilliant RSA Animation series on YouTube called "The Empathic Civilisation".   Because of the extraordinary growth in social media it suggests that individual national and lesser cultures will be subordinated to a sort of benign mob rule, with initiatives starting and developing outside formal channels.  Perhaps this is already happening to some extent and it may well grow exponentially like its carrier.  Please note, Facebook has just been valued at $50bn which is substantially greater than the GDP of many a country.

Whatever happens in the future, businesses still need to consider their own culture and make certain that it doesn't just happen by default.  Define the seasons and make sure that you build a society that will take you and the company forward.

I wish you all a very happy, joyful, peaceful, healthy and successful New Year.

For further information visit www.vistage.co.uk and www.maa-uk.co.uk
For further information, email to ivan.goldberg@vistage.co.uk

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