The Need for Speed, or Process is Cultural: Part One

by Lisa DeWaard, Ph.D.

It’s common knowledge that we like speed in the United States. We want to see increases in our bottom lines quarter over quarter, not year over year. Sales professionals frequently quote the slogan “A.B.C.: Always be Closing.” We praise those who can close deals quickly. And our focus on “the win” in all facets of life is a well-documented cultural trait. We like our personal lives to be kept separate from our work lives so much so that we often say “it’s just business, it’s not personal” or “we just have to work together, we don’t have to like each other” to keep things moving along. We consider ourselves flexible but don’t like missed deadlines or changes to timelines. The goal drives us. And a “good process” is one that keeps things moving forward at a rapid, consistent pace. We also like a largely experimental approach: let’s try out an idea, if it works, let’s keep it. If it doesn’t, let’s adjust it and try again. This is not an exhaustive list, but it does capture the essence of our preferences for how processes should go. 

For this series on M&As, I’ve been exploring multiple sources that claim to help you avoid M&A pitfalls, or deal killers, or execution mistakes. All of the resources provide solid recommendations on how to put deals together, checklists so nothing is forgotten, and suggestions for how to diagnose and treat issues as they arise. The advice is excellent overall—chock full of lots of good practices that assist you as you search out deals or assist you as you go through one. I would highly recommend them for anyone going through an M&A—but they don’t capture the whole picture.

Each of the sets of recommendations is written from an American vantage point: keep things moving, avoid emotion, keep everyone communicating, don’t rely too heavily on relationships. But if you are involved in a cross-border M&A, here are some things to keep in mind:

1. Not all cultures value speed. 
2. Not all cultures believe all voices carry equal weight.
3. Not all cultures are comfortable with an experimental approach.
4. Not all cultures view nepotism as a bad thing.
5. Not all cultures place the highest value on the bottom line.
6. Not all cultures view emotion as weakness in business settings.

In short, not all cultures have the same purpose or process for business. This does not mean they are not driven, nor that they don’t value success. They simply look at things differently and define success differently. And this makes the processes they use to get things done very, very different.

In this article, I will explore the first three issues. In next week’s article, I will explore the second three. But before we begin, I need to make a quick clarification: we differentiate between national culture (the primary culture you are raised in that largely defines the gut reactions you have over the course of your life) and organizational culture (the values set by a company that drive the behaviors they expect at work). Over the course of this series, we will look at M&As through both the national culture and organizational culture lenses (as well as how they interact). For the purposes of this article, we are looking at national culture.

So why would a culture not value speed in business? It’s not that speed isn’t a priority, it’s just less of a priority than other concerns. If we look at the National Culture Dimensions as developed by Hofstede in his book “Cultures and Organizations: Software of the Mind” we see that Hofstede discovered that there are six dilemmas that each culture solves in different ways.

For a detailed look at each dimension

To access our National Culture database and/or compare countries along these dilemma lines

The six dilemmas are scales that represent preferences along different lines. So the need for speed is largely connected to the risk appetite, or Uncertainty Avoidance, that a culture has. The U.S. has a score of 46 out of 100 on that dimension. The implication is that we have a larger risk appetite than most: we are happy to experiment and adjust, experiment and adjust, and so forth, until we are satisfied with the result. Cultures that have a high score on Uncertainty Avoidance have a low risk appetite. Their preference is to try to anticipate potential problems before beginning in order to rule them out. This means it takes longer, sometimes much longer, to get started (but it goes much more quickly at the end). What is the implication of this for an M&A? We often see that cultures with low Uncertainty Avoidance scores find their prospective partners from high Uncertainty Avoidance cultures as “over worrying things,” “uninvested,” or “dragging their feet.” Cultures with high Uncertainty Avoidance can find U.S. businesses trying to move very quickly to be “hasty” or “sloppy.” Neither is true: cultural values dictate process preferences. If you are in an M&A process and don’t realize that this is what’s going on and withdraw from the deal, you could miss out on a fantastic opportunity simply due to a mistaken impression.

The importance (or lack of importance) assigned to each voice is another social dilemma. The importance of each individual is the premier American value and it underlies everything we do. Stories about lower-level employees who bring million-dollar ideas to their companies (see Post-It Notes, Liquid Paper) are reminders to executives to listen to everyone. “Treat the janitor like you treat the CEO” is another U.S. mantra signaling the importance of each individual in our society. It is difficult for us to understand how cultures could work in any other way. This is the cultural dilemma known as the Power Distance Index. The U.S. has a low score on the Power Distance Index and that is reflective of the value we place on individuals. While it may be difficult for us to understand, the majority of the world’s cultures (roughly 85% of the world’s population) do not hold this same value. This does not mean they don’t value people, just that they believe that each person contributes in a different way and, for that, is entitled to different amounts of power in order to achieve those goals. The President of Russia? He has an extraordinary amount of power. He also has riches, prestige, and control over more aspects of life than the U.S. president does. This is expected. And why? He is supposed to use it to care for and protect his people.

What does this mean for M&As? In a culture with a high score on Power Distance (and as I mentioned, that is the vast global majority of cultures), information flows are controlled. You will not have access to anyone unless key stakeholders decide you need it. You cannot and should not try to jump levels of business hierarchy; you will need to abide by their org charts or risk losing the deal. It will also likely take longer to go through the deal since communication channels are funneled and decisions are made at the top. What is the benefit? If you can prepare yourself for a longer wait, show respect for their differential approach to decision-making and communication, and invest time in building relationships with those to whom you have access, you are likely to be rewarded with a longer term contract and a high degree of loyalty to the partnership. 

The M&A process is overwhelming at best. When it crosses borders, cultural differences can make it feel impossible. If you find yourself in this situation, reach out to us. We have been assisting businesses as they go through M&As for over 20 years. We have 130 Associate Partners working in 60 different countries and speaking over 30 languages. Culture is what we do and we have data and analytics to make it tangible and manageable. Email us at [email protected] to schedule a complimentary needs analysis call. And stay tuned for next week’s article on the second three differences above.