Amazon’s 2017 acquisition of Whole Foods was met with a lot of fanfare. The deal would allow Amazon to grow beyond e-commerce and sell groceries in hundreds of stores while collecting significant shopper data. Meanwhile, Whole Foods could lower its prices (organic avocados for just $1.69!) and scale up after its recent declines in sales and market share. In the words of Whole Foods CEO John Mackey, the partnership was “love at first sight.”
One Reason Mergers Fail: The Two Cultures Aren’t Compatible
When tight and loose cultures merge, they often clash.
October 02, 2018
Yongyuan Dai/Getty Images
Summary.
Amazon’s 2017 acquisition of Whole Foods was met with a lot of fanfare. The deal would allow Amazon to grow beyond e-commerce and collect significant shopper data, while Whole Foods could lower its prices and scale up after its recent declines in sales. But a year later, stories of Whole Foods employees crying on the job over Amazon’s changes have begun circulating, and some workers have even taken steps to explore unionizing. The two companies failed to investigate their cultural compatibility before merging, and now they stand on a fault line researchers call tightness versus looseness. Tight company cultures, like Amazon’s, value routine and use strict rules to uphold cultural traditions. Loose cultures, like Whole Foods’, eschew rules, encourage new ideas, and value discretion. When tight and loose cultures merge, there is a good chance that they will clash — but, if diagnosed early, these clashes can be handled productively. To avoid the pitfalls experienced by Amazon and Whole Foods, companies considering merging should: (1) Prepare to negotiate culture from the start and identify areas for compromise. (2) Construct a prenup that outlines their integration plan. (3) Make sure everyone across both organizations understands what changes will be made and why they will be made. (4) Embrace trial and error.