… and they all lived happily ever after.
Well, they may well have done; but only in fairy stories. Those of us who live in the real world know that the end of any story is only the beginning of some hard work if the story is to lead to success.
And that’s the trouble. When we put so much effort into achieving an identified goal there is almost an inevitability about the backlash which follows. Any sportsperson will tell you that winning a championship is one thing, repeating the feat the following year is quite another. And it’s the same in business. When our eyes and efforts are focused on that one big project, that merger, that IPO; its successful completion can lead to a quasi dead time in which we take stock, regroup and prepare for the next phase.
a culture of continuous development will build a culture of innovation baked into the DNA of an organisation
It’s one reason why we talk about building a culture of innovation rather than promoting a series of separate innovation events. When there is a continuing drive for improvement baked into the DNA of the organisation then it is far easier to avoid the sort of stop-start progress which can hinder organisational cohesion in the long term. A culture of continuous development also steers businesses away from the too short, too sharp, too shallow introduction model which invariably leads to change fatigue and cynicism.
culture has to flex and change if it is to stay current
Innovation aside, what can organisations do to ensure that the culture remains on track to deliver the organisational strategy even after a major event? You can’t just freeze it; culture has to flex and change if it is to stay current. Let’s take IPOs for example. Gearing up to an initial public offering can be a tremendously exciting yet energy sapping time. And it doesn’t matter whether you’re a young company on a fast growth track or a more mature organisation looking towards a listing; satisfying the regulatory and legal requirements for an IPO can stretch resources to the limit.
For some this will be a danger time, a time in which the CEO and the leadership team take their eyes away from the day-to-day, hoping that the culture is strong enough to sustain the business without active guidance. That danger aside, this is also a time for flexing the culture, for gearing it up for a post-IPO world.
why the need for change?
Quite simply because the business now has to take the needs and requirements of shareholders into account. Even within a strong and innovative organisation that has been looking to deliver long-term profitability allied to customer excellence, the presence of shareholders will alter the balance. For example, accounts and annual reports will now have to be prepared with the ‘comply or explain’ principle in mind and that means a renewed emphasis on being clear on the strategy and purpose of the business.
And with shareholders in the frame, breaches of trust or actions that damage reputation can have consequences that reach far beyond the immediate client/supplier base and into the long term viability of the organisation. That said, the shareholder relationship can be extremely positive, encouraging businesses to focus not only on profitability but also on areas such as sustainability, innovation and environmental impact.
great culture does not end with an IPO, in fact, it is just the beginning
So for the CEO and leadership team, the post-IPO world is one that calls for a renewed emphasis on strong and inclusive culture development. But quite frankly if refreshing the culture starts once the IPO has been completed then the leadership team is way behind the ball. One of the reasons why so many mergers and acquisitions fail is down to the lack of awareness of the importance of culture in delivering the new organisation. The same is true of businesses that are moving towards an initial public offering.
Unless the post-IPO culture is part of the transitional design then the business will be caught unawares. This includes:
- Planning the relationship with shareholders
- Working on employee engagement with the new structure
- Reviewing the company Values
- Deciding how to report on People & Culture to the Board and various committees
When you open up your organisation to shareholders you are offering your culture as much as your product. Being clear about your culture is therefore as important as preparing accurate accounts or providing realistic forecasts about future prospects. Business culture doesn’t end with an IPO but a successful IPO will start with good business culture.