Do the clothes fit?
Patagonia is one of the most commercially successful outdoor clothing companies in the world, driven by a strong culture and inspired people. As founder Yvon Chouinard put it “We can hardly continue to make the best outdoor clothing if we become primarily an ‘indoor’ culture. So, we seek out ‘dirtbags’ who feel more at home in a base camp or on the river than they do in the office. All the better if they have excellent qualifications for whatever job we hire them for, but we’ll often take a risk on an itinerant rock climber that we wouldn’t on a run-of-the-mill MBA.” (Source: Patagonia)
Compare this with another successful outdoor clothing brand, North Face, with its mantra to “maintain an unwavering commitment to pushing the limits of innovation and design, so that you can push your limits outdoors. Never Stop Exploring.” (Source: North Face) More of a performance culture than a ‘dirtbag’ culture.
Patagonia and North Face are both strong brands attracting a range of loyal customers. While they operate in the same sector and could, in theory, be ripe for M&A, how can they come together when the two cultures appear to be so incompatible?
Symbiosis of brand and culture
The answer partly relies on the individual brands and the experiences they bring to their customers. Brand and culture are symbiotic. A strong brand equals a strong culture and vice versa. In order to continually and consistently aim towards a north star, organisations must have both. Various recent studies show that brands with strong reputations deliver 30% higher shareholder return and much of this enhanced reputation is directly associated with higher levels of employee engagement who can help their companies grow profits 3 times faster than competitors (Source: Clutch).
Numerous other studies have demonstrated the power of culture as a key driver of performance. A survey of CEOs and CFOs by the Bureau of Economic Research in the US found that 9 out of 10 believe that improving corporate culture would increase their company’s value, and nearly 80% ranked culture among the five most important factors driving their company’s valuation (Source: Glassdoor).
Assessing the fit
A recent McKinsey article on cultural integration noted that some 95 percent of executives describe cultural fit as critical to the success of integration. Yet 25% indicated that a lack of cultural cohesion and alignment as the primary reason integration efforts fail. (Source: McKinsey)