Piyush Durani, an Executive MBA graduate of Cambridge Judge (EMBA 2018), measures cultural fit in the $74 billion merger of Bristol-Myers Squibb and Celgene.
The well-known business expression “culture eats strategy for breakfast” is particularly apt for mergers and acquisitions, but many dealmakers don’t heed its warnings in advance: as the focus of M&A teams is to get the deal done, and those teams consist of lawyers and finance people, the cultural fit of the two merging firms is often an afterthought.
So an Executive MBA graduate of Cambridge Judge Business School, Piyush Durani (EMBA 2018), set about to demonstrate that cultural fit can be scientifically measured and examined when the pharmaceutical company he works for, Bristol-Myers Squibb (BMS), completed the $74 billion acquisition of cancer drug specialist Celgene in November 2019, one of the largest-ever pharma deals.
Now Associate Medical Director (Medical Lead), Oncology at BMS, Piyush approached his Cambridge Judge supervisor, Professor Yasemin Kor, to propose for his EMBA Individual Project (a key part of the EMBA programme) an empirical investigation of the BMS-Celgene deal. The project was designed to show where the two companies stand in terms of common and contrasting cultural attributes, as a precursor to hoped-for smoother integration of the two companies.
“As I progressed through my EMBA programme in 2018-2019, the BMS acquisition of Celgene was announced in January 2019 and I was interested in understanding what could be the factors that would make this a success or failure given that a number of articles I read at the time highlighted the high failure rate for M&A,” says Piyush.
“I thought that such an empirical study was a great idea: most companies ignore this issue because they don’t know how to approach it scientifically as intangibles are hard to quantify,” says Professor Kor, Beckwith Professor of Management Studies at Cambridge Judge. “It’s better to run a study to diagnose the cultural attributes in both companies, map these, and see the diverging and converging points, rather than to make superficial assumptions about the fit.”
So that’s just what Piyush did, drawing on his background in psychometric questionnaires. Using a quantitative survey, the widely validated Organisational Cultural Assessment Instrument (OCAI), he asked legacy BMS and Celgene UK and Ireland employees to complete the survey at the start of post-acquisition integration – indicating both their perception of the current culture in their respective firms and their hopes for the future culture of the combined company. The OCAI focuses on four key cultural “archetypes” that broadly entail collaboration and trust; creativity and dynamism; hierarchy including processes; and market strategy.
While there had been a prior assumption that the much larger BMS and more agile Celgene could create a cultural clash, the survey results suggested otherwise: there was a mix of cultural traits across both legacy organisations, with no single trait dominating, and there was a common thread of collaborative, friendly working environments where informal ties are valued. While there were some subtler differences between the legacy cultures, people coming from both firms sought in the future a culture that is more externally focused, agile and innovative.
The smaller-than-anticipated cultural gap between the two legacy companies “can be used as an opportunity for legacy employees to learn from each other in the process of transforming to a ‘best-of-both’ culture,” says Piyush, who drew on such EMBA courses as Organisational Behaviour, Strategy, and Innovation Management in developing his project. “The roadmap for this cultural change, however, needs to be firmly rooted in the future strategic goals and directions of the merged organisation and the capability configuration to pursue such directions.”
Professor Kor says the project is a good example of Cambridge Judge programmes and assignments providing important insight into real-world issues at companies.
“The diagnostic result of the survey is not an end in itself, but the beginning of reflections and conversations. This is not likely to happen without a set of evidence from a systematic analysis which gets the attention of management, but it is up to the companies to develop procedures to use the evidence productively in steering both companies into the future. “The whole point is to make sure that the organisational culture is an enabler of the strategy, not a constraint for it. That requires strategy and culture to evolve together. Culture really shouldn’t eat strategy for breakfast; the goal should be for culture and strategy to go out to lunch together.”