What’s culture got to do with it?
A company’s culture is what drives action and innovation—or stands in its way. There’s no substitute for establishing a culture of growth within an organization, as it’s what ultimately provides the foundation for sustainable shareholder value creation. NextVista can help you align your organization for growth from the executive leadership down.
Tools for Growth vs. a Culture of Growth
Companies sometimes embark on a program of acquisitions, corporate partnerships and joint ventures, or corporate venture capital programs to drive growth. While these can contribute to building major new growth platforms, they are not complete approaches to driving growth, and each carries significant risks.
- Acquisitions can jump-start major strategic initiatives, and have the potential to be transformative since a large acquisition can quickly add business heft and capabilities. However, M&A per se is generally not a productive source of corporate growth. Capital market efficiency (not to mention the unused cash currently on the sidelines) tends to drive up acquisition prices, integration is difficult and expensive, synergies are sometimes overestimated, and the process of realizing value can be extremely management-time consuming.
- Partnerships & Joint Ventures provide quick access to new capabilities and resources and sometime approach the value of the synergies that are possible with an acquisition without a significant balance sheet commitment. Joint ventures, however, almost never last, since the strategic interests and/or priorities of the corporate partners tend to diverge over time.
- Corporate Venture Capital can provide a window on new technologies and young companies, and sometimes even generate the opportunity to acquire a promising new growth platform. CVC also uses balance sheet dollars rather than P&L dollars, provided that the ownership stakes are kept small and non-controlling. With only a few notable exceptions, though, CVC programs have not been successful due to the strategic ambiguity (ROI vs. intelligence gathering), along with a prevailing attitude within the VC community that most large corporations are the “chumps” when it comes to the venture game.
Culture, on the other hand, is the pervasive unwritten, collective ethos — the values, style, norms, shared assumptions and working language of the company—that drives action throughout an organization. A company that develops a culture of innovation, growth and experimentation, supported by strong executive commitment and significant resources, will have an organization more aligned behind and driven to growth than one setting up an M&A function or corporate venture capital group. But culture alone is not enough.