Mapping Culture in M&A: 2 Practical Frameworks for Leaders

Every organization has a culture—a set of shared values, beliefs, and behaviors that guide how work gets done. But if you ask ten people to define that culture, you might get ten different answers. That’s because culture, while omnipresent, is often hard to articulate and even harder to measure. However, using practical frameworks can provide clarity, helping leaders understand and navigate culture in ways that foster alignment, growth, and success—especially during critical moments like mergers and acquisitions (M&A).

Here, we’ll explore two widely used frameworks for analyzing culture: Edgar Schein’s model of organizational culture, in which he identified three distinct levels, and the Competing Values Framework, co-authored by four leading organizational psychologists. Both approaches offer actionable insights into understanding your own organization and others.

Edgar Schein’s Three Levels of Culture

As discussed in our previous article “Culture Eats M&A for Breakfast: Why Aligning Values is Non-Negotiable,” organizational psychologist Edgar Schein developed one of the most influential models of organizational culture. He described culture as existing on three levels, each progressively harder to observe but increasingly impactful.

1. Artifacts and Behaviors: These are the visible aspects of culture. Think about what you can see, hear, or feel in an organization: the dress code, office layout, jargon used in meetings, or even the presence of a ping-pong table. While these artifacts give clues about culture, they only scratch the surface.
2. Espoused Values: These are the stated values and beliefs—mission statements, leadership priorities, or the company’s stated commitment to diversity. However, these espoused values aren’t always reflected in the organization’s day-to-day behaviors.
3. Basic Assumptions: This is the deepest level of culture and the hardest to uncover. Basic assumptions are the unconscious beliefs and behaviors that shape how employees think and act. They represent the “way things are done around here” and are often only noticed when there’s a misalignment or conflict.

For example, during an M&A, one company might assume that decisions must involve extensive collaboration, while the other values fast, top-down decision-making. Neither approach is inherently better, but these conflicting assumptions can create significant friction if not addressed.

The Competing Values Framework

Another powerful tool for understanding culture is the Competing Values Framework (CVF). This model evaluates culture along two key dimensions:

1. Flexibility vs. Stability: Is the organization more adaptable and innovative, or does it prioritize consistency and control?
2. Internal vs. External Focus: Does the organization focus on employee development and internal collaboration, or is it driven by external competitiveness and results?

These dimensions create four quadrants, each representing a distinct type of culture:

1. Adhocracy Culture (Flexible + External Focus): Innovative and entrepreneurial, this culture thrives on risk-taking and creativity. Companies like Apple or Spotify often fit this mold, prioritizing new ideas and first-to-market strategies.
2. Clan Culture (Flexible + Internal Focus): Collaborative and people-focused, this culture emphasizes teamwork, employee development, and shared goals. Think of organizations like Pixar or Zappos, where relationships and long-term development are central.
3. Hierarchy Culture (Stable + Internal Focus): Structured and process-driven, this culture values efficiency, consistency, and control. Large, traditional organizations like General Motors or Bank of America often embody this approach.
4. Market Culture (Stable + External Focus): Competitive and results-oriented, this culture focuses on achieving goals and outperforming rivals. Amazon and IBM are examples of market-driven organizations that prioritize speed and measurable outcomes.

Using Frameworks in M&A

These frameworks become particularly valuable during mergers and acquisitions, when two organizations with distinct cultures come together. For example:

• If an Adhocracy Culture merges with a Hierarchy Culture, the former may see the latter as bureaucratic, while the latter might view the former as chaotic.
• If a Clan Culture acquires a Market Culture, the focus on collaboration might clash with the acquired company’s aggressive results-driven mentality.

Using tools like Schein’s model or the CVF allows leaders to assess both their own culture and the culture of the other organization. This clarity can guide integration strategies, helping to identify areas of alignment and potential friction.

Making the Frameworks Actionable

Here are a few steps to apply these frameworks effectively:

1. Assess Your Own Culture: Before analyzing another organization, take a hard look at your own culture. What are your basic assumptions? What quadrant of the CVF best describes your company? Acknowledging your cultural strengths and blind spots is critical.
2. Ask the Right Questions: Use Schein’s model to guide your inquiries. What are the visible artifacts of the other organization? Do their stated values match their behaviors? What underlying assumptions drive their decisions?
3. Map Cultural Overlaps and Gaps: Use the CVF to compare cultures. Are both companies results-driven, or is one more focused on relationships? Is one more flexible while the other prioritizes control? These insights can guide strategies for integration or collaboration.
4. Leverage Cultural Strengths: Instead of forcing one culture to dominate, explore how the strengths of each can complement the other. For example, a Clan Culture’s emphasis on teamwork might balance a Market Culture’s drive for achievement.

Why Culture is Key to Success

No framework can capture every nuance of culture, but tools like Schein’s model and the Competing Values Framework provide a starting point for deeper exploration. In the context of M&A, understanding culture isn’t just a matter of due diligence—it’s a strategic necessity. The more intentional you are about analyzing and aligning cultures, the greater your chances of achieving not just a successful transaction, but a thriving partnership.

Remember, culture isn’t static. It evolves, shaped by leadership, employees, and external forces. By using these frameworks to understand where you are and where you want to go, you can make culture a driving force behind your organization’s success.

*This blog is part of a series on organizational culture in M&A. While this article explores practical frameworks for analyzing culture like Schein’s Three Levels of Culture and the Competing Values Framework, previous installments discussed the risks of cultural misalignment and tactics for cultural integration. Together, these resources provide actionable insights for leveraging culture as a strategic asset in business transitions.

To learn more about how to apply these cultural frameworks in your M&A, please contact our organizational development specialists.

Article Contributed by Gary Kustis, Ph.D.