The $146+ Million Dollar Culture

By David Hassell

Steady growth. That is what every company strives for. Hockey stick revenue, market-share domination and a loyal customer-base makes investors jump up and down in their cushy leather chairs. If you have this or are heading in this direction, I applaud you. And also want to share a story about how important it is to sustain a fluid and open communication channel through growth, lest your great trajectory take a turn for the worse.

And, if your burgeoning company is appealing enough to acquire, how will you intentionally merge not just your customer bases and technologies, but also your values, goals, and vision? How will you share information and culture quickly and seamlessly across the different teams?

This is how M5 Networks used 15Five to streamline communication through rapid growth, a multi-million dollar acquisition, and the integration of two different company cultures.

Your company at your fingertips

New York based M5 was founded and built from the ground-up by former CEO Dan Hoffman. During the recent recession of ‘08-’09, many companies were forced to close up shop, but M5 survived and even thrived as the economy moved into recovery. They aggressively grew their business from 125 to 200 employees between 2010 into 2011.

In a world of telecommunication companies, M5’s competitive advantage was first and foremost having a strong service culture. Hoffman was very concerned that the rapid growth was threatening that culture and his ability to keep everyone in sync.

M5 began using 15Five with their executive team in 2011. Our simple and powerful employee feedback app was highly valued by M5’s officers as a method for gaining feedback from hundreds of employees divided amongst several teams. They used the app to find out where people were stuck and where they thought that others were stuck. People felt that they had a safe place to provide feedback, and management could react quickly while problems were still small and manageable.

Critical pieces of employee feedback were automatically passed up by managers and reviewed by Hoffman each week. Instead of wasting precious meeting times updating different leaders about cross-team productivity and challenges, the standard was that everyone would arrive having read everyone else’s updates. The executives went from spending the bulk of their meeting time just getting caught up to debating, problem solving, and taking decisive action.

The see-through culture

M5 was performing so well that in 2012, they were acquired by ShoreTel for over $146 million. The acquisition of M5 gave ShoreTel a prime position in the rapidly growing cloud-based Unified Communications market.

Half of all M&A’s fail. AOL/Time Warner, Daimer Chrsysler and a host of other huge mergers were killed by cultural incompatibility. So when M5 Networks was acquired by ShoreTel what did they do differently?

They asked questions.

According to Hoffman, information sharing is the most important issue for merging businesses. The teams don’t understand each other, and there is a lot of distrust. Senior management has anxiety around new people and not being aware of the potential dissidence that comes with acquisitions.

Fear and silence are present at every level. Even middle-management goes dark because they are afraid to discuss potential problems with their new managers, who don’t know them. 15Five provided transparency, which in turn built trust during those shaky first months when team-integration was so vital.

Killing the culture killer

The first step was to preempt the culture clash between a NYC startup (M5) and a publicly traded Silicon Valley communications powerhouse (ShoreTel). Hoffman used weekly 15Fives to share information, build trust and give employees a voice. By putting employees first and by taking care of their needs, the customer experience was able to remain phenomenal.

As providers of cloud-based collaboration tools, remote work was part of M5’s culture. With a strong foundation of trust, they believed that people could work wherever they did their best work. This trust had to be built between two previously established teams that would now work on the same goals virtually between two coasts. With 15Five, the combined teams could stay aligned around company goals and management could maintain visibility into the specific details of daily operations.

Hoffman, who became President and General Manager of ShoreTel’s Cloud Division sought to keep integration as light as possible. He focused his teams to execute on just a few initiatives while maintaining their mission of providing customers with an exceptional service experience.

Q&A is the handmaiden of M&A

Hoffman has since left ShoreTel but the practice of asking questions to employees persists. When we asked him about the finer points of the app, he remarked that it’s given the entire executive team visibility to the activities across the country, shortened our executive meetings, and created some good cross-functional issue escalation and faster resolution, among other things. It gives me visibility into the problems and successes at my company and a feeling from the staff that they are being listened to.”

Managers at every level asked employees pointed questions about how they feel, what they need, or if they understand a new role or goal. Asking the questions invited candid answers that  were shared up the ladder. Instead of guessing about the future of a multi-million dollar purchase, a weekly report automatically provided that information in black and white (and a little orange).

When executives can ask questions, they can have visibility into everything that is going on at the company. They are able to see problems during the nascent stages of a merger or acquisition, and ask follow-up questions for a deeper understanding.

Breaking down walls between merging teams is absolutely critical. ShoreTel relies on their weekly 15Fives and the ability to pass-up the most important feedback to the highest levels of the organization. All of this in a simple, agile tool that provides the critical visibility and alignment to help ShoreTel continue to grow.

Photo Credit: Tax Credits

What do you think is the biggest challenge that companies face during a merger of acquisition? Leave a comment below. 

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