Case Study: A Tale of Two Cities
Issue 117: July 13, 2023
We now present a true story, a tale as old as time, of what happens when you unknowingly create resistance to change. We’ll share the saga and let you draw your own conclusions about the outcome.
Succession
The founder of a digital media platform specializing in the strategy and operations of the design industry for a C-level audience needs a succession plan. She is in her early eighties and wants to be sure the brand she has nurtured and loved for 50+ years will have a home after she decides to step down. Having said that, she admittedly reports she will work until she can’t, assuming she will pass on defiantly at her keyboard.
So, she and her managing editor set off on what will turn out to be a search for the Grail in the hopes of finding a suitable acquisition partner. The journey will not be easy. The two have been running the business as a boutique thought leadership media brand more as a passion than a vocation. They love what they do and are repeatedly told they provide a valuable, perspective on the industry that is missing in competitive media brands. They have created a trusted community of executive peers and collaborative partners, dedicated to transforming the industry with insights and actionable advice. They are both intellectuals and veterans of successful corporate careers. They were never in it to make money.
The business has consistently broken even, but with revenues under $500,000, it is not an attractive, scalable moneymaker for an investor. Only two people are working full-time, and one is the owner of her eponymous brand. Without her, there is no real brand connection for her audience and the advisory board comprised of current and past CEOs – all personal friends and contacts. Furthermore, the subscriber database is about 14,000 strong – not exactly a robust audience even in a niche industry.
The Road to Armageddon
They thought they lucked out when an investor led them to a consultant looking to build his street cred with a respected thought leadership brand. Long story short, he offered to buy the brand, but balked when the owner set a price that was well beyond the value of the company. She priced herself out of the market, and her hubris turned off the consultant who passed with no possibility of reconsidering.
Next was an old friend of the owner who offered to buy the brand for $1 and combine it with his trends company that was slowly losing steam. Then they met with an investor who said the enterprise was too small for her to take on. Plus, since the brand was run by only two people, there were no assets to acquire. Then an old friend of the owner who was a prestigious deal maker introduced them to an international connector based in Ireland who ran a global network of influencers. He was intrigued by the possibility of building his brand through the strength of the American brand. He also wanted to make the owner an international thought leader icon. He met several times with the editor but was unable to meet the owner because of scheduling conflicts. She spent the winters in the Keys, not New York. The Irish entrepreneur was beyond charming, but there was something off with his business model. They couldn’t figure out how he made any money by connecting people. And when it came down to it, he was willing to partner with the brand but unwilling to purchase it.
All this took several years of search as each deal was destroyed. Then as life has it, there was a possibility hidden in plain sight. The owner was invited by a company in the Midwest to do a keynote at a summit they were sponsoring. Weeks afterward, the editor suggested the owner get in touch with the Kansas-based company to explore an acquisition. The synergies seemed positive: a design studio, real estate management and analytics business were good matches for the thought leadership media brand that played in the same space. The businesses were complementary, each with assets that could produce revenues for the other.
Twelve months later her brand was acquired by the consulting company after due diligence causing an arduous months-long treasure hunt on behalf of the editor to find all the financial records and files. And a seemingly happy marriage was made. That quickly turned into indentured servitude for the owner and her executive editor.
New York City Is Not Kansas
At first, everyone was very excited. Many meetings in the Midwest, which to the New Yorkers was like coming from Emerald City … to Kansas. The onboarding was with kind, mild-mannered, polite, smart people who were process driven and worked on projects that lasted for years. The media team (all two of them) were bred and thrived on deadlines, a digital daily transmission only accelerating their love for urgency on steroids. More hours of onboarding in Kansas. Meticulous presentations on the process they developed to brand and physically transform a space. As bright as everyone was, there were no visible disagreements; they always agreed with each other with the highest level of consideration. For both the owner and editor, who ironically were from Illinois and Missouri respectively, and left as soon as they could after high school, it was déjà vu, and not in a good way. They thrived on the scrappy, fast-paced, often contentious culture of the Eastern media culture. They were paid to be critical thinkers and look for the story behind the story. They are trained to question everything.
The acquisition was becoming a fatal example of mismatched cultures.
No Sense of Agency
We all know change is hard – especially when your company is being reimagined by someone else. The Kansas company was led by a newly appointed CEO (not new to the company – all her practice leaders were former colleagues at the same Kansas-based firm, and all have been working at the company for over 17 years). She fancied herself an innovator and transformation agent. And here’s the rub. She had mostly great ideas in theory. Bridging theory to practice was not a strength. She was such a flurry of ideas based on social trends, best practices of other companies and her own vision of a future that it was hard to separate aspiration from reality.
Relying on outside expertise, she assigned all the marketing for her company and her new thought leadership brand to her trusted outsourced marketing agency. She wanted transformative change, but in reality, she had enlisted a dogmatic marketer to oversee all her projects.
For the editor who had been responsible for everything at their brand – from content and sales to marketing and operations – having marketing and content distribution taken away was a wrenching experience. New automated systems were implemented. A we-know-more-than you marketing attitude was pervasive. On top of that, the marketing consultant said in no uncertain terms that whatever he asked for required no justification.
How do you respond to that?
The Chains of Change
The editor was unhappy. Although the owner was getting a payout, and still felt she was calling the shots (although she wasn’t), she wasn’t too happy either as she saw her role becoming disintermediated. The CEO in Kansas had a vision but was disempowering the experience and expertise of her new acquisition partners to contribute to shaping a reimagined future for the brand.
So, why doesn’t the Kansas CEO just call a spade a spade and forge ahead running a media brand (outside of her expertise). Why should she care about the feelings of her new employees? After all, she had a plan in buying the media business to build her own company’s brand recognition and relevance. She insisted on collaboration but in reality, is paying lip service to the concept. She advocated transformative change but imposed it without buy-in from the brand she bought. She conjured up a new model and new voice for the media brand without bringing along the owner and editor in the process.
In short, she did everything opposite from what she stated publicly, which became subversive, demoralizing and discouraging to the media team. The culture clash became more evident as the integration process progressed and the media team couldn’t penetrate the cabal of the CEO’s executive team who all had been originally trained within the same corporate culture. And the firm’s creative branding process always depended on the same team, using the same tools and techniques they developed for every client. And that was their plan to re-engineer the media brand.
If this sounds like a nightmare, it is for the media team who now find themselves struggling with the transition. They don’t know how to continue to bring their experience and know-how to fruitful results. And worse, they feel they are no longer able to protect the brand and what it represents. They are confused about how to reconcile the past with the future. And they resist letting go, which is what an acquisition is ultimately about.
Help Solve the Problem
So, we ask you as a faithful 2040 newsletter reader, how would you dissect this situation? Can you see how the decision-making and subsequent behavior of all involved unintentionally creates an environment of power broking and resistance? How do the two cultures clash and inhibit the principals in a collaborative transition?
From a business case perspective, the successful niche media brand could become something different, perhaps even better. But how does resistance to change (subconsciously and consciously) limit acceptance of potentially inventive innovation? And how does that resistance impact new ideas and very necessary collaboration? Instead of being charged up, the media team is exhausted by the process of the firm’s creative ideation and problem-solving.
The acquisition team isn’t exempt either. Imposition of change is a sure way to derail productive processes and sustainable transformation. Forcing a senior team to conform to a formulaic branding exercise limits participation. And enlisting an outsourced marketing consultant to implement a series of tech-based solutions without adequate explanation or defined goals and outcomes only causes resentment.
The 2040 Roadmap to Transformation
We have written obsessively via this weekly newsletter and in The Truth About Transformation about how innovation, change and transformation cannot happen unless the entire team is inculcated with the mission, goals, and benefits to them. This collection of interdependent parts sums up to shared purpose and sets the market orientation. The shared purpose also sets the tone for how each individual in the system transitions, evolves, defines themselves and their roles, and how they assess their own professional identity, contribution, and value. This case study represents the many elephants in the room that are often overlooked or completely ignored, but still very much present.
Change and transformation is first and foremost a very human endeavor. It brings to bear every nuance, ability, and attribute to find a path to work together. One might suggest that some have won the transformation race by shear dumb luck and chance. For others, we would argue that clarity of mind and critical thinking provides the roadmap of what to do and why. And there are success stories when the transformation team puts their egos aside and recognizes the contributions of others. This approach acknowledges there are smarter people in the room (field or village) who need a voice. Using a systems-thinking approach with outside expertise avoids creating an insular culture and resulting environment of resistance.
Tell Us Your Story
We are confident that our case study may trigger a long list of other impacts, wrong turns and unintended consequences that may be swirling around in your mind. We get feedback from our readers all the time who love the case studies we present. So, we are reaching out to you. Do you have a story to tell us for a future issue of the newsletter? Have a solution to share? Drop us a line at contact@2040digital.com.
We are active listeners and eager to hear your story.
Never one to ignore the thorns in any leader’s side, we will continue to bring forward more about creating a wall of resistance over the weeks ahead.
Get “The Truth about Transformation”
The 2040 construct to change and transformation. What’s the biggest reason organizations fail? They don’t honor, respect, and acknowledge the human factor. We have compiled a playbook for organizations of all sizes to consider all the elements that comprise change and we have included some provocative case studies that illustrate how transformation can quickly derail.
