From promise to performance: cognitive inclusion to integrate a start-up acquisition boosts innovation
Published on 4 July 2024 • Written by Dr Lisa Colledge
Boosting innovation by acquiring start-ups is appealing to large corporate organizations; as well as a new product or service, they gain employees with a risk-taking, innovative mindset who have the potential to infect the corporate organization with a more inventive attitude. Start-ups are attracted by a different type of innovation: the scale, systematic go-to-market processes and market access of the corporate.
Logically, these organizations are complementary, but in practice the imbalance of power, size and structure often results in negative outcomes, such as employee resentment, and under-investment in building new relationships. Rarely is attention given to consciously designing and building the culture that will deliver the anticipated benefits quickly, while safeguarding the happiness and wellbeing of the employees of both parties.
While discussing the real challenges of a integrating an acquired start-up with ex-colleagues, we realized that the service I offer would have resulted in a more effective and faster integration than had actually taken place. I design and build cognitively inclusive cultures, using best practices inspired by neurodiversity inclusion. In this article, I discuss how a cognitively inclusive corporate mindset can facilitate the smooth integration of an acquired business. An acquisition offers the perfect opportunity to prioritize investment in establishing the culture that will enable your expanded team to collaborate so you can benefit quickly from their collective genius.
Three key takeaways
Innovation is critical to organizations so that they remain relevant and successful in the midst of the many changes they face. Innovation can be boosted organically, by taking steps to build the right mindset and working environment so that ideas are encouraged and given the chance to thrive, and it can also be bought in such as by acquiring a start-up. But the mis-management of acquisition integrations can delay the benefits being experienced and open the door to competitors to take advantage.
One characteristic of a cognitively inclusive culture is its ability to respond positively to change. A cognitively inclusive culture values curiosity, respect, mutual support, trust, and open communication, celebrating a mix of thinking styles to engage and retain happy employees who advocate for the organization. Such a culture increases the revenue from organic innovation by 19%, and is inherently adaptive to the skills and experience of new team members.
These advantages of a cognitively inclusive culture don’t emerge spontaneously. Your culture needs to be designed and implemented by an experienced change manager who has no vested interest in any particular outcome and so can be trusted by everyone involved. Innovation by acquisition is a great opportunity to take control of your culture and make sure it supports the behavior and results you want.
Driving innovation by acquisition
Building a cognitively inclusive culture drives double digits of improvements in organic innovation. While discussing the characteristics of the culture that drive innovative with ex-colleagues recently, they considered how it could have solved the challenges they experienced while building innovation in another way: by integrating an acquired start-up into a large corporate organization.
Innovation by acquisition is typically seen from the perspective of the large corporate, which is keen to add an innovative product or service to their offering, and to acquire the start-up’s pipeline of promising ideas, organizational agility, risk-taking, ambitions for rapid growth, employee passion and loyalty, and strong relationships with customers. The start-up tends to be attracted by the size and maturity of the corporate, and seeks benefit from their resource, scale, and processes to reduce their risks, systematize their go-to-market, and to build their market access and power. We might not typically think of processes as innovative, but they are from the perspective of the start-up.
There were some challenges during the integration my ex-colleagues were discussing. The rigid corporate organization and processes didn’t make sense to the more decentralized and informal decision-making style of the start-up, in which everyone jointly took a degree of accountability for the business success. And both parties believed that their approaches were superior, so there was a year-long delay before a shared willingness to listen, learn and adjust emerged, which provided the opportunity to a weaker competitor to gain a market foothold which they still retain.
How could the service that I offer, of designing and building cognitively inclusive cultures, have solved these integration challenges and kept the competitor out of the market?
What makes a cognitively inclusive culture so innovative?
A cognitively inclusive culture is curious and respectful. Questions are welcomed as a means to share knowledge and insights. It is mutually supportive, with differences in thinking style and skills (cognitive diversity) being sought out, celebrated and enabled so that everyone can contribute their best to team success. Teams strive to build trust, valuing transparency and open communication, and fairly considering ideas and opinions that are shared. People are engaged with the business mission, happy, and don’t want to leave; they recommend that their friends come and work at the organization as well.
Organizations with this kind of culture are more innovative, productive, and profitable, better able to retain employees, and attractive to a larger talent pool with the highest skill levels. The reason? People enjoy working in teams that let them thrive and contribute their best. The impact is so profound because we mimic the solution that evolution has found to make humans outstanding at adapting to change: individuals specialize in generating ideas, or evaluating options, or building a plan, or conducting a strategy, and our social nature ensures that every group can call on the right skills when it needs them.
Cognitive inclusion recognizes the differences in the way that people take in and use information and makes sure that they can all contribute in their different ways. It is the only kind of diversity that makes any difference to how well teams solve problems; demographic diversity in gender, age, ethnicity, educational beckground and so on doesn’t make any difference at all.
How would a cognitively inclusive culture have accelerated the acquisition integration?
People in a cognitively inclusive culture are curious to learn about their new team-mates. They want to know how they will make the team more successful, and what they can learn from them.
The most straightforward cultural integration would be both organizations already having a cognitively inclusive culture; everyone would behave in their regular way to adapt their teams to their new colleagues, and the integration would largely take care of itself.
If one organization has a cognitively inclusive culture but not the other, then a bit more effort is needed. People working in the non-cognitively inclusive organization need to become aware that a culture can be designed, built and maintained, rather than being something that just happens and must be tolerated. Some training would be needed, similar to onboarding a new colleague but on a larger scale.
If neither organization has a cognitively inclusive culture, then the integration of an acquisition is the perfect reason to prioritize it as a change project. It would also be the ideal project for both parties to collaborate on, involving everyone and itself demonstrating the value of the culture.
How does existing cognitive inclusion in one or both parties accelerate the integration?
I have developed a model that I call Freedom within a Framework to structure the implementation and maintenance of a cognitively inclusive culture.
The framework is defined by leadership. It is constant and non-negotiable. It describes how the culture feels, what it seeks to achieve, and specifies some hallmarks. It may share examples, but it doesn’t dictate how the framework should implemented.
The freedom refers to the accountability of each employee to make that framework relevant to the teams that they are a part of. The teams determine how the framework is implemented; they are empowered to do this by leadership, and have stepped up and accepted the joint accountability. The implementation of the framework differs between teams, and changes over time within any team as people leave and others join. Everyone, regardless of seniority, function, location, neurodivergence or any other diversity, contributes to translating the framework so it makes sense in the teams they are a member of, and enables each of their team members to shine.
If cultural Freedom within a Framework already exists at one or both of the organizations, then it will accommodate the acquisition, although some extra attention and monitoring is advisable. I have designed the model to respond to change, and to be sensitive to different team compositions, while ensuring that everyone stays focused on the same outcome. The framework wouldn’t need much, or any, adjustment because of an acquisition, but the employee accountability and freedom to adapt their team norms to welcome their new team members would ensure they could contribute their best.
What if neither organization is cognitively inclusive?
The corporate and the start-up are ideal, complementary partners, but the sudden new relationships that need to be navigated are complex and often challenging. There is an inherent imbalance between the organizations in size, power and structure, which must be skillfully addressed. If this imbalance is not managed, start-up employees can feel overlooked and overwhelmed by the corporate, and corporate employees might start to resent their new colleagues if the asymmetry is over-compensated by being too positive about the start-up while dismissing much of what has been built in the corporate business. Not doing anything increases the likelihood of negative outcomes such as shirking responsibilities by under-investing in building new relationships, misappropriating benefits by trying to claim more than agreed on, and finding ways to delay progress.
The solution is to appoint someone to be accountable to design, oversee and monitor the cultural integration. It is not sufficient to ask someone from the acquisition committee, let’s say an expert in product, to temporarily take on this extra responsibility; after acquisition, the product leads need to be fully focused on executing the integration.
The person accountable should be focused on the integration as their primary role. They should be skilled in change management and psychology. Ideally, they are a neutral external party without any vested interest in either the corporate or the start-up, able to be trusted equally by both parties as they design and build a shared culture that quickly enables both parties to thrive and derive maximum benefit from the acquisition.
Reference underpinning some of my thinking
Carlo Giglio, Vincenzo Corvello, Olda Maria Coniglio, Sascha Kraus, and Johanna Gast (2024) ‘Cooperation between large companies and start-ups: An overview of the current state of research’, European Management Journal (in press).
I'm Lisa, and I help leaders create inclusive cultures that embrace all neurostyles. By empowering every team member to contribute at their best, while fostering mental well-being, you will boost innovation, retention, and talent acquisition—leading to enhanced business performance.
Click here to learn more about how my services can transform your team.
