Culture as the key ingredient in successful M&As

RED L E A DE R SH I P PER SPECT I V ES

RED LEA DERSHIP PERSPECTI VES Culture as the key ingredient in successful M&As

Culture as the key ingredient in successful M&As On the importance and mechanics of effective culture integration strategies in mergers and acquisitions

A conversation bet ween

Mikael Wedell-Wedellsborg, VP Corporate Development at Novo Nordisk Eric Dessertenne, CEO at Biocorp Mads Holme, Managing Partner at ReD Associates Alexis Jakubowicz, Director at ReD Associates Paris 1

RED LEA DERSHIP PERSPECTI VES Culture as the key ingredient in successful M&As

A BOUT

NOVO NOR DI SK

BIOCORP

In the wake of Novo Nordisk’s increasing M&A activity, VP of Corporate Development Mikael Wedell-Wedellsborg and his team prepared to acquire Biocorp in 2023, as part of their strategy to complement existing capabilities with external innovation in the future.

ReD Associates was brought in to navigate the cultural challenges of the upcoming integration.

Novo Nordisk is a global healthcare company with more than 100 years of innovation and leadership in diabetes care, haemophilia care, growth hormone therapy, and hormone replacement therapy. In recent years, Novo Nordisk has been pioneering a new approach to culture as a strategic enabler to drive impact from M&A.

Biocorp is a French MedTech company renowned for developing innovative medical devices and smart drug delivery systems to enhance the management of chronic diseases.

Mads Holme: Tell us about the background to Novo Nordisk’s

the right exit has always been top of mind because of our capital

acquisition of Biocorp?

structure, the founder’s age and ambition, and Biocorp’s mission and willingness to achieve great impact. We have always needed

Mikael Wedell-Wedellsborg: For several reasons, we

to expand our manufacturing footprint and distribution strategy.

wanted to complement our internal R&D pipeline with relevant

Being a startup located in the middle of the Auvergne region does

external innovation. The outstanding growth Novo Nordisk has

not really help with the kind of growth we were aspiring to. So you

experienced in recent years provided an opportunity to accelerate

might say it has also been a maturation process on our side as well

our strategy execution in support of our purpose of driving change

recognising what we are really good at – innovation – and that

to defeat serious chronic diseases. But it also increased the pressure

to sustain it, industrially and commercially speaking, we needed

to sustain our innovation to expand and diversify our pipeline

a good partner, one who would take Biocorp as it is with all its

across our core therapy areas. Our appetite for external growth

legacy and employees. It took us ten years to find the right partner,

also comes from the recognition that there’s a lot of interesting

but ultimately we did. Novo Nordisk checked all the boxes.

innovation happening at the grassroots level in different parts of the world. It has been a maturation process for us to acknowledge

Alexis Jakubowicz: In what ways were Novo Nordisk’s culture

that good innovation does not only happen from within, and that

and processes challenged by Biocorp’s acquisition, and how did

acquiring new assets can help us continue providing improved

you manage these organisational tensions?

treatment options for the patients we serve and continue our strong Mikael: As Novo Nordisk has developed from within, it has

business performance.

very set ways of working. We have never been in doubt about Eric Dessertenne: Biocorp has faced several cases of M&A in

how to operate our business. The way we work is good in many

the past. It was sold, bought back by its founder, and merged with

ways, but one can’t just infuse something new and expect it to

one of its other ventures. Some of our peers and colleagues, who

work out in such a well-configured company. Our culture is

have been with the company since its inception in 2004, have

everything but fluffy.

experienced these phases in a negative way. Nonetheless, finding

“The way we work is good in many ways, but one can’t just infuse something new and expect it will work out in such a well-configured company” 2

RED LEA DERSHIP PERSPECTI VES Culture as the key ingredient in successful M&As

the organisation might be affected. It was extremely important

“In some companies, culture might just mean naming meeting rooms.

At Novo Nordisk, it’s articulated in the detail, over and over again and deeply engrained in our daily work.”

to spend that time upfront, managing everyone’s mindset. What we have done well since the inception is to maintain an open conversation on how to operate together with Novo Nordisk.

From the beginning, we said that this would be our core focus.

Concretely, this means articulating the deal in a language that can be understood by the team, checking in with them regularly to build reassurance, and making sure we aligned on the key principles of the integration: these were the three top things we did to make sure everyone stayed onboard.

Mikael: To Eric’s point, we knew we had to be very sharp on what we wanted to achieve with the integration and on what it

It was clear from the start that we could not just ask our peers at

could mean for each individual case. Our objective was to add new

Novo Nordisk to take the Biocorp deal as is and operate around it.

capabilities on top of Novo Nordisk as a new innovation muscle.

We’ve learned just how interdependent our ways of working are,

That was very different from our past acquisitions, which often

so integrating a 100-person startup from the middle of France

were about acquiring and leveraging an interesting IP based on

into a global company of 60,000 forced us to reflect on potential

our internal operating model. In the case of Biocorp, the purpose

ripple effects. This is why it was so important to us to do a cultural

of the deal was precisely the integration of a new capacity on top

analysis and see how we could, through a better understanding of

of ours, with a ratio of 100 people to 60,000. The whole process

the human principles at the core of both organisations, preserve

on the Novo Nordisk side was to accept given circumstances to

and expand value.

preserve Biocorp’s innovation value and ensure that it would remain strong enough within Novo Nordisk as an organisation.

Mads: What was the integration process like from an acquirer

So that was why culture was the cornerstone of the integration, but

and target perspective?

we had to do the culture work differently; we had to go in-depth as opposed to past acquisitions. We knew that if we didn’t get this

Eric: To begin with, we did not underestimate the energy and

right from the start, it would turn out to be something that would

the time it would take to lay the foundations. I think it’s a good

haunt us later.

learning experience for any company to go through. The work we did together, with ReD Associates, has been extremely useful to

Eric: Building on Mikael’s point, let’s take the example of decision

help us identify the key item on which we had to focus our efforts.

making. In a company like Biocorp, with less than 100 employees, all decisions can be made in less than an hour. Understanding how Novo Nordisk, on the other hand, reaches consensus is key to bracing the teams. We knew that things wouldn’t be happening in the same way. But understanding why, from an organisational

“Culture is a key contributor to the success of our deal”

and cultural perspective, is key to avoid extrapolating and making baseless hypotheses which, in the end, get everyone to question the choice of selling to Novo Nordisk. The number one KPI to track here is motivation, and since we joined Novo Nordisk, we have kept all key members of the company – which to me is a sign that we did the job as well as it could possibly be done. Getting that

After the acquisition, the hard part of the job starts. The integration

leadership perspective from the start on who you are dealing with

part is a very different task, requiring maintaining momentum

is vital. It helps build empathy and trust.

and enthusiasm while figuring out how to fit into the new setting.

Concretely, on D+1, you are dealing with people and their anxieties.

What about my position? What about my projects? Etc. As a CEO, you need to really reassure your people and make sure that your management has a good understanding of how their teams across

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RED LEA DERSHIP PERSPECTI VES Culture as the key ingredient in successful M&As

“The endpoint of the integration is precisely not to solve these tensions but rather to embrace them and make them fruitful”

ReD’s recommendations for leaders looking to get cultural integration right:

1) Recognise the critical importance of cultural compatibility in M&A situations. A substantial number of integrations fail due to insufficient attention to cultural alignment, making it essential to dedicate time and resources to understanding and preserving the unique cultural aspects of both organisations.

Mads: If you were to convert the cultural work into value, how would you do it?

2) Employ a methodological approach to cultural integration. This not only facilitates a safe space for expressing frustrations and differences but also encourages transparency and collective problem-solving, which are crucial for successful integration.

Mikael: It’s somewhat difficult to put an incremental value to it, but it is clearly foundational to value preservation. I would rather ask: what would have happened if we hadn’t done it? One could always speculate, but I think if we had not done this well, there would have been a significant risk that key employees would not have wanted to stay. The people who built and nurtured it were

3) Assert your organisational culture and values during integration processes. Clearly voicing and standing for your culture not only keeps your team motivated but also influences the integration positively.

critical to the value we wanted to preserve and leverage. So, culture, from that standpoint, is a key contributor to the success of our deal. You have got to answer every question the team may have to secure them in one way or another. So, we decided early on to get a portfolio review done to give as much clarity on what projects we wanted to keep in the pipeline. It ended up being a long process, but taking that time to go through multiple filters showed that there’s a lot more gold in Biocorp than we had initially thought. That is something we again uncovered because of the culture work, which forced us to look very deep into Biocorp’s organisation.

Alexis: You decided from the beginning to pursue a standalone integration. Concretely, how does this impact collaboration between Biocorp and Novo Nordisk R&D teams?

Eric: It creates tensions, of course, because we’re not exactly playing by the same rules. But from a company perspective, we have the best of two worlds: we are doing external innovation from within. It’s a very interesting and strong model: we have demonstrated that we can keep pushing projects through the pipeline and deliver, showing how relevant it is for us to maintain a fair level of independence. We are a new tool in Novo’s pocket.

So, I think we are committed to keeping those differences alive to ensure we benefit from them.

Mikael: There are tensions indeed, and we let them be! The endpoint of the integration is precisely not to solve these tensions but rather to embrace them and make them fruitful.

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4) Emphasise relentless and direct communication of each other’s cultures. Prioritise face-to-face interactions to respect and effectively convey the cultural nuances and expectations of both organisations, facilitating a smoother integration and cultural alignment.