Novonesis
Culture as a strategic enabler in a historic merger
A historic merger to create a transformative biosolutions company
In January of 2024, the largest merger in Danish history was completed. The statutory merger was a unification of two icons of bioscience with long legacies and strong market positions, Novozymes and Chr. Hansen. The new company, Novonesis, has the ambition to become the global leader in biosolutions and accelerate the mission of both companies to create a more sustainable society through combining their global expertise, technology, and capabilities.
Novonesis has more than 10,000 employees and a revenue of approximately EUR 4 billion. The commercial ambitions for the statutory merger are significant with an expected organic revenue growth of 6-8% and an expected EBIT margin of 29% by 2025. In the medium and long-term its ambition is to: ‘continue to deliver accelerated sustainable growth from the underlying business coupled with new, and de-risked, innovation and growth opportunities’. 1
“It is all about culture when building a new transformative company and driving growth”
Ester Baiget, CEO at Novonesis
“It was a strategic decision getting an early start on the culture integration process. This was important for the employees and gave us a clear advantage”
Marianne Bie Frydendahl, VP Strategy, Integration and Sustainability at Novonesis
Culture as a strategic enabler in M&A
The combination of the two companies was meticulously planned on several levels to ensure that the company had the best possible starting point for realising its full potential. One unique aspect of this preparation was the weight the organisations and their executive management put on company culture. There was an early recognition that corporate culture is a strategic enabler for efficient processes, customer interactions, brand building, innovation, and many other factors. In other words, culture was to be leveraged as a strategic tool in the integration process as well as ensure that commercial targets were met.
The clear decision on culture as a strategic enabler was made through an in-depth mapping and analysis of the two existing company cultures. Using this analysis, it was decided which traits from each company should be kept and brought into the new culture, which should be left behind, and what needs to be built from scratch.
This case shows:
Why
culture
as a strategic enabler is important in M&A
The
method for working strategically with culture during a merger
“When combining two strong legacy organisations and cultures you need to lead with perspective –and be explicit about what to keep and change”
Henrik Jørck Nielsen, EVP Strategy and Integration at Novonesis
“We wanted to create a bold move with an entirely new brand – this can only succeed with a strong culture as our base”
Key learnings and how to bring it to life
Morten Enggaard Rasmussen, EVP People and Stakeholder RelationsatNovonesis
How to build a new company culture
Building a culture based on two unique companies and from the ground up in a new company with 10,000 employees is challenging, but it is possible. The work of defining and enabling a new culture relies on a belief that key elements, such as leadership behaviour, processes, brand, and communication, can make a coherent culture emerge that is acted out and owned by the entire company. However, for this to be successful it requires a clearly defined target culture that outlines the behaviours and actions that are part of the new culture, and those that are not.
Culture is the sum of what is done, what is allowed, and what is celebrated.
Culture consists of a collective set of beliefs, values, and norms that shape how we understand ourselves in relation to others, how we behave, and what is important to us. To better understand these informal factors, we study the more intangible aspects of an organisation: what is considered meaningful work; definitions of ‘us’ and ‘them’; myths and origin stories; work practices and habits.
Ethnographic research
A mixed-methods approach to understanding culture
The starting point for defining such a culture was exploring the core characteristics of the existing cultures, as well as the most prevalent aspirations for the future culture. Mapping out the existing cultures was done through in-depth ethnographic research as well as company-wide surveys.
More than hundred people across seven countries were interviewed and studied in the offices and factories of both companies, with close attention paid to environments, objects and behaviours. The value of this research was to understand both company cultures at depth, both through what people know and speak of, but also the unspoken truths which only emerge through observing behaviour.
Company-wide survey
Research using ethnographic methods in over 10 offices across six countries globally, including interviews and observations of daily work, social dynamics, and the built environment.
Survey sent to all employees in both companies providing data on the existing organisational cultures, enabling a comparative analysis, as well as input on the desired culture for the new company.
(N= 6,065)
To complement the research with a wider perspective, and to increase the sense of involvement in building the new culture among the employees, a survey was also launched to all 10,000 employees.
The survey asked employees to give input on the aspects of the existing cultures they wanted to dial up and dial down, but also what the new culture should be like and why. The survey made it possible to size some of the observations made in the qualitative research, and enabled a better comparative analysis of the two company cultures.
Key learnings for building a new culture
In-depth understanding of the two existing cultures
The first step of the analysis was to gain an in-depth understanding of the two existing cultures. This understanding made it possible to identify the key strategically enabling traits of each culture, which needed to be maintained in the new culture, but also the traits that were potentially disruptive to reaching strategic aims. The understanding also made visible complementary characteristics of the two cultures, as well as potential culture clashes to address.
Define a target culture
The second step of the analysis was to define a target culture that Novonesis should aim to build – and the right language to best describe it. The target culture was built using the strategic rationales and aspirations of the merger itself, leadership input, as well as critical traits from the existing cultures. Starting with a long list of cultural traits that were desirable, the most strategically important ones were selected and described in clear behavioural terms, while ensuring that they aligned with each other.
Compare the current cultures with the target culture
The final step of the analysis was to compare the current cultures with the target culture, highlighting the main gaps and potential risk factorsin each company. Using this analysis, it was possible to draw up a concrete plan for how to establish and nurture a new shared culture, treating it not only as a potential derailer of the merger, but as a potential catalysis of the synergies and strategic rationales of the merger.
Close collaboration and facilitation on analysis, synthesis, and co-creation with a cross-company team and involvement of the new executive leadership team
A culture to deliver on the potential of
Novonesis
The analysis led to a target culture model with four core ‘Commitments’, that are designed to realising the strategic potential of the merger. The commitments rest on three building blocks each, containing descriptions of the behavior that should be exhibited to act out and live each commitment. The commitment building blocks are applicable across levels and functions and should give concrete guidance on how to act in line with the culture.
When the four commitments are effectively balanced and lived in the day-today of employees of Novonesis, the company as a whole will be more cohesive, effective and resourceful.
Journey and steps for activating and implementing a new culture
Rolling out the four ‘Commitments’ in Novonesis entailed a range of activities tailored to the structure, context, and culture of the newly established company.
The activities are the starting point for a transformation journey – the culture and the initiatives designed to embed it will drive the integration of the two companies. However, the work with nurturing the culture is never done. Using culture as a strategic enabler requires constant work to ensure alignment with the strategic goals and needs of Novonesis in the future.
1. Leadership principles, behaviours and activation
Translation of the commitments to specific principles and training material to ensure that leaders across the new organisation behaved and communicated in a way that was aligned and ingrained the new culture.
2. Building a new visual identity and brand
Close collaboration with brand and communication using the new culture framework and commitments to build a completely new visual and brand identity – that builds pride internally and drives differentiation externally.
3. Company-wide communication
Large and small initiatives to communicate, embed and activate the commitments across levels, functions and geographies, such as posters, training decks, videos.
4. Transformation enablement
Close collaboration with other integration tracks, such as communication, operating model, change management and HR, to ensure that the processes and structures that were built were aligned with the ambition and commitments of the new culture.
