By Emily David 

Peter Drucker’s famous line “Culture eats strategy for breakfast” is one which is often quoted, but also regularly ignored or merely paid lip service. This lack of regard for the importance of culture is, among other things, short-sightedness on the part of any organisation – especially a globally minded one looking to expand. 

A recent survey from Bain & Company found that culture clash is one of the top reasons why so many mergers and acquisitions fail to realise their promised potential. Following an M&A, a company should look to forge a new, unique and unified culture that properly embodies its people and makes the organisation more than the sum of its parts.  

From Biostime to H&H Group – Building a strong, cohesive business culture 

In 1999, a twenty-year biotechnology veteran named Luo Fei saw the niche opportunity of a lifetime, addressing a gap in the China market for infant probiotics. His company, Biostime, launched in 2003, and by 2007 was a market leader, its name synonymous with infant probiotics. 

With more than 300 million RMB in annual sales and a highly innovative marketing approach based on educating mothers about probiotics through events and their signature Mama100 membership platform, Biostime grew rapidly, at first, but soon approached a growth cap. Facing a choice between pushing probiotics to all ages or diversifying its product range while building on brand recognition, they opted for the latter. 

Biostime again grew rapidly after its Hong Kong Stock Exchange IPO in 2010. Its high-profile acquisitions came thick and fast, including brands such as Swisse, Dodie, Good Gout, Aurelia, Solid Gold and Zesty Paws. By 2017, it had grown from a purely infant probiotics company to encompass a highly diversified product range, including nutrients, vitamins, skincare, organic food and pet products derived from companies positioned across the globe. 

At this point, the organisation’s leadership decided to change the company’s name from Biostime to H&H (Health & Happiness) Group. 

Forging a singular identity 

Creating a strong, cohesive culture among so many disparate elements required H&H Group to establish a unified vision for what the brand was, what it stood for and how its employees could live up to those established values. This involved a number of steps: 

Determining the ‘thread’ 

What made these very different companies come together to create an inclusive, cohesive corporate identity? Leadership realised that the thread that joined them together was the concept of promoting health and happiness for babies, adults and pets. Hence the name change. 

Creating mottos and logos as cultural reinforcement 

While the established, well-known individual companies within the group remained unchanged in terms of their branding, the newly minted H&H logo depicted people holding hands, in an uplifting, joyous way. This reinforced a sense of cooperation, community and happiness, and was consistent with the group’s motto, Celebrate Life Every Day (CLED). 

Ensuring the office environment reflects the new culture 

H&H encourages its employees to aspire to health and happiness too, alongside their customers. In the office environment, this manifests itself in many ways, from giving employees access to yoga rooms, parenting areas and bike storage to visual reminders in the workplace to embrace the CLED way.  

Having events and actions go beyond mere words 

Culture must be displayed through actions, not just words. H&H reinforces its encouragement of CLED with events such as H&H Heroes, where individuals are nominated by peers for embodying the company’s cultural values. Prizes are individualised too, as winners can choose from $1000 to a charity of their choice, $1000 in health and beaty spending, or the ability to take five days off work. While encouraging the pursuit of health and happiness, this approach also recognises the individuality of employees – a tangible form of celebrating diversity. Employees are further encouraged to connect and bond outside of work through non-work-related events and opportunities. 

Balancing growth with cultural solidification 

To solidify the new cultural identity and vision that H&H wanted to pursue, M&A activity was paused briefly to create the New H2 Fund, a venture fund specifically designed to seek out smaller companies that fit with the H&H brand and its cultural values. Since its founding, New H2 has enabled highly targeted acquisitions that strengthen the H&H global product range but without weakening its sense of purpose or identity overall. 

The lesson here is that, once the new cultural vision is set, all future M&A activity must be based on finding appropriate companies that are a good fit culturally, not just financially. 

Creating a ‘glocal’ management strategy 

The H&H example shows that you can have a strong, unified, ‘glocal’ culture if you are willing to put in the legwork and maintain an established vision when considering future growth. Always remember: 

• There must be buy-in to global group values and vision. Empower your local teams to make their own marketing and management decisions once the cultural identity is set. 

• Go beyond the surface level; encourage bonds between employees and reward the kind of behaviour you want to see, in a way that fits the cultural message. 

• Be aware that a strong culture must also be an inclusive one. Otherwise, it can become an echo chamber that is so homogenous that it stifles innovation and individuality. Everyone must feel psychological safe enough to know instinctively that they can speak up. 

• Finally, all of these desired behaviours should be modelled by leadership. Share vulnerabilities, and demonstrate positive reactions when employees speak out. 

This article draws on findings from a business case study entitled “H&H Group: A Global Firm with Chinese Origins (A)” by Emily David and Iris Wenting Xue. Learn more at ChinaCases.org. 

Emily David is an Associate Professor of Organisational Behaviour at CEIBS. For more on her teaching and research interests, please visit her faculty profile here.