Writing this week is John Graham. He co-founded Guildmaster Consulting, specializing in management coaching. For more content like this, check out Guildmaster’s blog and follow them on LinkedIn.
By now, it seems pretty clear that Elon Musk’s takeover of Twitter is a disaster of epic proportions. He’s lost billions of dollars, and Twitter engineering is on life support. On the one hand, seeing how Musk took the reins made the failure unsurprising. He did every “bad manager” thing in the book.
But on the other hand, it didn’t feel inevitable to many people when it started. After all, Mr. Musk successfully leads Tesla and SpaceX. Why wouldn’t he be able to successfully lead Twitter? Intuitions aside–whether you thought Musk was a genius or a scoundrel–how would one rationally see this coming?
The answer is leadership.
Big OH Theory of Leadership Recap
In our blog at EngagedAgility, we illustrated how your Big OH culture is highly affected by senior leadership. Let’s recap here.
First, Big OH culture is Guildmaster’s model of company culture that says: companies tend to have two dimensions of values, similar to those found in human personality.
One dimension is called openness to experience. Some companies are open to experiences, while others are closed. Think of these companies as risk-taking versus risk-averse.
The other dimension is called honesty-humility. These values play out in a group setting as being more collaborative on the one hand or more competitive on the other. We call the former high H and the latter low h, with capital and lowercase letters used as code.
Why do the personality traits of individuals drive group values? Because out of the 6 personality traits studied in the HEXACO model of personality, it’s only these two that tend to drive affiliation among people. In other words, if you’re extroverted, you’re still likely to have introverted friends. However, if you’re humble-honest and cooperative, you’re less likely to have manipulative and competitive friends. You just won’t get along.
Leaders Drive Culture
In our other post, we talked about how leaders are one of the most significant influences on culture. This is because senior leaders have the most outsized impact on who is hired, who is fired, and what feedback is given. In this way, they shape the culture by changing the kind of person that will work in an organization.
I admit I was mainly writing from a “founders” perspective; though the model also applies to a company where leaders rise up the ranks. Someone founds a company, and broadly the company will reflect that person’s values and adopt an OH culture along the founder’s axis.
Alternatively, a company will have a strong culture, and certain people will succeed. Those people will eventually rise up the ranks and reinforce the culture in which they flourished.
I did not write the introductory post on leadership and culture with acquisitions in mind. Generally speaking, the firm will reflect the personalities of those at the top. What happens in an acquisition where top leaders are removed, and entirely new leaders (or a single leader) take their place? And what happens when the acquiring entity’s values don’t match the acquired company’s values?
What Was Twitter’s Culture?
In 2014, Twitter was winning awards for its culture. It could not afford the high salaries of its competitors and so largely tried to win talent by being a place where you can `#LoveWhereYouWork`. The value that comes across in many reports is collaboration.
That’s a high H value. Most company documents could be seen by any employee, and all calendars were transparent. There was nothing to hide. Information access was flat, reflective of Twitter’s mission to make it easier for information to get out. It was easy to have open dialog with company executives.
There’s no evidence of any significant shift in culture since then. Mr. Musk most likely bought a collaborative high-H company that expected to work in a certain way and had employees who shared specific values.
Okay, What Culture Does Elon Musk Bring?
(Let the speculation begin!)
Musk has a history of allegations of retaliation. He often seems more interested in controlling information than spreading it (ironically). In my opinion, he’s often used his power to his own benefit. This is further underscored by multiple sexual assault allegations lodged against him.
That’s a very low h value. Elon musk is brilliant— a word we often use to describe folks with sociopathic tendencies that we manage to keep around anyway.
The companies he’s run also appear low h, with Tesla fighting off allegations of lax safety standards in the name of productivity and SpaceX dealing with sexism allegations.
Thus, applying our model would predict a significant culture clash–a competitive leader taking over a cooperative workplace.
So That’s What Happened…
As Elon explained, his strategy for Twitter was to become “hardcore”–whatever that means.
Some might argue that to truly succeed, you have to be competitive. This inevitably leads to a bit of “Great Man Theory” whereby the most cutthroat need to rise to the top of the organization to steer it. Regardless of this theory’s ahem fascistic tendencies, it just isn’t empirically true.
What often happens in run-amok competitive cultures is everyone is so focused on backstabbing each other that actual enterprise value goes out the window. While backstabbing may be less clear, lost value is apparent. Twitter’s been marked down so much that Elon Musk has to deal with margin calls. He has earned the dubious title for most money lost ever in history.
But Why Would He Do That?
It’s easy to figure out why Musk did what he did if you accept the personality traits and values above. It’s hard to explain the purchase of Twitter if you still cling to the notion that Musk is a super genius.
Collaborative cultures throw out the notion of genius. Great teams do things, not great men. And great things are accomplished when those teams benefit from the outcome, not by the strong exploiting the weak.
Why did Elon Musk buy Twitter? Because he believed his own propaganda that he was a genius, most likely, and could do no wrong. He also seems to me to be an intrinsically manipulative person; and the opportunity to control one of the levers of information in today’s society was too tempting to pass up. A tragic flaw: the wealth and power accrued are never enough, and eventually, the competitive person will overreach and…
“Still,” some might argue, “It might be so dumb it’s brilliant…”
Takeaways
This is a leadership lesson with both a broad and narrow focus.
The narrow focus is on mergers and acquisitions themselves. The takeaway there?
Identify and consider company culture. What is the acquiring company’s culture? And what is the acquired company’s culture?
If they’re different, mark down the deal’s value. The massive turnover and emerging clashes will almost certainly wipe the acquired company to zero. Culture clash may be one primary reason that only a small fraction of M&A generates value.
This is an odd takeaway, especially for a people management author on an agile blog. Still, we’re entering a period of industry consolidation, so we’re likely to see many companies gobble up others.
The broad focus is trying to explain why this weird and dumb thing happened. Why did the Twitter acquisition fail so terribly? Because of a culture clash. And why did someone low on humility put so much money into buying a company high on humility? Because he couldn’t help himself–he’s low on humility after all.
As I’ve mentioned to many of my clients: this is a tale as old as time. Either in the rise and fall of political personalities or on the battlefields of Ukraine, the values of cooperation and collaboration are embattling those of manipulation and competition.