Culture Clash: Sprint - Nextel

In the course textbook, Kinicki and Kreitner emphasize the importance of strong organizational culture, or a “set of shared values and beliefs that underlie a company’s identity” (36). They explain that while a number of different organizational cultures can be successful for a company, it is very difficult to merge two companies together whose organizational culture is very different. In fact, Kinicki and Kreitner state that “mergers often fail due to incompatible cultures” (45).

One famous example of a merger that many consider failed was between Sprint and Nextel, which merged in 2005. Sprint acquired Nextel in a $35 billion acquisition, with the idea that the merger would bring a stronger customer base and a strong strategy to help Sprint Nextel lead in communication changes (Sedensky). However, the merger instead brought on a wide array of problems and customer and employee discontent. The two company’s cultures were very distinct, with Nextel known for having a more entrepreneurial culture and Sprint having a more traditional, bureaucratic culture. A Washington Post article written by Kim Hart, two years after the acquisition explains that “The two sharply different cultures have resulted in clashes in everything from advertising strategy to cellphone technologies.” The Washington Post article explains this culture clash with an example, where at a manager’s meeting soon after the merger, the CEO from Nextel excited the crowd with a pep rally style speech and the CEO from Sprint followed up with a formal PowerPoint presentation. This difference in culture continued over time, with Nextel employees feeling that “the aggressive, entrepreneurial style that spurred its early growth had been stamped out by Sprint’s more bureaucratic approach” and Sprint’s employees feeling that Nextel’s more rash decision making was impulsive and apt to cause losses (Hart). The two sides also began to compete for now duplicated positions, creating even more tension. Many Nextel employees began to exit the company, which in turn made Sprint employees feel abandoned (Hart).

When looking at the Competing Values Framework outlined in the book, Sprint seemed to have a hierarchy culture, with a more structured work environment, while Nextel seemed to be in line more with an adhocracy culture, valuing flexibility and the ability to quickly respond to market changes. These organizational cultures completely contradict one another. The adhocracy culture, emphasized by Nextel, has an external focus and values flexibility, while the hierarchy culture emphasized by Sprint, has an internal focus and values control. No wonder the two companies found themselves so at odds with one another. However, it is possible to bring two different cultures together and I think that one of the problems with the Sprint Nextel merger was that they tried so hard to recognize the cultural differences of the two companies that they created a competing, me versus them environment. Instead, they should have focused on identifying the culture for the company as a whole and begun the process of culture change outlined in the text.

Even more importantly, Sprint and Nextel should have considered cultural differences when considering the merger in the first place and thought about the consequences such a merger might bring. Recently, AT&T has announced plans to acquire T-Mobile (Associated Press). While AT&T has cited increased coverage as a strong benefit for the merger, I wonder if they have considered the difference in the two company’s cultures and the effect this might have on the merger’s success. Like, the Sprint - Nextel merger, AT&T - T-Mobile is a merger of a company known for its innovation and creativity (T-mobile) and a company known for its more bureaucratic and traditional company culture (AT&T). Will this merger find more success?