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Buy companies like a salad bowl
Keeping each culture
Beacon acquires businesses from founder entrepreneurs who have built something special, and each comes with its own unique culture. The idea is not for them to blend into the sauce Beacon is making. Each brings its own unique ingredients, and together they make a better-tasting salad.
Canada versus America
The frame is the Canadian concept of a salad bowl versus the American concept of a melting pot. Most of Beacon's businesses are in the U.S., and entrepreneurs react to the comparison in all kinds of ways, though it has been helpful.
Founders at headquarters
The same founder-first approach shows at headquarters, where 65 percent of the engineering, product, and design team have been founders before. Beacon owns over 30 businesses, and 75 percent are still run by their original founding entrepreneur. A team of former founders has downsides, but cultural cohesion outweighs them.
Where did the salad bowl idea come from?
Canada adopted an official multiculturalism policy in 1971 under Prime Minister Pierre Trudeau, and the Canadian Multiculturalism Act followed in 1988. The word mosaic had been popularized for Canada by John Murray Gibbon's 1938 book Canadian Mosaic. The melting pot image comes from Israel Zangwill's 1908 play The Melting-Pot, which was set in the United States.
Why do acquired companies lose their culture?
After a merger, the buyer often applies its own systems, reporting lines, and routines to the acquired business, and those changes reshape daily work. Organizational psychologists Susan Cartwright and Cary Cooper found in the 1990s that cultural incompatibility was a major cause of merger failure. Employees at the acquired company can feel that what made their workplace distinct has been replaced. Their work grew into a widely cited body of research on mergers.
How do holding companies stay decentralized?
Berkshire Hathaway, headquartered in Omaha, Nebraska, runs its subsidiaries with a high degree of autonomy. Warren Buffett has described the approach in his annual shareholder letters for decades, saying that managers of acquired businesses keep running them. A small headquarters staff handles capital allocation and leaves operations to the people on site.
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