Take two: Reinventing culture after an acquisition

When you take over a company with a long history and entrenched management style, how do you engage the workforce and persuade them to buy in to your vision for the future of the business? This was the challenge John Mahtani, ACMA, CGMA, and his partners faced when they bought Cinelabs London, a niche film lab that had been owned and run by the same person for more than 30 years.

Establishing the right culture at the company was particularly important to Mahtani, who, as an executive at Warner Bros. Pictures International, witnessed a culture clash between Time Warner and AOL staff after the companies’ 2001 merger.

But establishing the right culture amid change is never easy. And the Cinelabs London story is rife with change: a changing company in a changing industry with a change in ownership. Mahtani found that communicating the vision and creating an environment conducive to innovation were critical to managing that change.

A new strategy

As the major players in the film world, such as Technicolor and Deluxe, have transitioned to digital processes, Mahtani and his partners saw a gap in the market for a niche photochemical processor. Many directors, Quentin Tarantino included, still like to shoot on film. And the new owners of Cinelabs wanted to continue serving that pocket of the market.

But to ensure that Cinelabs London would endure even as film fades, an overhaul of the business model was necessary. The company did two key things.

First, Mahtani and his partners broadened the portfolio by offering a range of new services, including film scanning and digital mastering. Restoring and digitising film archives so they can be accessed and leveraged on digital platforms is another revenue stream with great potential. Photochemical work now accounts for just 25% of revenue, compared with 85% at the time of the acquisition.

A new quality-control process was another feature of the overhaul. Mahtani had worked on a list of blockbusters including 300, Superman Returns, Man of Steel, Inception, The Dark Knight, and all eight Harry Potter films while at Warner Bros. And he was keen to replicate the high standards he had observed there.

Once this new vision had been created, it was critical for management to communicate it to the workforce and secure buy-in.

Communicating the vision

Some of the longest-serving staff members were apprehensive about the new owners and feared they would be dismissed. Evaluating the acquired team was therefore an urgent priority.

While some roles did not fit in with the new business strategy, the adaptability of each staff member was explored. Fourteen of the 23 staff were retained, and Mahtani sought to demonstrate to them that he valued their technical know-how as well as their knowledge of the company’s history, services, and clients.

Mahtani believes communicating the company vision takes more than a one-off event. “To build a line of trust, it’s important to ask everyone individually, on a regular basis, ‘How are you getting on?’ ‘What’s your core focus?’ ‘What challenges are you facing at the moment?’ ‘How can we help you?’” he said. “If you take the time to identify their strengths and get them to build upon that, they flourish.”

One-to-one sessions are something Mahtani particularly enjoys. “I talk to everyone about the vision of the company, the role they play, and how important it is,” he said. “At the end of the day, an organisation will only grow if everybody buys in to that cohesive value chain.”

The dialogue continues at a fortnightly barbecue social hosted by the management team to thank staff for their efforts.

Mahtani believes that sharing some of the value a business creates with employees generates a much greater level of engagement. “I always say, ‘It’s not my business, it’s our business,’” he said. “Rather than draw lines between people, if you seek unity and collaboration, you start to really see a difference in the way people respond.”

Room for trial and error

An important aspect of the Cinelabs culture is the space to experiment.

“Innovation comes when people feel they are in a safe environment, safe from aggression, bullying, intimidation,” Mahtani said. “We make the team aware that, as long as their intentions are right and they put in their best effort, we accept that mistakes happen and things go wrong sometimes. The key is: What can we learn from that?

“We want people to feel that they have autonomy and they are accountable for the area they are looking after.”

For example, a new lab manager was unhappy with the chemical mix being used and wanted to look at alternatives. He ran a controlled experiment using test negatives to ensure there was no damage to any original stock, and the results were fabulous, Mahtani said.

Mahtani also strives to eliminate fear and empower staff to make their own decisions. “Initially, people came to me with so many questions,” he said. “I would ask them: ‘What would you do in that situation? Talk me through the three options. Which one do you like best? OK, do it.’ By the time they see me for the fifth time, they realise they have the answer. Now, rather than ignore a problem, people start coming up with solutions.”

Staff are encouraged to take responsibility for their own development and build their skills in other areas of the business, such as developing, printing, and maintenance. This not only provides a good crossover of skills among the workforce, it enables employees to move across functions within the company if they wish.

Work in progress

Cultural change is not like switching on a light bulb. It can take months or years. “But the quicker you start to focus on it, the more likely you are to impact change,” Mahtani said.

He added: “If you have a happy workforce, productivity comes on its own. Innovation comes on its own. That for me is the key driver. The atmosphere is just so much more positive and engaging, people are so much more responsive.”

All of this is reflected in the level of attention to detail and service that clients receive, he added. “Last month was our strongest revenue month yet, so we must be doing something right.”

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