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Merger and Acquisitions
By Dr. G. Clotaire Rapaille
Fiat is taking over Chrysler after Daimler lost billions trying to do exactly the same thing. Time Warner and AOL ended up in a fiasco. GM lost Saab, Ford lost Jaguar and Land Rover and today we have the battle of Kraft taking over Cadbury.
Why do most of these mergers and acquisitions end up in disaster?
Because they don't know the code... they don't know their own code - their corporate code. They don't understand that a corporation is a culture (rituals, myths, heroes) and has a code. They also don't know the code of the company they want to acquire or merge with. Of course they end up experiencing a "Culture Clash" and "Cultural War". Then they have no idea of the country culture code, (see how the Cadbury people in England are reacting to the American take over or the Danone disaster in China).
To succeed you need a corporate Psychologist-Anthropologist. You need a corporate culture Match Maker who can identify each corporate culture code and facilitate the creation of the NEW culture while keeping the best of each of the old cultures.
Royal Bank lost most of the brilliant people from Royal Trust when they acquired Royal Trust. Daimler lost ALL of the Chrysler executives when they took over Chrysler (most of them went to GM).
What is the value of a company if all of the brilliant people leave?
Mergers and acquisitions should bring more than the sum of their parts. How do we do that? By creating a new corporate culture that integrates the best of each original corporate culture. This new corporate culture should have "babies" with both companies DNA.
These babies should be:
On code with the reward and recognition system and have a deep shared gut feeling about the higher purpose of the new corporation. Just increasing share-holder value is not a goal, it is a consequence of having "fire in the belly".
Clear rituals, myths as well as stories about heroes, symbols and metaphors that speak to the corporate collective unconscious should be on code.
A new "Manifesto" should be created that clearly explains the commitment, vision, purpose and values of what the new corporation stands for and why the employees are passionate about it.
If you don't share it, leave!!
If you do share it, pledge your allegiance and re-pledge your allegiance every year.
Marriage is difficult. 50 percent of American marriages end in divorce. Corporations are sometimes different species (Time Warner vs. AOL). Try to create a baby from an elephant and a giraffe. It is not just because the numbers are good that the baby is going to survive. All of that was part of the plan for Daimler when they "invaded" Chrysler. After a few years, the value of Chrysler vanished. Wow!! They spent all that money and ended up with nothing.
The Time Warner-AOL saga is not better nor is HP with Fiorina. The benefits of these mergers never materialized and Fiorina lost her job.
What has happened to J.P. Morgan and Washington Mutual now that Chase runs the show? What will happen to Mexico's FEMSA (which includes Sol, Recate and Dos Equis) once the Dutch brewer Heineken takes over?
Remember when ATT tried to "function" with Olivetti? Or when Renault and Simca-Chrysler were together?
Less than 10% are success stories, and less than 20% just survive.
So it is time to do it right and to accept that a business plan is not enough.
You need a New-Culture-Creation plan, which will take into account the corporate cultures, the Nation-Culture (where they come from), and an action plan to create the new culture that is "On Code".
Enough money has been wasted and lost. To repeat the same bean counter-engineer-financial-economist approach can only lead to the same failures.
These people with all their mathematical models were not able to predict what happened on Wall Street.
It is wise to question their ability to predict the success of a merger or of an acquisition?
Hybrid children usually inherit the best of their parents, but they can also inherit the worst.
Between two corporations, this cannot be left to chance.
We now have the tools to do it right.
So let's do it!!!
Dr. G. Clotaire Rapaille
www.archetypediscoveriesworldwide.com
www.tuxedo-productions.com
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