There is a reason that marriages are not considered mergers. They are not the joining of two disparate groups to make a stronger bigger group, but the joining of two groups to make one cohesive unit dedicated to being great together, supporting each other and leveraging each other to be more successful.
Yes, marriages and mergers are different.
Clearly there is a difference in combing the operations of thousands of people versus two. But the sentiment is the same.
MIND-SET OR APPROACH
The reason that most mergers fail is mind-set. The approach of many mergers is to come out it from the standpoint of garnering new market share or swallowing a potential competitor or sometimes to even purchase new growth/new technology.
However, the standpoint is generally from the perspective of “how can we make our company bigger and better faster?” It’s not, “How does this merger benefit our customers, employees, and in the end, both companies.
Of course mergers are an important tool to continue the growth, viability, and infusion of innovation of some larger organizations. Often, on paper, these mergers make sense. They are the combining of two organizations that can leverage the economies of scale to drive down cost or corner particular market share.
Unfortunately, what ends up happening is people get in the way. Mergers, like any change, are messy and complex. Therefore distilling what could make a potential merger successful, in most cases, will you increase the likelihood of a long-term success and long-term return on investment.
Viewing Mergers like a Marriage
There are a few simple questions to think through before deciding whether or not the merger could actually work.
1. Will the resulting company be beneficial to both parties?
That is, when all is said and done, will the merged entity have benefited the two previously separate companies, the customers of the two previously separate companies, and the employees of the previously separate companies?
There might not be some employees that become redundant when there is a merger, but it’s important to make sure that those employees that are seen as assets review the merger as beneficial to them. If they don’t, it could be more costly to merge them to leave the companies separate.
2. Are the two companies’ cultures compatible?
Cultures that are diametrically opposed will likely clash and work against each other. It is likely that those cultures will never completely melt.
This constant internal battle between the two opposing cultures will undermine forward progress and often make it difficult, if not impossible, to implement new strategies or products quickly.
Therefore, it may be better to avoid a merger of two diametrically opposed cultures than to force the marriage between the square peg and the round hole.
3. Once the merger is completed, can the two formerly separate companies work together towards mutual benefit?
Although this is hard to determine prior to the merger happening, it is vital that both parties are willing to commit to the benefit of the newly created entity.
It is a desire to do what is best for the new organization, thinking about decisions and direction based on what will make the new organization successful.
Senior leaders have to be fully committed to this and wiling to reward and reprimand individuals that exemplify either.
4. Are both organizations willing to willing to give up something about themselves to make the new merged entity successful?
Each party or company must be willing to give up some tactic or artifact that is part of their cultural make up. Both sides need to show their willingness to be fully behind the new organization.
If these can be addressed with some level of certainty, the merger has a higher chance of succeeding. Undoubtedly, there will still be challenges; no merger is that simple. But, if both organizations are willing to embrace the new organization,a merger can work.
However, if there is not a goal of common success, then the merger will go the way to AOL Time Warner. Marriage sounds like a strange business term. It feels like there is some commitment to it. That is because there is.
Where do you think mergers go wrong? What can be done to make them more successful?
Anil Saxena is the President of Cube 2.14, an organizational development consulting firm that works with clients to increase both customer and employee engagement while decreasing turnover, improving customer retention, and increasing profitability within organizations.
Saxena is a certified High Impact coach and trainer and a Joint Application Design facilitator. He is also certified by both Rush Systems and IBM as a focus group facilitator. He is an inaugural member of Northwestern University’s Learning and Organizational Change program, and he earned his bachelor’s degree in mechanical engineering from the Illinois Institute of Technology.