Why a Post about M&As?
I have read many posts and articles about Mergers and Acquisitions (M&As). There are more than a few forms of M&As. You can read more about them on Investopedia and elsewhere. I hope to briefly show here how the three “Whats” of “What?”, “So What?” and “Now What?” can be asked in different forms when we are faced with situations akin to M&As. Using analogies is a good way of expanding our thinking into possibility thinking. Good leadership competencies being manifested throughout the process are assumed. Perhaps an Enterprise Union might be able to avoid at least one of the disadvantages of the European Union. The European Union has control over monetary policy, but not fiscal policy. Read STRATFOR and Geopolitical Futures to get insights as to why this has contributed to the Frankenstein condition we observe today. More understanding will also lower the perceived need for “Change Management” projects that are running rampant.
Mergers & Acquisitions. Enterprise Union?
Investopedia defines Mergers & Acquisitions as:
Mergers and acquisitions (M&A) is a general term that refers to the consolidation of companies or assets. While there are several types of transactions classified under the notion of M&A, a merger means a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed.
One way of grasping the essence of the different types of M&As follows.
A simple way of capturing the essence of the different types of M&As is how the ABO blood types of children are determined. Here, one parent has AO and the other parent has BO type blood.
The parents exhibited only blood types A and B. The children, however, can possibly exhibit blood types A, B, AB and O. This will be clearly seen if the parents have more children.
What does that mean for an Enterprise Union? Simply put, the more dominant cultures will either be manifested or co-manifested. The less dominant cultures will not be manifested. The difference between ABO blood types and corporate culture is that if a currently less dominant culture is seen to be desirable, it can be grown and made to become more dominant. Before we examine that, we need to first understand why an M&A is taking place.
Purpose of M&A?
People always forget that bigger is not always better. The deep question “Why?” is seldom asked. If it does happen to be asked, it is not often clearly answered. We need to realize that if an M&A is conducted simply for profit, the resultant entity, whatever form it takes, might actually turn out to be a loss-incurring quagmire. Have you asked the “Why?” Does the answer make sense? If so, ask more of the “What” and “How” questions before proceeding. If the answer doesn’t make sense, then you should be asking yourself why you are doing this at all!
A cursory glance at any list of corporate values would indicate a harking back to universal, non-negotiable principles. No business wants to be seen as an exploiter, it’s simply not good for business. So, at the universal, non-negotiable principles level, M&As, or Enterprise Union, as I call it here, should not be a problem. So why do so many end up in disaster?
Culture – Manifested Values
The answer lies in differences in the cultures of the merging entities. Culture is simply how we choose to manifest, or demonstrate, core values embedded in universal principles. However, we need to remember that it is also how we choose to allow the culture to not manifest. If two cultures are strong and based on bedrock values, there would be fewer issues for Enterprise Union because their principles would already be aligned. The different preferences are far more easily managed than we usually imagine. What has been making them difficult is a mistaken notion of tastes as “culture.” We are too ingrained with the notion of “Their Culture” and “Our Culture”, this whole “Us and Them” sort of outlook. If M&As are to succeed, we need a much higher order of thinking.
Another big reason why M&As break down is poor coordination. This is surprising, since people working in enterprises of any size seem to be able to coordinate everything else rather well. One main reason for this poor coordination is the fear of being gotten rid of. Such issues need to be addressed well before the time. Coordination goes a whole lot further than simply matching dates and time slots. It is about taking the time and effort for both sides to get to know each other. In effect, they need to be “dating.”
Debridement & Growth
There would tend to be many legacy systems, particularly in IT. These need to be realigned and decisions must be made as to what to re-purpose or discard completely. The old adage “If it ain’t broke, don’t fix it” must also be thrown out the window. Just because something ain’t broke doesn’t mean it works well, particularly in the newly merged environment. Choose what to keep, what to merge, what to throw out, and what to develop. Your M&A efforts will prove to be much more fruitful!