Pulling off a corporate merger or acquisition is one of the hardest tasks that a corporate leader can face. The way that the integration of the two organisations is managed can make all the difference between the success or failure of a corporate merger or acquisition operation. According to Successful Mergers, Acquisitions and Strategic Alliances” (published by McGraw-Hill), most failures result from an inability to grasp the implications of the corporate culture aspect. ICM’s work sets out the key factors of success: how to properly prepare an integration plan, how to capitalise on cultural differences, how to steer the integration process and deal with different approaches to things like time management.

    In the case of Renault-Nissan and Air France-KLM, the corporate leaders managed to avoid many pitfalls: the syndrome of the saviour, the current trend, and the belief that big is always right and best, and the tendency to focus on what the customer wants right now whereas what really matters is what he will expect tomorrow.

    In both cases, the corporate leaders involved demonstrated the need to understand and accept cultural differences in order to successfully pull off mergers and acquisitions. It is in a spirit of dialogue, of close and extensive contact with its new partners that each company was able to gain a better understanding of its own culture and even change the way it saw itself before ever thinking of changing the other.

    These two groups managed to define a new approach to mergers and acquisitions. Their corporate leaders initially tried to bridge the cultural divides rather than fashion a new culture from the word go. To do so, they commissioned detailed analyses of the factors of success and failure of any integration process. The “Culture Bridging Fundamentals TM” approach involves dealing with the issues that people would like to express but are worried to air openly, with their innermost fears and hopes. By openly delving into their own past successes and failures, the companies drew useful lessons from their respective histories. By identifying the differences between their practices and ways of doing things, such as the decision-making processes in particular, the people in charge of the integration process were able to draw up a map of the pitfalls to be avoided at all cost.

    Among the most serious of these pitfalls, one might mention the risk of falling into a wait-and-see attitude, the loss of talent and the erroneous belief that convergence is inevitable. In reality, the natural tendencies of individuals are directly opposed to the uniform adoption of best practices, with each individual trying to impose their own way of doing and seeing things. “When strategies and cultures clash, culture always wins over” (Jack Welch). Hence the need to grasp the cultural aspect right from the very start of the integration process.

Marc Raynaud
Partner
Inter Cultural Management Associates (ICM)