market leader - working across cultures sb

7/21/2019 Market Leader - Working Across Cultures SB

http://slidepdf.com/reader/full/market-leader-working-across-cultures-sb 1/6



The art of joining different cultures

by Kim Thomas

A Mergers and acquisitions (M&As)provide a first-class opportunity to cutcosts, increase profits and benefit fromanother company’s knowledge and

5 expertise. Yet surveys consistentlyshow that a high proportion of M&Asdo not fulfil their objectives. One study

of senior business leaders conductedby the Hay Group found that only

10 9 per cent of mergers were judged‘completely successful’ in achievingtheir aims. So what goes wrong?

B Studies have found that three condi-tions are present when M&As take

15 place: that it is not business as usual;there are tight timeframes, withno slack in the system; and that the

people making the decisions are biasedin a particular direction. These pro-20 vide plenty of opportunity for things

to go wrong.C Faced with those conditions, it is

essential to have strong governanceand clear aims. The most successful

25 deals are very clear about the primarygoal. Is this about cutting costs througheconomies of scale? Is it about acquir-ing a specific capability or productand leveraging that through your

30 existing channels?D The hardest kind of deal is the ‘best-

of-breed’ merger with a competitor,which means bringing together two

powerful management teams, merging35 two sets of IT systems and aligning two

sets of working practices.E Carolyn Firstbrook, European Head

of Strategy at Accenture, the consul-tancy, maintains that setting clear

40 targets is crucial, and emphasisesthe importance of managing a tightprocess as well as taking importantdecisions quickly.

F Another frequent cause of failure,45 says Ms Firstbrook, is to under-estimate

the cultural difficulties in integratingtwo companies with very differentworking practices. When Hewlett-Packard (HP) acquired Scitex, a digital

50 printer company based in Israel with

500 staff, it was taking over an organi-sation unused to big corporate practices.G ‘You’re telling a fairly small, agile

company, which doesn’t invest a lot55 in processes or long-term planning,

that they need to conform with neces-sary corporate processes that aretotally alien to their culture,’ says PauMolinas, Operations Director for HP’s

60 graphics and imaging business.H The danger is that morale will sink

and people will leave the acquiredorganisation. In fact, says Mr Molinas,in the first 18 months after the acquisi-

65 tion, only four of Scitex’s staff havedeparted. Partly, he says, this was downto the goodwill HP had already estab-lished in its acquisition of anotherIsraeli firm, and partly it was due to the

70 hands-off approach HP took towardsScitex: ‘It was a market HP didn’t have

a lot of experience in. We wanted themto have a lot of freedom when it cameto investment decisions. So they were

75 teaching us, and they appreciated that.’I Cultural differences can even add

value, says Ms Firstbrook. ‘A mer-ger offers a window of opportunity,’sheexplains, ‘when all employees are

80 expecting and prepared for change,to introduce new ways of workingthat neither side may have accepted

in the past.’J But in the end, the trickiest question85 is: how do you know whether the

merger or acquisition has beensuccessful? Although many deals havedisappointing results, it has to beremembered that a merger often hap-

90 pens when at least one party is alreadydoing badly. Ideally, if you want toknow if the deal is a success you should

be measuring the business value com-pared to what would have happened if95 you hadn’t done the deal.



a study



studies carried out / conducted

market leader - working across cultures sb

Documents