Research suggests that over 30% of mergers fail because of culture incompatibility, and a lack of consideration and attention being given to the merging or transformation of the cultures.
Mergers and acquisitions are more common than ever in today’s context of international business climate. If your organisation has never been through a process of integration or assimilation, it is probably just a matter of time.
Mergers are never straightforward affairs and in fact studies show that many mergers are doomed to fail. The failures result in poor shareholder results, layoffs and in some cases a complete dissolution of the merger.
Some of the contributing factors for this are; regulatory pressure, overestimating the worth of the acquired organisation and over investing. Or it is simply a poor mix of product, market or even resource synergy. And possibly the most common reason for integration failure, is the lack of understanding of the impact that the cultures within the merging organisations will have on the success or failure of the venture.
Recently Nokia acquired Alcatel Lucent and is currently investing time, money and attention in understanding and identifying how best to assimilate their cultures. Both organisations are determined that the acquisition does not become one of the 30% failure statistics and I am delighted to be currently working in Paris with theses two groups supporting their transition thinking and plan.
It seems obvious that considering cultural fit and synergies is a sensible thing to do during a merger or acquisition, but in fact it is not common practice or considered with enough depth. Fortunately Nokia and Alcatel Lucent have recognised the benefits of understanding and working with their combining cultures to create the best outcome for their business future.
Cultural Observation For Consideration
If your organisation is going through any form of transformation, from merger acquisition, restructuring, modernisation, or brand re-positioning, make sure you factor in assimilating the various organisational cultures involved as part of your ‘change’ process and the accompanying mind set shifts.