Acquisitions often fail and cultural problems are often part of the problem.
Try getting a team of entrepreneurial-minded people to maintain the same level of passion and adventurousness when they’ve just been swallowed up by a larger, and, usually much older, beast.
Marc Lore has been on both sides of the equation. Last year, his e-commerce startup Jet.com was acquired by Walmart, but he decided to stay on as CEO of what is now known as Walmart.com.
He already has helped steer an acquisition of his own after Walmart.com bought outdoor retailer Moosejaw, which has a large online presence and 10 physical stores.
“Empowerment means you agree with your new parent company. It means giving true authority to others, and providing autonomy and responsibility. Building trust with talented leaders is vastly more important than the outcome of any single decision.”
Lore says it’s tempting for CEOs heading up acquisitions to try and take a hands-off approach. After all, the CEO of the acquiree will probably have a decent-sized ego and wouldn’t want another manager meddling in their affairs. Best to just leave them to it.
CEOs taking such an approach, however, could be making a big mistake.
“If you simply tell them “keep doing what you’ve been doing”, you take away the exciting part of their careers—the part where they face new challenges and experience the sense of accomplishment that comes with finding inventive solutions,” Lore writes in a LinkedIn post.
Instead, he said, leaders should be offered more responsibility to keep them engaged.
For example, when Walmart.com acquired Moosejaw, Lore didn’t just ask CEO Eoin Comerford to continue managing it as a standalone site. He also asked Comerford to run the entire outdoor category across all of Walmart and Walmart.com, in addition to running Moosejaw.
“We haven’t limited the challenges he and his team face, we’ve increased them. He has more responsibilities and opportunities now than before the deal happened,” Lore said.
Of course, handing over more responsibility comes with a degree of risk attached. It also means giving up power to someone else, leading to inevitable disagreements over strategy.
As far as Lore’s concerned those are risks worth taking.
“Empowerment doesn’t mean you get to do whatever you want as long as you agree with your new parent company,” he wrote. “It means giving true authority to others. It means providing actual autonomy and responsibility. Building trust with talented leaders is vastly more important than the outcome of any single decision.”