According to SHRM, 70-90% of all mergers fail to achieve their anticipated strategic and financial objectives, and the failure-rate is often attributed to various “people issues,” such as “incompatible cultures, management styles, poor motivation, loss of key talent, lack of communication, diminished trust and uncertainty of long-term goals.”
According to our own anecdotal observations, roughly 100% of carefully followed cake recipes successfully result in cakes.
What’s the connection? Baking a cake requires a series of chemical reactions that transform individual ingredients into a cohesive dish, and it’s basically a two-step process: Blend the ingredients and put them in the oven. The oven’s heat provides the energy necessary to cause matter to collide with enough precision and force to break old chemical bonds and form new ones. This is textbook chemistry.
When merging people from two or more corporate cultures, the goal is likewise to produce a chemical reaction, one that will transform them into a new and better cohesive whole. There’s already lots of heat from the friction, emotional toll and intense pressure of a merger, but absent the pre-requisite (successful) blending, people fail to cohere. And of course, this means no transformative chemical reaction.
That’s why when merging two or more corporate cultures, it is imperative to very quickly and effectively blend key people while at the same time applying the heat that will unify them. Force key leaders, influencers and doers from across merging companies into direct collisions with each other around the shared purpose of ensuring their new company thrives, and like the collisions that transform cake ingredients, magic will happen. Or, to be more accurate, chemistry will happen.
Your only question should be how best to do that.
How to Quickly Catalyze a Transformative Chemical Reaction
Blend all the right people together in one place for a few days
Bring a select group of people from across the merging companies together at the very beginning to get to know each other, to have it out and to move forward in unison on an action plan they co-create. Accomplish that in two or three productive days at the very start of a merger, and you will accelerate through several months of churn and frustration, and quickly mobilize important champions who will bring others along. Selecting the right variety of people is key.
A recent Oil & Gas Industry merger launched their integration efforts with 42 people from across the two merging companies, including executive leadership, managers, supervisors, North American sales, International Sales, marketing, R&D, manufacturing, finance, IT, HR and so on. These people spent three days together discussing and struggling with all of the topics they needed to sort out. There was conflict, fear, distrust and all the other dynamics you’d expect, and they dealt with it all amongst themselves in those three short days.
If they weren’t all in the room together, they would not have seen the whites of each other’s eyes, heard the stories, shared their concerns, argued through what needed arguing through and jointly built and committed to a plan.
The evidence that the ingredients were blended quickly and effectively:
• Nearly 90% felt that what they achieved in three days would have taken at least four months if they hadn’t spent well-orchestrated time together building the plan.
• More than 90% of participants said they are likely to stay connected with the new people they met, that their trust in and working relationships with colleagues had improved, and that whereas they knew only 43% of the others in the room at the start of the three days, by the end they knew 90%.
Apply heat by tasking them with figuring out how to achieve stretch results
Once you’ve brought all the right people together, give them a clear question to answer (packed with stretch goals and ambitious timelines) and let them take it from there. Make it clear that they are expected to work together to find and recommend the right answers to the question by the end of the few days they have together and have them start by deciding what they need to talk about. Set the bar high, put the pressure on and let them at it.
In the Oil & Gas example, their group was tasked with recommending a plan that would lead to whole-is-greater-than-the-sum-of-its-parts results in terms of growth, margins and workplace excellence. They weren’t told how to achieve those results or what topics to explore. Instead, they were given a big question to answer and the opportunity to set their own agenda of topics that would lead them to answers. The agenda-setting was important enough to consume their first half-day together: Nothing was rigged; it marked their first genuinely collaborative effort together; and it launched the rest of their efforts on the right foot and with the right mindset.
Some of their chosen topics were highly contentious and vital to resolve right away, rather than leaving them festering for weeks or months. Their rapid exploration of those topics was hard and fraught with emotion but dealt with and out of the way right up front, thus making less contentious items easier to knock off.
In the Oil & Gas example, the evidence of the successful application of heat to the right blended ingredients included the following:
• With respect to the question and the topics they chose, more than 97% of the participants agreed that the relevant perspectives were represented in the room and that the question and topics spurred the conversation needed to address the complexity of the merger;
• Fully 97.5% of them believed their plan was actionable and felt committed to it.
Orchestrate a high-volume of high-speed, high-quality collisions amongst them
A hand-selected group of people, a very short time together, an ambitious question and the right range of topics determined by those involved…that leaves out only the catalyzing agent, high-volume, high-speed, high-quality collisions.
With the entire group together for a few days, you can’t take chances with casual interactions. You need to ensure that every person is connected directly with every other person and that at every interaction point there is effective discourse, passion, discipline, repetition and capture.
Effective discourse can be ensured using specific behavioral rules and roles, enforced by a neutral facilitator. Passion is the result of the natural pressures of the merger, critically important self-selected topics, stretch goals, tight timelines and high expectations. Discipline is imposed by behavioral roles and a well-managed schedule. Repetition allows for human and team dynamics to play out over progressive conversations. Capture, again by a neutral party in the room, means that nothing is lost from the broader set of conversations and that information will flow from topic to topic.
In the above Oil & Gas example, the evidence of high-volume, high-quality, high-impact collisions included the following:
• There were 32,000 collisions carefully orchestrated over three days. The direct person-to-person collisions blended people, catalyzed them, and drove shared clarity and ownership for what had to be done to ensure a successful merger.
• 95% felt people actively engaged, more than 87% felt perspectives were voiced honestly and openly, 83% felt energized, and 100% felt responsible for helping to make the merger work.
Have Your Cake and Eat It Too
When companies merge, the opportunity is to reap benefits that are otherwise unattainable by each one on its own. Those benefits might be revenue or margin related as a result of product synergies, economies of scale, access to new customers or new markets for one or both companies, blending of teams or other efficiencies. Why else merge?
While the Oil & Gas merger example cited here is still “in the oven” baking, all 42 people involved came away from their three days together understanding the critical importance of the merger, understanding the perspectives of the other participants present, knowing key contacts from both companies and feeling clear on and committed to action. As one participant put it: “I feel upper management has entrusted us in our business. They have positioned us for success.”
Blend people. Apply heat. Have your cake and eat it, too.