by Jason Richmond, CEO and Chief Culture Officer at Ideal Outcomes, Inc.
I recently embarked on an undertaking that research shows has anywhere from a 70% to 90% failure rate. What was it and why would I do such a thing? What made me think my odds of success would be any greater?
The failure rate, according to Clayton M. Christensen, the academic and business consultant who developed the theory of “disruptive innovation,” relates to mergers and acquisitions on which U.S. companies spend more than $2 trillion every year.
Here’s what I did, why I did it, and how I am working to make sure I’m definitely not part of that dreadful statistic.
Ideal Outcomes, the company I founded in 2014, works closely with the Dale Carnegie companies. Recently, I acquired the Dale Carnegie franchise in Orange County, California. The game plan I followed is a template for any business owner wishing to pursue an acquisition.
Thoroughly research the company you want to acquire. This involves analyzing financials, assessing if the company culture matches your own, getting to know the employees, weighing up any liabilities, and doing everything you can to make sure there are no hidden surprises. In my situation, I was extremely familiar with the Dale Carnegie operation. I’d worked closely with the franchise for eleven years and prior to launching Ideal Outcomes I’d been Global Vice President Client Acquisition and Services for Dale Carnegie corporate. Due diligence done!
Clear Strategy and Vision
The purpose behind the merger or acquisition should be clear up front. What are the benefits you hope to achieve? Do you envision client expansion, improved product development, cost benefits? In my case, because I’d worked for such a long time not only with the franchise but also its key clients, I was well aware of the significant synergy that already existed between both companies. It made sense to cement that relationship, enhance prospects of new business, and share some operational expenses.
As I wrote in my book Culture Spark: 5 Steps to Ignite and Sustain Organizational Growth, “Corporate culture is a more important consideration than it has ever been. For companies to grow and move beyond the plateau it’s essential to be fully aware of the risks and rewards of global expansion, the challenges of merging with other companies whose culture is vastly different, and how rapidly-evolving technological advances change everything.”
As I mentioned earlier, 70% to 90% of corporate marriages end in failure, shockingly higher than for personal marriages which is a mere 40% to 50%! The number one reason for the failure of corporate marriages is culture clash: two different mindsets, two different ways of operating, two different aspirations. Or as Don Harrison, developer of the Accelerating Implementation Methodology (AIM), so neatly expresses it, “Same beds, different dreams.”
The culture shock many companies experience during a merger doesn’t exist in this case, since my team and I have built such strong working relationships and friendships over the years with the DCOC team. We have a shared sense of the kind of corporate culture that places people and values at the forefront.
Many aspects of success in business revolve around effective communication, a skill that’s often sorely lacking. It’s even more important when a merger or acquisition is underway, especially in the early days when employees on both sides are most nervous about the relationship and how it is going to play out.
It’s imperative to be transparent. Clearly explain to employees and associates of both companies the reasoning behind the merger or acquisition and how it will benefit all concerned. Keep them informed and involved. Foster links between peers at the two companies. This is advice I gave in my book, and this is how I implemented it between Ideal Outcomes and Dale Carnegie.
For the Ideal Outcomes team, which is spread across the country, I provided details in our weekly team meeting. For the Dale Carnegie team, I met with individuals in person in their office. While some team members on both sides already knew each other I made a point of introducing others who didn’t. I also hosted a welcome party where team members were able to socialize and get to know each other better.
And don’t forget about communicating with the acquired company’s client base. They also need reassurance that their needs will continue to be met or exceeded.
Retaining Key Talent
It’s almost inevitable that key employees will feel threatened. That’s what happens in times of change. It’s vital to have an open door to allow everyone to voice their concerns, even though the workload involved in coordinating a merger or acquisition brings acute pressure on your time. Be prepared to let them know how they fit in with the ongoing business development. Reaffirm to them how the company’s core values remain intact, even amidst change.
A company is only as good as its people and the human elements (the relationships and informal structures) must be given just as much time as the operational elements (systems, and policies and procedures). Alleviate concerns about job security and role changes as soon as you can.
Every merger or acquisition is unique and the road to success is fraught with challenges. It’s natural that many individuals will be nervous and stressed when the status quo is changed. It’s critical to proactively address concerns and have a clear strategy in place to ensure a smooth transition for everyone. That’s what I’ve strived to do…and I’ll let you know in a couple of months how well I did! Join the conversation by following us on LinkedIn.