Mergers & acquisitions are only successful thanks to organizational culture, China’s economic dictatorship and the meaning we give to our life. Serious topics in this week’s Before The Weekend.
Mergers and acquisitions are only successful thanks to organizational culture
The two French enterprises Veolia (specialized in water purification) and Suez (specialized in waste disposal) have agreed on a 13 billion EUR deal where Veolia will acquire Suez. It took months of hostile bids, fighting and defending to find an acceptable deal.
Earlier this year, the Italian-American Fiat Chrysler Automobiles group FCA and the French PSA Groupe, with well-known brands Peugeot, Citroën, DS, Opel and Vauxhall, concluded their merger operation in a much more civilized way, leading to the new enterprise Stellantis.
Where does the difference between these two come from?
In M&A’s the main drivers are often financial like growth or cost-saving, operational excellence, R&D sharing or sales/market share. Although there’s nothing wrong with that logic in itself, I too often see how organizations stumble in the process, because they don’t sufficiently take into consideration the most important asset: culture! It should get the same or even more focus than the financial aspects.
If you think that organizational culture is something fluffy and irrelevant in M&A’s, let me give you some examples of very dramatic failures: Sony & Columbia Pictures, Daimler Benz & Chrysler, AOL & TIME Warner, Volvo & Renault, ABN Amro & Fortis. Some are still ongoing like Air France & KLM, Bank of America & Meryll Lynch and some years ago there was the attack of LVMH on Hermes.
So how do you approach M&A’s in a better way?
I have two key recommendations:
- Be conscious of the importance of organizational culture of the new organization to make the financial ambition succeed. Culture does eat strategy for breakfast!
- Integrate the existing cultures into a new organizational culture, with new values, new beliefs and a strong new Noble Purpose, to engage your employees to fully contribute to the post-integration plans.
Chinese economic dictatorship
Jack Ma’s Ant Group was set to make history last November 5th, as the world’s largest IPO. But Chinese regulators pulled the plug just a few days prior. And last week, Alibaba, the distribution platform of Ma, got fined 18 billion renminbi because they were supposedly too dominant in the Chinese market.
Jack Ma, after being praised for a long time as China’s national entrepreneurial hero, is now being mulched for having lashed out at the Chinese regulatory authorities, whom he accused of lacking innovation. President Xi Jinping was furious at Ma’s comment because he views strengthening financial oversight as his signature reform.
The Ant Group incident reveals the fragile future of innovation in China. The increasing government control, coupled with bureaucratic infighting, decreases the incentives for entrepreneurs and private investors to take initiatives.
We’ve had similar cases with other governments, who have ‘decapitated’ entrepreneurs out of fear of losing control over them or to prevent them from gaining too much impact in society. In Russia, president Poetin, took Mikhael Kodhorkovski and his enterprise Yukos Oil down in 2003, after Kodhorkovski had been critical of the state control and manifest corruption.
What is the point I want to make?
No progress without entrepreneurship!
No progress without a tolerant and corrupt-free government!
Therefore, free entrepreneurship and a ‘right’ degree of government control should go hand in hand to shape a nation’s economic innovation, growth and stability. Entrepreneurs and governments have the obligation to work together at the service of society.
And in my philosophy, I want entrepreneurs and governments to join forces to realize the Noble Purposes that respectively the enterprises and the government have defined for themselves. I believe that it is through challenging and supporting each other, while putting themselves at service of society, that entrepreneurs and governments will be truly relevant, and able to concretely contribute to progress, innovation, freedom and democracy.
The meaning we give to our Life
This week I had an intriguing conversation with an executive client, who said he was frustrated for having worked most of the time during his Easter week off. When I asked him why he felt frustrated he said that he felt like he had nothing else to do, other than work. Isn’t that a sad realization to come to? Especially when that work is not necessarily the most fulfilling.
Unfortunately, I observe this pattern with many people, and in my case leaders or managers, who are trapped in their golden cage. They keep working to keep themselves busy, even if they don’t like what they do or the way they do it, for lack of something more fulfilling and meaningful in their Life.
It made me think of a London-based company chairwoman that I was introduced to, to help her find that sparkle she felt was missing. When I listened to her story, she seemed to have everything: a loving relationship, a great family, a successful career allowing her to have gathered an important amount of assets, good health, … And yet. Something deeper was still missing.
I asked her if she could take a week to connect with herself and think about why she got up in the morning. A week later she had done her reflections and didn’t come up with anything more exciting than “to earn a living.” Coming from a person, businesswise successful, leading a holding with several enterprises and employing tens of thousands of people. So much for inspirational leadership!
I believe that we as free human beings owe it to ourselves to take the time to connect with ourselves and understand what we’re really here for. Maybe this weekend you can take the time to do that, if you haven’t already done so.
In my book, The Book of Noble Purpose, I explain why it is so important for every human being, to create that self-awareness and ask the why-question, in order to be able to lead joyful, fulfilling and complete Lives. It’s only through fulfillment in what we do, by being connected with why we do it, that we will be able to energize ourselves, boost our potential and come together as complete human beings, to have a Life that is meaningful at all moments.
And it will definitely allow us to take more holidays, to be able to do things that are different than working for the sake of being busy.