Disney-Fox, CVS-Aetna, EON-Innogy; 2018 is bringing its set of major M&As. While it makes strategic sense for many companies to join forces, up to 90 percent of those operations fail to deliver the expected results. A possible solution? Brand.
Used not just for marketing but as a touchstone for setting the integration agenda, brand can be the key to uniting stakeholders and accelerating success. However, when it comes to brand, the lessons of the past are not necessarily well-learned. In this article, we lay out four of the most important leadership lessons we’ve learned over the last seven decades.
Lesson 1: Don’t just tick the box when it comes to brand
The CEO’s M&A to-do list is full of operational and regulatory challenges to resolve. Brand work typically shows up as a few line items on this lengthy list: choose a name and a logo, package the new value proposition and ensure there is a marketing story. The temptation is to focus on the easiest and fastest execution to ‘just make it work because it is only communication,’ opposed to defining how to create lasting value.
Tackling the tough components of any merger is necessary; stopping there, however, wouldn’t ever be sufficient to make the company successful in the long term. For instance, getting rid of the parts of the business that aren’t justifying their investment won’t engage the company in the future. A strong purpose, on the other hand, will. Take Google. Their singular purpose — to organise the world’s information and make it universally accessible and useful — guides not only product development but also M&A activity. The acquisitions of Waze, Nest and YouTube all ladder up to their higher purpose, creating clarity for customers and employees while lighting the way for Google’s leaders.
When brand is elevated as the broader framework to develop a common direction, stunning things can happen. A brand’s strategy can provide the emotional framework to create attention. It can also guide and engage teams in the process, instructing them on how to deliver on the brand’s promise to customers. While these benefits don’t show up directly on the balance sheet, they are the foundations for a sustainable future.
Lesson 2: It’s about developing a single prescriptive guide
Used at its best, brand should reflect the essence and the purpose of the merger, providing clarity about and inspiring confidence in the new direction. So, how do you combine two company identities, histories, philosophies, strategies, cultures and ambitions?
The simple answer is, at least in a merger, you shouldn’t. The assumption often is that the best way to appease both sides of a deal is to converge or combine their strategies and purposes. Yet this approach can prove counterproductive. Reflecting back on the psychology of a team in the midst of merging, the inherent territorialism and threat of the unknown can mean that brand amalgamations ring hollow.
It’s much better to take a different approach — to build on existing legacies, treating them as input, not a result. Doing so ensures everybody is on the same playing field. Nobody has the home advantage, and nobody is seen to be an invader. A vision and purpose can then be defined, not as the minimal common ground for alignment, but as the reason why companies merge, with substance, balancing authenticity and aspiration. This requires the input of the future leadership team, and shouldn’t be isolated to marketing and communications.
The effects of not doing this early on in the process can reverberate many years down the road, especially for employees. This became glaringly obvious when we worked with a client in the telecoms sector. Fifteen years following a merger, team members continued to harbour an “us versus them” mentality. The business hadn’t acted early enough to build a singular, inclusive identity, and misunderstandings and natural “tribal instincts” took hold to deepen the boundaries between their teams.
Lesson 3: Appreciate the power of symbols and symbolic actions
Symbolic actions can be a powerful vehicle of positive change. While a new identity can carry a lot of meaning in the context of a merged organisation, strong signals of convergence can appear in unexpected ways for employees. We’ve seen this work to great effect with a client in the manufacturing industry, where a merger led to the need for rationalising locations. Leveraging this opportunity, our client sought to move their corporate functions to a new location rather than to one of their existing bases. This created a catalysing space for the new company to move forward, reinforcing the concept of a new brand identity. And in doing so, meant they didn’t have to deal with issues of legacy ownership and turf wars.
Lesson 4: Understand what really drives employees
Psychological factors often don’t appear high on the list of M&A priorities, but they underpin the dynamics of a merger and set the tone for the future of the organisation. In particular, the “survival instinct” that kicks in once the process is announced is often underestimated. It manifests in individuals and teams worried by the prospect of change or redundancy, causing them to become protective or even paralysed by what is at stake.
At the root of the issue is a very human reality: change is interpreted as a threat to those who aren’t in control of it. A strong brand story can help companies navigate this dynamic and become a positive guiding force for the actions of all employees. So too can a detailed communications plan, one that clearly outlines the implications of the new strategy on the employee experience, operational structures, departmental transfers and training initiatives prior to Day One. Together, these demonstrate to employees that they are part of the process, and expected to play the central role in it, rather than be a victim of it.
Beyond the operational needs, brand has proven to be the unifying catalyst in successful M&As. When used as a broader framework to set a common direction, brand can create convergence and unite tribes, inspire employees and ultimately, accelerate the success of any merger.