The financial media is reporting a noted cautiousness by companies in terms of considering a merger. With debt concerns stretching far into and beyond 2010, coupled with a still volatile market, M&A activity is down 4.4% from last year- when we were in a recession.
80% of Mergers are a failure
The reasons for lack of merger success are numerous and complex. However, often an employee supposes that upon completion of the M&A, it will be business as usual. The reality is that M&A needs to be recognised as a long-term plan, which will involve change. Thompson Dunn has observed the major challenge encountered by companies to be a lack of appreciation for differing cultures. As a company with an international client base, Thompson Dunn confronts this dilemma (individual values, beliefs and leadership styles) on a daily basis.
Edgar Schein, writes that “culture matters because it is a powerful, tacit, and often unconscious set of forces that determine both our individual and collective behaviour, ways of perceiving, thought patterns, and values.” It is absolutely crucial to understand this when organising a merger, as these cultural elements determine strategy, goals and modes of operating. This could indeed be the fundamental factor that determines whether the new company is efficient and successful, or adds to the 80% of failures list.
The largest pitfall: Inefficient Communication
Thompson Dunn believes that the largest pitfall on the way to a successful merger is inefficient communication. In order for customers, shareholders and specifically employees to redirect their action to the value-added deal, top management needs to provide the crucial details, and stray from uncertainty and lack of informative answers.
To address this, cultural communication preferences must be taken into account. The two companies may share the same goals, but have different ways of getting there so it is fundamental to take cultural differences into account.
Thompson Dunn prides itself in striving to understand not only the goals of a company, but how they feel comfortable in achieving them. We bring people together across the new organisation face-to-face and value past achievements and backgrounds, taking the context of the previous organisations into account.
We encourage people to share their hopes and concerns for the future, develop and share a sense of purpose and identity and re-activate their desire to take initiative. This creates a new culture, driven by the strategic intent of the merger, where a whole is more than the sum of its parts.
Read more about Human Due Diligence.
Read more about Mergers and Acquisitions.
By Marc Jacobson
There were people from all over the planet, young and old in Perpignon. So, apart from the ability to read English and the desire for personal exploration, there are no barriers to entry in pursuit of this goal. I will keep you posted, warts and all. The book is called “
From my perspective as a business coach, authenticity in leadership is not merely important – it is the essential component that leaders must have to be effective long term. Put in simple terms, authentic leadership is grounded in knowing who you are; knowing why you behave as you do; knowing your preferences to behave and how it is likely to effect others. Put another way – it’s about your beliefs and values and being clear about that which drives you. Without this self-awareness, how can we be expected to influence others?
Why should Talent Management be a CEO priority? We have all seen management theories come and go – business process re-engineering, off shoring etc. Eventually we must reach the conclusion that the quality of leadership is what drives business performance.
80% of Decisions are Made Intuitively
As science advances, it is emerging that thinking with your heart and not your head may be more reliable than once thought. Recent developments in neuroscience have concluded that 80% of decisions are made by the intuitive and primal parts of the brain, as opposed to the rational, complex and information-processing parts.
The facts:
1) We have stone-age brains housed in modern skulls. Science has shown that the brain’s hardwiring causes us to behave in a more primitive way than we might think.
It is a common misconception that, as humans, we are highly advanced, matching the complexity of the tools and machines in our modern society. However, we must take into account the fact that our modern world is the summation of ingenious ideas over many centuries, not a single decision from a single person.
The Genome Lag principle states that our everyday lives and the decisions we face are becoming more advanced than our brain anatomy can cope with. Cavemen are 500 generations away from us, whereas most of the technology we use today has been around for 2. Cavemen relied on their gut instinct, fight or flight response to survive. Given that humans are still around today, this mechanism is an effective means for survival. We should not ignore the accuracy and efficiency of this response, and not be afraid to follow it.
2) Conscious thought is like the tip of the iceberg
The emotional and unconscious area of the brain is larger than the rational and conscious part and so the brain processes more emotive than cognitive activity (Baker, 2006). Furthermore, the degree to which signals run from the emotional brain to the rational brain outnumber those running in the opposite direction by a ratio of ten to one (Hawkins and Blakeslee, 2004). Our subconscious can pick up subtle clues from the environment before we consciously and rationally can understand what they mean or what to make of them.
3) Gut instincts happen at great speed before complex thought processes
It has been scientifically proven that the information received by the Amygdala pathway in the brain responsible for raw emotions (anger, happiness, fear..) is simpler to processes than complex information in the neocortex (Adolphs et. al, 1999). Therefore, when trusting these raw emotions, rewards can be reached quickly and effectively, without the need for too much rationale.
In conclusion, your intuitive thinking is a quick and effective mechanism that far predates your rational thinking. The most primitive process in the brain has survived the evolution of 500 generations and the reason for this is it’s survival value. Trusting your instincts could be the most beneficial factor when making decisions in the modern world.
How intuitive are you?
Thompson Dunn uses the Decision Profile to measure the ways in which we make decisions and our attitudes towards them. It looks at attitudes towards risk, luck and decisiveness and provides insight into whether you will rely on the facts or trust your hunches.
Please contact Anna Pulleyn for your opportunity to trial this test free of charge for a limited period at anna.pulleyn@thompsondunn.com
By Marc Jacobson