By Bill Rusteberg
“Don’t worry, nothing is going to change!” said the company owner. “We are merging with another company who has the resources we need to do the things we’ve wanted to do but lacked the resources to do on our own.”
How do you screw up a perfectly good company? Merge with another company, forfeit your decision-making power and watch helplessly as the dominant company scales too fast with false expectations.
We are seeing this unfold in real time today, all in a span of less than one year. We’ve witnessed the cannibalization of a perfectly good company, a trailblazer transforming a simple risk management strategy into actionable administrative reality while the rest of the market slept.
Company mergers bring unease to existing partnerships. “What will change? Who do I deal with now, you or the new ownership?” asks the worried customer.
“Don’t worry, nothing is going to change!” said the company owner. “We are merging with another company who has the resources we need to do the things we’ve wanted to do but lacked the resources to do on our own.”
In all our years we’ve heard this before and its never been true. When mergers occur, change is just around the corner. Some get there faster than others. The roll out is always the same………..”Don’t worry nothing will change, it’s business as usual.”
But it’s not.
First comes customer confusion and churn. Customers may not recognize or trust the “new” merged brand, especially if service consistency wobbles which can often happen. This affects customer loyalty leading to market share erosion. Weakened brand loyalty feeds easier competition attacks. In this instance a formerly sleeping market has since awakened, heartened by the trailblazer’s success and eager to compete with improved service models.
Second comes cultural clash. Merged leadership teams often fight silently (or openly) about priorities, roles, and decision rights. When two different company cultures collide, it takes time to unify values, behaviors, and priorities. Either one side will win or both sides will lose. In the latter case a new culture will rise creating new relationships internally and externally, changing the entire dynamics of a business organism feeding off a new menu in a new environment.
Finally, the politics of change plays an important role and is hard to quantify or place on a balance sheet. No matter how smart one is and no matter how much study is put into a potential merger, there is never a guarantee of well laid plans.
It’s all about leadership. It’s all about adaptability. It’s all about change.
If change is the only constant why do we need to worry about it? New customers don’t know if something is better or worse if they didn’t know what it was before. A merger may lose some customers at first, but nothing is static in business. So what’s the difference?
