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November 17, 2018

Think ahead when building an enterprise

 One glance at any media outlet at the moment will bring you up to speed with a so-called seismic event in international politics and economics. The British have been given the opportunity to vote in a referendum about continued participation in the European political model, and have surprised the elite by voting ‘No thanks.’ What interests me is the elite, who offered them the vote, really didn’t expect that result. So they did not plan for it. I’ve seen this in business too. I’ve seen it happen when consumers reject a brand proposition or employees misinterpret a change in business operations, when private sector and government agendas collide. The most catastrophic examples come from the world of mergers and acquisitions. Not surprising because, although most transactions begin with a big business opportunity, they are then handed over to people whose focus is narrower. The men and women who run the spreadsheets, tot up the assets and liabilities, and compute the tax efficiencies. They are tasked with something called due diligence, which sounds very professional, but often produces an assessment that is less than watertight, liable to produce shocks further down the line. But that is not my biggest concern.

In my experience, I have never witnessed M&A technocrats regarding the people in a business as anything other than physical assets. Things to be assessed and invariably downsized. And if this isn’t bad enough in itself, I have never seen any attempt to assess cultural impact or the emotional effect on the people in the business which will impact future performance. This impact can be very positive. Many employees feel their hearts lift when they hear they might become part of a bigger enterprise. These people would form a very good target audience in any pre-transaction communication. Handled well, they could be inspired to create a positive groundswell within the enterprise that carries others along. But I’m kidding myself. The reality is that very few organisations engage their employees before a merger or an acquisition. So here’s what happens. You complete the transaction. The M&A people depart, and leave you with a new entity that appears bigger and more capable, but which is actually dangerously fractured. Then you find you are working against employee-imposed delay, against hardened internal silos, against supplier skepticism and, if it goes public, a dip in market confidence. So let’s consider. Is there a better way to combine enterprises than simply on a spreadsheet?

 

 

Chris Harrison leads The Brand Inside.

He helps organisations to deliver their brands through their people. www.thebrandinside.com

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