looks good on paper.
Many organizations are completing a financial and legal
due diligence on their alliance opportunities, but failing
to look at either corporate or country cultural issues.
As a result, there is an 83% failure rate when two or
more companies try to work together.
It won't happen to us. This is the attitude many executives
have taken as they enter into strategic relationships.
Mergers, joint ventures, acquisitions and alliances are
struggling to produce a return on shareholder value, yet
these relationships are being initiated at a rate of several
hundred a day worldwide. While many executives believe
it won't happen to them, statistics indicate that a company
only has a 20% chance of success.
It's the simple things. Many of these relationships appear
to be a success on paper, but fail to produce results
during execution. While legal and financial experts adequately
complete their due diligence, the key to success is in
the implementation. Many alliance-related stories of the
past two years seem to indicate that these relationships
are failing due to a culmination of several missed expectations
that are culture-based.
One of the mostly highly chronicled mergers of the past
year has been the Daimler Chrylser merger. It was believed
by all that this "merger of equals" looked good on paper;
however, the two sides faced several cultural differences
from the very beginning. For example, the Daimler team
resented the fact that they were not allowed to smoke
in the Chrysler Auburn
Hills headquarters. Due to differing travel policies,
the Executives from Chrysler traveled "coach" or "business
class" while the secretaries for the Daimler Executives
were permitted to travel First Class.
Apparently no one completed a culture compatibility
assessment to identify and address these potential differences.
While one or two differences may not be determining factors
in the success of an alliance, overtime, the culmination
of several of these basic differences, exacerbate the
Lessons Learned. While a financial and legal due diligence
is critical to initiating and developing a working relationship,
it is even more important that a cultural assessment be
conducted in order to identify and address those potential
pitfalls that are contributing to the 83% failure rate
ICA has developed a cultural assessment consisting of
nearly 2,500 Key Indicators that identify cultural differences
between organizations. "We completed a cultural assessment
of an organization with two campuses within site of each
other and they had two distinct cultures which often prohibited
them from working together," said Scott Romeo, Senior
Partner with the Institute for Collaborative Alliances.
Scott A. Romeo
for Collaborative Alliances
1749 South Westwood
Mesa, AZ 85210 USA