How mergers create magic
In the new age of consolidation, brand is the essential ingredient for growth.
A merger, like a marriage, is one of life’s biggest turning points – a moment of inflection. And the current pandemic is likely to drive consolidation across many industries in the next twelve months. So there are multiple inflections coming up. And these inflections will take many forms – full mergers, joint ventures, alliances and newer, looser kinds of collaboration.
We’ve lived through mergers and joint ventures like Diageo, E.ON, NBC Universal, EE, Tata Docomo and Sony Ericsson. Mergers, of course, often fail to achieve their initial goals. But a good merger can make business magic. From our experience, any merger needs a strategy – way before the deal is signed – for all of these four dimensions.
Don’t just rationalise, lead
The first impulse in many mergers is to cut back, remove overlaps, and achieve savings – which is often essential. But for us, there’s a risk. In a mindset of consolidation it’s easy to lose a different kind of mindset – the bigger picture ambition. Where’s our world going? What are the untapped opportunities? Just how big could our future be? How are we positioning ourselves? How do we tell this story? We’ve recently helped one of the world’s biggest media companies to create new strategies and models, sparked by a new leadership story. Consolidation can be, and should be, one of the great drivers of brand-led innovation.
Don’t just add, multiply
Mergers often aim mainly for scale – adding two businesses to make a more powerful force. For us, though, the real opportunity is not in this adding together, but in multiplying the skills of the two organisations. It’s discovering what happens in a meeting of minds, uncovering new superpowers and identifying new abilities. The merger of Grand Metropolitan and Guinness into Diageo told that multiplication story in an emotional way (everyday pleasures around the world), enabling investors, staff and customers to make sense of their new capability and reach. At its best, a merger creates not just new scale but a new path to growth, delivered through a revised portfolio of products and services, and an enhanced capability, shared through brand-led learning.
Don’t change behaviours, unite in spirit
Everyone knows that the main obstacle to many mergers is the clash of two cultures – entrenched ways of working that just don’t fit together. So it’s tempting to try to get people to quickly and radically change behaviours. But people can be tribal and they don’t like change: they can’t simply be reprogrammed to act differently. It’s better to understand the two cultures, find common ground, and nurture a new spirit, inspired by the new collective ambition and vision for the future. Before a recent planned merger in the energy sector, we carried out a rigorous assessment of the two organisations' DNAs. We revealed a new spirit that could grow organically out of the old cultures and manifest as a new set of shared values and behaviours – part of our proven brand-led approach to organisational change.
Don’t re-badge, show value
While not every merger needs an entirely new name or logo, they do all need to communicate their value and their values. The visual, verbal, sonic and interactive language of the newly merged entity are powerful signifiers of the new ambition and value they wish to deliver – both externally and internally. Together they provide the toolkit to build a powerful presence in the world that can become a shorthand for understanding, navigation and buy-in. People increasingly demand that brands, and the entities behind them, become more responsive and responsible. The powerful use of design can engender trust, inspire confidence and create a new more ‘conscious’ brand – the kind of brand that can turn a merger from inflection to transformation.