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the
innovative LEDGER
An e-Newsletter from The Innovative Edge™ Inc. Vol.
1, No. 2, Summer 2001 This past May a report was published by Vantage Partners LLC of Boston, reporting on their three-year study of 150 companies that had entered into, or attempted to enter into, strategic corporate alliances with other firms. As we all know, the merging of large and medium-size corporations has become the norm across the U.S. (for better or worse to the consumer). Banks, retailers, utilities, insurance companies, manufacturers - almost every business sector has seen companies join forces in order to gain a competitive edge, or in some cases, to simply survive. In each instance, the hope is that the newly formed entity will spawn new synergies that propel it toward increased growth and profitability. However, according to the study, the majority of these marriages fail. They do so for reasons having little to do with the brass tacks that no doubt constitute the bulk of preparatory work in effecting a merger: legal issues, the financials, and the melding of disparate information systems. Rather, it's the "soft" side of the equation - the relationships among people and the reconciling of different cultures - that has been most responsible for torpedoing what could have been very profitable alliances. By Vantage's reckoning, fully 52% of failed unions were the result of "poor or damaged relationships between firms." (For full details on the study, go to www.vantagepartners.com). For those of us who have been following trends in business for the past two decades or more, the reason for these failed alliances has a familiar ring to it. In the 1980's, TQM was adopted by American industry, in part to fight back against the tremendous inroads made by foreign competitors and the perceived excellence of their offerings. Companies spent millions on systems for analyzing root causes and instituting new practices to achieve zero defects. The Baldrige Award became a much-ballyhooed and sought-after commodity. Then, in the '90's, the re-engineering movement swept through U.S. businesses, promising new efficiencies and dramatic increases in productivity. Both of these trends have had their successes - some quite substantial - but in the many instances where results were disappointing, it was often the "people issues" that were shown to be responsible. Both TQM and re-engineering required new groups of people to work effectively together - people with differing perspectives, background and training. Often, the re-shuffling of traditional hierarchies and boundaries was a necessary aspect of the process. But all of this requires a keen recognition of the impact on individuals, their natural resistance to change, and perceived threats to their job standing (in many cases more real than perceived). None of which is adequately accounted for if the focus is primarily upon legal, financial and IS matters. If the people who ultimately have to implement major changes have no part in inventing their own future, chances are they will find ways to undermine the effort. TQM and re-engineering initiatives took place within individual corporations. Now, imagine the additional complexities when two companies are involved, with their distinctly different cultures, power structures and historical perspectives. Add to that the fact that in many instances the merging companies are former competitors, with years of experience casting aspersions upon their new partners-to-be, and you've set the stage for some serious "people work" that will NOT be carried out by lawyers, accountants and software engineers. Ironically, what Vantage has identified as the apparent Achilles' heel for so many newly-formed alliances should instead be one of their greatest assets. From an innovation perspective, the restructuring necessary for any of these kinds of major initiatives lends itself well to increasing the innovation potential of the new organization. Organizational creativity thrives upon diversity of opinion and experience. Properly managed, there is nothing as conducive to developing a culture of innovation as putting new groups of people together - in effect, creating new "chemistries" - especially when there are differences in the way they see the world. Perhaps
Vantage's next study will look at those variables contributing to
the most fruitful mergers. If so, it's a good bet that the amount
of attention paid to relationship issues and the ability to leverage
the cultural differences inherent in any new alliance will emerge
as the key factors for success. * * * * * * * * * * * * * * * * * * * * 6 Steps to Increase Your Organization's Innovation Potential Most business leaders would agree on the importance of coaxing creative ideas from those who know the business best - their own employees. Here are 6 practical steps for actively supporting creative thinking and problem solving within an organization. 1.
Create a safe haven - physical, virtual or both - for new thinking
- for most people, offering unusual or untested ideas can feel risky.
They need a place and time in which all ideas are welcomed without
judgment. * * * * * * * * * * * * * * * * * * * * Names We Like We're always on the lookout for creative business or product names. If you know of any good ones, send them along! You may see them in an upcoming issue!
Innovation Quotation "You
can't depend on your judgment when your imagination is out of focus." * * * * * * * * * * * * * * * * * * * * The Innovative Edge™ Inc. is a consulting firm based in Massachusetts that helps client organizations tackle tough challenges through creative problem solving. Its president, Jeffrey A. Govendo, works in a broad range of industries as a project consultant, group facilitator, trainer and conference designer, enabling organizations to achieve their goals by increasing their capacity for innovation. Contact
The Innovative Edge at: Copyright © 2001 The Innovative Edge, Inc. The
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