Blog #3: Two companies facing the "Seven Ways to Fail Big"

The article on “Seven Ways to Fail Big” makes me think about two experiences: One in which I supported my client during my summer internship as a management consultant and felt I saw the “Synergy Mirage” and the other in which I worked as an IT business analyst and felt I saw “Wrong Technology bets.” I feel that since I have personally experienced two of the fails mentioned in the article, at least these two issues are common reasons companies fail in even small ways (i.e. not in the form of a bankruptcy). 

              Related to my summer internship consulting project, though I did not participate in the due diligence of the transaction I was involved in, as discussions of the future state were taking place, I felt that during them there was a strong sense of optimism that things would work out and discussion of details was contained. The author mentions how M&A is pursued to capture synergies but that the transactions can be detrimental if the two companies that are merging don’t align on culture or other factors. In early discussions, I wondered through the acquisition what economies of scale could be achieved especially since the acquirer was decentralized while the target was centralized in its activities. For the client, it was important to manage the brand’s locally therefore resulting in decentralization. While the reason behind that was likely due to the products offered by the company, it does suggest that maybe the synergies expected were overly ambitious. With synergy targets going out five years from the date of closing, it will be a matter of time before the company can determine whether they succeeded or failed. The article mentioned the idea of questioning whether a strategy was sustainable over the long term. This transaction pointed out to me how difficult it can be to not only understand what the future brings but also how to predict out five or more years.

              Something that stood out to me from being an IT business analyst was the idea that technology alone cannot solve organizational issues, something mentioned in the article. The employer I worked for used SAP which is a very robust platform, however, we had major compliance issues while using it. We also had better technology than a competitor, but they had a larger research funding portfolio which was a more important metric for the organization. The article mentions “Wrong Technology Bets” and I definitely felt first hand what can happen when you have great systems but they don’t align with the needs of the organization or can’t be implemented ideally because of what the people resources within the organization can achieve.