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.
