Why mergers suck for brands

Posted on Posted in How to Guide for Marketers

[sg_popup id=”9″ event=”onload”][/sg_popup]All the talk of who 3G might purchase next, has brand managers around the world wondering if they are next. If you have ever gone through a merger, you will know that they suck. If you have not gone through one yet, you will likely find out soon how badly they suck. Not only do they suck for brands, they suck for brand managers. Most mergers however, seem to come out of nowhere. A little like a blockbuster trade in sports, they shock the system. mergers suck

I bring a unique expertise to this merger topic, having survived three and half of them. One was so small and fast, I would call it half. I know people who have gone through 5 or 6 of them.

With each merger, the companies used a different ‘merger rule’: one went fast, one went slow and one went clumsy. Sadly, I used one ‘merger rule’ in that I was relatively a “jack ass” at various points of all 3 mergers. Apparently I have a ‘low EQ’. They say it takes 2 years for a merger to work. From my experience, it takes until the next merger to truly feel like ‘one team’. Some companies appear to go through mergers every few years. The poor people at Kraft have been traded around so many times, people’s resumes are starting to resemble a pop-up book more than a clean sheet of paper.

The data even suggests that mergers suck

M&A research studies estimate 83% of companies fail to reach their merger goals. With those statistics, you would expect companies would avoid all merger activity. The problem is cutting the check is much easier than the work it takes to make the actual merger work. The only winners appear to be the investment banks that finance the deals and the consultants who churn out very high-priced org charts.

I worked on one merger where the final purchase price was almost twice what we valued ourselves. We were happy until we realized our new bosses were paying too much and it would just mean future cuts to make the merger pay off. Ten years later, they are still cutting. I was shocked at the lack of pre-planning from those who bought us. They barely knew what we did. I remember one of our new owners said “we bought you because of your global breadth”. I did not have the heart to tell him the truth, in that we were not very global at all, but we were really just in 10 markets that were far apart from each other. Everyone after the merger talks about culture. They make tons of culture posters. But, it seems no one ever considers the cultural fit before the purchase.

No one ever says, “Congratulations, we want to add money to your brand.”

The brands do not benefit. With a distracted company sorting through the complexities of the merger and trying to make the numbers at all costs, brand advertising and risky innovations are the first cuts. Brand Leaders do not benefit. They have to re-work and re-work slides for new management. The discussions with the new bosses take a huge step back with brilliant questions like, “So tell me how this product works again?” or “Have we always done it that way?” With a need for synergies, the high-priced merger consultant just groups brands together in the new org charts. The brand leader feels lucky just to keep their job, even if their portfolio has doubled, for the same salary. Less attention is paid to each brand with the crucial attention to detail slipping. Brand budgets are scrutinized and cut, any risky or creative options are sacrificed while the safe and reliable choices are pushed forward.  mergers budgets

The reasons why mergers fail is the same reason they had hope for success in the beginning. The #1 reason for mergers is the belief that ‘we can do a better job with the brand than you can’. The problem is the need for merger synergies gets in the way of the needed turnaround. The new owners do not know the details needed, so most of their ideas seem naïve and elementary. The needed investment gets put off until the merger is paid off. The brand continues to hemorrhage and the new owners do not seem emotionally invested in the brand’s success. The other main reason is an ego-driven excitement of “Imagine the power of us together”. I am sure that is going through the halls of Kraft-Heinz as they drooled over Unilever. Sure, there are synergies in manufacturing or at the retail stores. But, these huge mega-corporation usually just take two smart and nimble organizations and turn them into a slow, clumsy and risk-averse bureaucracy. A ‘new win’ in the mega-corporation feels like after 19 meetings, they have finally agreed to use your ‘expense form’. Yeah!

My advice to brands considering a merger: focus on growing your own brands, choose the smartest consumer driven strategies and then execute with intelligence and passion. Sounds like marketing 101? Yes it is. You should just stay focused on growing your own business instead of drooling over others.

The grass always looks greener on the other side of the fence, until you buy the brand and then slowly start to destroy it.

At Beloved Brands, we run a Brand Leadership Center to train marketers in all aspects of marketing from strategic thinking, analysis, writing brand plans, creative briefs and reports, judging advertising and media. To read more on strategy, here is a workshop on How to create beloved brands, click on the Powerpoint presentation below:

Beloved Brands: Who are we?

At Beloved Brands, we promise that we will make your brand stronger and your brand leaders smarter. We can help you come up with your brand’s Brand Positioning, Big Idea and Brand Concept. We also can help create Brand Plans that everyone in your organization can follow and helps to focus your Marketing Execution. We provide a new way to look at Brand Management, that uses a provocative approach to align your brand to the sound fundamentals of brand management. 

We will make your team of Brand Leaders smarter so they can produce exceptional work that drives stronger brand results. We offer brand training on every subject in marketing, related to strategic thinking, analytics, brand planning, positioning, creative briefs, customer marketing and marketing execution. 

To contact us, email us at graham@beloved-brands.com or call us at 416-885-3911. You can also find us on Twitter @belovedbrands

Graham Robertson Bio Brand Training Coach Consultant

Microsoft just bought LinkedIn. This is a huge move into the world of social media.

Posted on Posted in Beloved Brands Explained

Microsoft has announced a $26 Billion acquisition of Linked In. This is Microsoft’s first entry into the social media world. (or second if you count MSN). My first reaction was “WOW. Just wow.”  I was expecting something, but didn’t see it coming now, and with Microsoft. But good for them. And this is the first move, not the last move.

linked in.002I normally hate mergers and acquisitions, but this one is pretty interesting. Microsoft is making an obvious play at the business world. While the Nokia experiment failed, I wouldn’t be surprised if they keep pushing into the portable device space. The surface has done fairly well (I’m 100% Apple guy, but I see them around). And now  Microsoft will now be able to package Surface + Office + LinkedIn + Slideshare + Skype.

In an email to staff, Microsoft CEO Satya Nadella touted the pairing as a way to improve both companies by integrating LinkedIn’s content and network with Microsoft’s cloud computing and productivity tools. “This combination will make it possible for new experiences such as a LinkedIn newsfeed that serves up articles based on the project you are working on and Office suggesting an expert to connect with via LinkedIn to help with a task you’re trying to complete. As these experiences get more intelligent and delightful, the LinkedIn and Office 365 engagement will grow,”Nadella wrote.

Honestly, I have no idea where the current world of social media settles in, and who owns what. But the world of convergence will happen over the next 5-10 years. From a social media point of view, most of these sites are just about expresses ourselves, just in slightly different ways. If I look at my news feeds on Facebook, LinkedIn, Twitter or Instagram, they are starting to look similar, some days almost too similar. Not all of them will survive or need to survive. There are already apps that allow one to post on each site. Why not take it a step further and just have one site, with 3 or 4 window. Facebook could easily have a personal window, business window, entertainment window or politics window. I don’t see a need for Twitter, do you?

I could easily see Apple and Facebook getting together.

linked in.001

By the way, shares of LinkedIn surged 48% after the announcement, while Microsoft’s stock was down 4%. Trading in Microsoft had been halted briefly for news pending before the announcement of the all-cash deal. So maybe the market’s first reaction isn’t so strong. I think this is a great fit for Microsoft and the market will settle in.

Your move next Apple.

 

At Beloved Brands, we lead workshops to help teams build their Strategic Thinking, helping Brand Leaders to think differently in terms of competitive strategy, consumer strategy, getting behind your core strengths and being aware of the situational strategy. Click on the Powerpoint file below to view:

Beloved Brands: Who are we?

At Beloved Brands, we promise that we will make your brand stronger and your brand leaders smarter. We can help you come up with your brand’s Brand Positioning, Big Idea and Brand Concept. We also can help create Brand Plans that everyone in your organization can follow and helps to focus your Marketing Execution. We provide a new way to look at Brand Management, that uses a provocative approach to align your brand to the sound fundamentals of brand management.

We will make your team of Brand Leaders smarter so they can produce exceptional work that drives stronger brand results. We offer brand training on every subject in marketing, related to strategic thinking, analytics, brand planning, positioning, creative briefs, customer marketing and marketing execution.

To contact us, email us at graham@beloved-brands.com or call us at 416-885-3911. You can also find us on Twitter @belovedbrands.

GR bio Jun 2016.001