Few economic adventures are as risky as merging two former competitors. The work entails making sure that the resulting whole is more than the sum of its parts, creating a shared future vision, and producing the dynamic needed for it all to work. At any given moment, the human element can get in the way of plans which, on paper, appear perfectly realistic. McKinsey was invited by two heavy-industry firms to tackle this delicate task.
To begin with, we confirmed the project’s rationale. Three or four months of investigation and analyses were needed to explore the possible synergies, imagine a common purpose for the two companies, and present them with the reality of the various issues at stake.
Once the two parties approved and accepted the project’s purpose and rationale, the time came for action. They had 16 months to transform the vision—the shared ambition for a successful merger—into reality and to strengthen it by uniting the advanced skills, IT systems, customer portfolios, expertise, values, and energy of both companies. This meant that we had to define the new organization and its operations in great detail—a genuine intellectual challenge that also called for deep expertise in operations improvement.
We then dealt with the merger at a practical level. Our main role was as facilitator: not only motivating, guiding, encouraging, and, when necessary, reassuring the employees but also clearing up misunderstandings and defusing personal conflicts at all levels of both organizations. We had to support each of the managers concerned—50 on each side—helping them understand their new roles, see how these would interact with those of their counterparts, and fully exploit all the merger-related improvements and synergies.
The process took an entire year to complete and enabled the implementation of the different associated action plans. The merger of the two companies was a resounding success. It also planted a seed: a few months later the two groups, satisfied with their shared experience, decided to merge. But that is another story.