When corporate souls collide

Boeing's 787, The Dreamliner, is the costly product of a merger between two companies with different  souls. James Surowiecki (author of that amazing book, The Wisdom of the Crowds) goes beneath the surface of the Dreamliner story to provide an insight that most of us missed. In his article  "Requiem For A Dreamliner?"  in The New Yorker he explains how, "the Dreamliner is a technological marvel...It uses twenty per cent less fuel than its peers, and so is cheaper to run, yet it also manages to have higher ceilings and larger windows. It is... one of the coolest planes in the air." So why has Boeing been plagued by "a long series of Dreamliner problems, which delayed the plane's début for more than three years and cost Boeing billions of dollars in cost overruns?"

The source of the problem, James shows, goes back to the 1997 merger with McDonald Douglas that made perfect sense to the bean counters but adulterated Boeing's soul. The story is a perfect case study illustrating the often astronomical cost of mergers and acquisitions founded on sound financial due diligence that give little or no thought about how to merge two corporate souls into a business greater than either of its merging entities never mind one that is greater than the sum of the two. "The McDonnell Douglas culture, averse to risk and obsessed with cost-cutting, weakened Boeing's historical commitment to making big investments in new products."

Corporate soul goes beyond culture. It permeates every aspect of a company. A corporation's soul can be so powerfully unique that it protects a company from competitive assault better than any other strategy can. When a company really has soul it pervades every aspect of the corporation, including its product. Think of how the soul of Apple manifests in its product, the soul of Southwest Airlines in its customer experience or Starbucks' soul in the nearly 20,000 coffee shops it has erected around the world. As Herb Kellerher founder of  Southwest Airlines said:   The tangible things your competitors can go out and buy. But they can't buy your spirit. So it's the most powerful thing of all. Corporate soul is a product of the human spirit. It cannot be engineered or operationalized. It takes real, authentic humans to breath soul into a corporation and inspire its diffusion through every facet of the organization. Does that mean that exceptional companies are often dependent on their leaders for the soul that makes them unique? Absolutely. It takes thousands of people to make Starbucks, but one person, Howard Schultz, gave it its soul, and we saw what happened to Starbucks after he resigned in 2000 necessitating his famous Valentines Day 2007 memo to employees saying that Starbucks had lost it's soul. Since his return as CEO in 2008 Starbucks' value has grown over 200% against the Dow's 9% for the same period. Southwest's value has declined by 43% since Kelleher's resignation as CEO in 2001 compared to the Dow Jones' gain of 41% for the same period. It's still early to know if the passing of Steve Jobs had anything to do with what appears to be the sad, slow dilution of Apple's soul.

Successful leaders can operationalize a lot of their innovations so that they endure after their leadership tenure, but they cannot bequeath their souls to others. Children inherit their parent's tangible assets, but not their vivacity, their passion or their soul.  After the departure of a great leader, a company can remain exceptional for a long time on his or her momentum. Ultimately either a new leader will emerge with a different soul to imbue into the organization, or the company will slide from being extraordinary to being merely excellent. Never underestimate the impact single individuals can have on a corporation, team, organization, family or country when they authentically live what they believe. The soul that leaders breathe into their organizations to make them extraordinary is the outcome of their beliefs and characters, rather than the application of their skills or knowledge.

Building great leaders should never be seen as different from building great human beings. When great human beings evaluate and lead mergers and acquisitions, they treat them in the same way they would treat the forging of any complex relationship between different individuals. With the power of their beliefs and the passion of their beings they focus disparate interests towards common purpose and shared values. They consider many key areas beyond financial statements and economic synergies. Some of the factors they consider include:

Values: Uncover, articulate and validate the values that drive behaviors and strategic choices in each entity, and the ones that will govern the new entity.

Purpose: Engineer the purpose of the new entity, and what tangible and intangible value it will bring to the specific customer-set who stand to gain most from its offering.

Culture and Leadership Philosophy: Culture cannot be decreed. It is the natural outcome of a carefully designed and orchestrated leadership philosophy that will be consistently applied.

Talent retention: In implementation of the merger, ensure that the trust each entity built with its employees is preserved.The due diligence math gets distorted if talent walks out the doors.

Had these and other related areas been the focus of the Boeing McDonald Douglas acquisition, The Dreamliner, innovatively fusing efficiency with design and comfort, could have become a metaphor for the successful merger of two great companies, flying Boeing to unimagined destinations of success.   

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