May 6th, 2017 | Life Sciences | By James Absalom
The last few years has seen a huge increase in merger and acquisition strategy across the global consumer and life sciences sector. As competition for market share increases, M&A is a key part of growth for many companies. Although their is still drive and willingness to grow organically via natural expansion into new markets and use of innovation, there is no denying M&A is also a quick fix option.
As a global executive search firm operating exclusively within the consumer and life science sectors, our clients often retain us to work on assignments that present themselves to us because of such activity. Clearly there are many factors to address when integrating companies together such as systems in distribution, IT, HR, manufacturing and purchasing. There is also the small matter of deciding which executive leaders will continue to lead which parts of the new company.
All the above are pivotal for success however for continued performance and communication it is vital that the company cultures are merged into a “One Culture” mentality. People are the head, the heart and the backbone of any company and it is through collaboration and working with a similar mindset that is key for success.
If we specifically look at Supply Chain, we know that in any single company, it is already a function in which end to end visibility and communication is key. The correct streamlining of processes, one way of working and implementation of standardised best practices and key performance indicators is the goal. Some large corporate companies can have 100’s of sites globally each manufacturing a different type of product or technology, working with different margins and customer base/expectations but all trying to work within a specific framework. A site in Taipei, Taiwan will operate culturally in a very different way to a site in Munich, Germany. Both will use separate suppliers and both working with different margins which are very dependent of their company market share in the region. If you then factor in additional centralised teams that also have a dotted line exposure to the sites in functions such as HR, Engineering, HSE, Capital Programs, Purchasing and not to mention individual country unions/politics, it is even more difficult to have a “One Mentality” way of working.
If you now add a completely different company with different culture into the equation, it just multiplies the need for collaboration and transparency across the value chain. It is vital that companies hire talented leaders that are experts in working with a multitude of cultures globally, have physical experience in multiple countries and are able to help breakdown and eliminate cultural silos that exist before they become a problem. The key to succeeding is to make sure that you hire experts in the field of integration and cultural change in each vertical function across the enabling units such as HR, Finance, Supply Chain and IT. These people not only have the technical knowledge but also understand what specific pitfalls and bottlenecks might appear in a specific function and help create transparency.
Perhaps a good recent example is within the global coffee sector in which the last major move around a year ago was the creation of Jacobs Douwe Egberts which was the merger of Mondelez Coffee and D.E Master Blenders 1753. D.E and Mondelez have very distinctive individual cultures. The direct and highly performance driven world of D.E Vs the more collaborative of Mondelez. When you are taking on a market with a start up mentality like the one that exists within JDE, it is vital that every single stakeholder in that business is working with a “one culture” mentality and shares the same goal and possesses the soft skills required to drive change to succeed.