THE BLOG
07/08/2013 09:16 am ET Updated Sep 07, 2013

About Leadership: One Management System

Merging of two companies means sorting out how the company is going to be managed, who is going to manage it of course, but more importantly how. We all know that there are lots of different systems -- business units, regional organizations, functional groups, highly centralized control, highly dispersed services, etc. And none of these is demonstrably the right answer or the wrong answer. True, much of what we do still goes back to systems introduced by John D Rockefeller when he created Standard Oil, which he in turn took from his two models of efficient organizations, the military and the Catholic Church. But over time these have evolved and developed in many different ways.

There is also fashion in management systems, and some companies move off in one direction, often under the influence of an external consultant, and then several years later move back to a version of what they had before. This is not such a bad thing, if you use every transition between management systems to drive efficiency through the company.

But what it means is that only rarely will two merging companies have the same management system. Now when we merge we must try to be appreciative of what is good and who is good in each other's companies. But that does not apply to the management system. From the outset, after the BP -- Amoco merger, John Browne, as CEO, made it clear that the new Company could only have one management system. It did not have to be either the BP or the Amoco system exactly replicated, but it had to be a clear system, that everyone could understand, and certainly not a hybrid. Why? Because the hybrid system would not be something you would ever choose to do if you were designing a company, and it would only be used because it represented parts of two specific companies. Hybrids may be good for seeds and cars, but they are bad for corporations.

This is a surprisingly common failure in mergers (much less so in acquisitions, especially of smaller into larger companies), and one that is so easily avoided. And all the work to decide how the company will operate can be done in advance of the actual completion of the deal, written down, and understood by all the key players.

Some people will not like the outcome. That is inevitable. We get very attached to our way of doing things. If these people dislike it enough, they don't belong in the new company, and the sooner they realize that the better.

About Leadership:
About Leadership is a series of 52 columns on corporate leadership -- essential skills, leading teams, managing your career, the strategic and business practices to make a company and its leader distinctive from competitors. These columns will be of interest to people leading small and medium-sized companies today, many of whom have not had much formal training in management skills and techniques; for the many people in big companies who aspire to senior management; and for anyone who thinks: Give me a hint, how can I do this better?