When DaimlerBenz CEO Schrempp called the 'merger' with Chrysler "a merger of equals" -- what was he drinking? It must have been the same corporate Kool-Aid that TimeWarner and AOL found so refreshing, that Vivendi's Jean-Marie Messier thought would make him the hottest ticket in town. Schrempp and Eaton were just following in the line of chief execs who think that big deals will make them big men. "Within five years," Chrysler's Eaton predicted, "we'll be among the Big Three automotive companies in the world." Grown men should know that size isn't everything.
Mergers and acquisitions have a failure rate of 50 to 80 percent. You don't have to be a Wharton PhD to understand what that means: you're probably better off passing. But even as business leaders around the world struggle to make their behemoths nimble and entrepreneurial, they are fatally tempted by size.
The language gives it all away: synergy, economy of scale, co-chairmen, cross-branding. These are weasel words and, in any business, should set off alarm bells. The minute a CEO spends billions of dollars while promising that nobody should fear change, you know you're being lied to. In the words of Schrempp himself, "The Merger of Equals statement was never a reality."
Indeed, there was nothing real about this merger. Only American hubris could imagine Europeans salivating over big, spongy American cars. And what genius seriously thought you could cross-brand Chrysler with Mercedes -- when every savvy marketer in the world has been saying, and growth has been demonstrating, that strong markets are niche markets? What consumer lusts after a Mercedes on a Chrysler wheel base? Aiming for the middle takes you to no man's land, the Somme of marketing.
Mind you, it was probably a very long time since Schrempp or Eaton had spoken to a real, live customer. Because that isn't what these big-deal CEOs do. The bigger the company, the further from serving customers they get. Maybe, for some guys, that's the whole point. Harvard's Shoshanna Zuboff calls this managerial narcissism: that moment when obsession with internal politics and positioning becomes more compelling than selling. All the time DaimlerChrysler managers spent at workshops on German Dining Etiquette was time they weren't talking to customers.
Schrempp said that what he wanted out of the merger was Chrysler's talent for innovation. But companies don't have ideas -- people do. And after the merger, the best idea the Chrysler people came up with was to leave. In business leadership the further you get from customers and employees, the further they will get from you. It isn't marketing; it isn't HR. If you're CEO, this stuff is your job.
Of course the big men responsible for the deal didn't suffer; it was the little people -- shareholders, retirees, employees -- who took the hit. The people to whom lipservice is regularly paid, who don't take the decisions but inevitably suffer the consequences. As the Bancroft family mulls over how to stave off Rupert Murdoch, what will keep them from the Kool-Aid?
* Put a photograph of Bob Eaton on the desk as a memento mori and remember: he wasn't a bad man or a stupid one. That means you can make mistakes just as disastrous.
* Whenever anyone tells you nothing will change, they're lying. No one spends millions or billions of dollars to maintain the status quo.
* You can destroy a culture -- quite easily in fact -- and you will never get it back.
* The bankers don't work for you; they work for themselves. They may pass out the Kool-Aid but please note: they don't drink it. Take advice from bright people whose only interest is in the continuing vitality and success of you and your firm.
* Deal frenzy is like romance: it makes you feel giddy and look glamorous. But it's a psychopathological state.
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