Over the last year, there seems to be growing interest and efforts focused on exploring and executing mergers and acquisitions within our sector. Three examples of creative forms of collaboration across our membership community include: DAI and IntraHealth; RTI acquiring IRG from Engility this year; and Grameen and Freedom From Hunger in 2016. In our discussions across the membership community, many expect this activity to continue as leaders and boards continue to ask the key questions: Can a merger or acquisition accelerate our strategic goals? Can we deliver more impact in a closer collaboration than alone? And, finally, what can we do to better ensure success?
Multiple studies from the commercial sector over the years have pointed out that mergers have a higher than expected failure rate in their ability to create and sustain long-term value, even with the greater abundance of resources and capital. While these studies may seem daunting, there are many ways to increase the odds of success in the design and execution of a merger or acquisition, and a favorable external environment also helps. In addition, many characteristics our sector embodies may also increase success.
Successful organizations rest not only on strategy and talent, but also on a sense of purpose and belonging, especially in creating a new organization following a merger. Our community, with its strong social purpose, commitment to values, focus on diversity and inclusion, and passion for results embodies both purpose and belonging, and that has allowed our organizations to adapt and thrive in adversity. They may also help us be more successful in our mergers and acquisitions.
Tom Dente was reminded again of the importance of purpose and belonging while reading Scott Jackson’s book Take Me with You: One Person’s Journey To Find the Charity Within. Scott is currently the CEO of Social Impact and has worked across our community as a leader, not only at Social Impact, but also at members PATH and World Vision. In his inspiring and powerful book, Scott highlights his personal journey of overcoming significant adversity to become a leader in our sector, bringing positive change to those in need globally. In recounting his journey, Scott reflects upon how the type of support he received while growing up, from educational to that providing economic opportunities, is reflected in the aspirations of the Sustainable Development Goals. His human journey, and the journey for humanity that the SDGs represent, are linked. Purpose and belonging are the link across multiple levels.
While still in its early stages, our own experience in creating Humentum from InsideNGO, LINGOs, and Mango reveals that while integration planning and execution are essential, success rests on more intangible factors focused on purpose and belonging. These intangible factors are often more complex, challenging, and lasting than registering a name change or integrating systems. For us, these factors include three essential and interrelated areas: mission, trust, and culture.
Mission is the touchstone to ‘re-recruit’ a combined global team to a renewed and larger purpose. Over time, creating opportunities for all members of our team to add layers of their own meaning, stories, and work successes will allow us to move from just having a mission statement to instead being on a mission together. Putting “mission above me” or “purpose above person” creates the environment that welcomes and supports valuable contributions from all.
Creating an environment of trust is also equally important, from initial merger discussions to the more difficult decisions of harmonizing programs, policies, and services. Trust rests on respect, openness to disagreement, transparency, and shared experiences. Trust can also be fragile, especially in times of personal change and overall disruption. Finding ways to reinforce the organizational “safe space” and relationships that allow trust to grow and thrive can help everyone contribute to the mission.
Finally, Peter Drucker’s old line that “culture eats strategy for breakfast” certainly points to the importance of organizational culture in any circumstance, but especially in mergers and acquisitions. There are many practices to enhance and sustain emerging cultures. For example, in our process of merging, we conducted team exercises where we shared impressions of each other’s culture (often humorous) and began to collectively define the new aspirational culture and the attributes, behaviors, and stories that make it real. While cultures are always in development and being refined, success allows organizations to draw upon their best talent and unlock individual potential in service of their missions.
Answers and approaches to the questions of mission, trust, and culture are unique to each organization. At Humentum, people are learning each day in these areas as we continue our journey ahead. As they do, we can be sure there will be both successes and opportunities to improve. With mergers and acquisitions part of the strategic discussions in their sector, sharing how we address these questions can help us collectively advance our overall objectives. As our sector continues to explore mergers or acquisitions, building upon the strong sense of purpose and belonging inherent in our organizations may be the real predictor of success.