Why Partnerships Fail

The gods curse us in two ways. They either don’t give us what we want or they give us what we want. --Greek Proverb

In the past few years, sad stories of gigantic merger failures have been told and retold in the media – AOL Time Warner, Corus, and Vodafone are all examples of gigantic blow-ups. But you go into any Wall Street bar on a Friday evening and you’ll be entertained by a litany of excruciating war stories about a multitude of smaller, less notorious disasters. Here are some startling numbers. Half of all mergers, acquisitions and strategic partnerships fail. That’s right. Half! Only 30% outperform the industry within five years, which leaves a whopping 70% of survivors who chronically under perform.

What went wrong? Post-mortems usually conclude that poor synergy, bad timing, incompatible cultures, off-strategy decision-making, hubris, and greed are all culprits. But I believe there is an additional way to look at a very complex problem that can be useful and simple. It is applicable to both profits and non-profits because it deals not with the logic of the arrangement but the emotions of the players.

In any strategic partnership it has been my experience that two dynamics are always brought by both parties to the table. These dynamics hover around almost all conversations. The first of these is hope, defined as the dreams of the relationship. Usually talked about exhaustively, with the intention of creating a positive and engaging vision, it is what people wish will happen. It is all about possibility. This usually takes the form of conversations on impact, market share or revenue. It’s often public and compelling, with optimistic tone setting such as “unprecedented”, “legacy” or “industry changing”. This is not a bad thing. People need positive stories and images that they can move towards. But it is not enough.

That is because there is a second dynamic that always comes into play, and it is rarely talked about, but none-the-less acted out. It is the dynamic of fear. And all fears typically can be placed into one of two categories, with everything else usually a subset. They are the fear of "loss of control" or "loss of identity".

Loss of control is when one of the parties fears the relationship will negatively impact their span of authority. Who decides what, what’s my level of influence or autonomy and what I can and cannot do are at the heart of this. Everything from brand protection to strategy differences defines the territory, but the issue usually comes back to “what do we control?”

On the other hand, “loss of identity” is the fear that I will get swallowed up by a larger partner. I fear I may not be the master of my own destiny, or that I will lose the essence of what makes me unique. This can play itself out in an emotional roller coaster of ups and downs. “It’s the chickens versus the foxes”, as one client once said “and the chickens always do what they can to get one up on the foxes.” References to the by-gone days of “we used to be a family around here”, or “the changing culture” are often a key indicator. Needless to say, because emotions don’t know logic, it can get ugly fast.

Fortunately, there’s an antidote. It is simple and direct, but not necessarily easy. It is this: in all matters of engagement, say what you mean and do what you say. “Saying what you mean” implies we honestly speak our internal concerns, neither holding back nor withdrawing from the fire of the conversation. This creates safety for the other party because they know there is no second guessing on intentions or actions. We relax, knowing things can be taken at face value.

“Doing what we say” means we are impeccable with our promises and commitments. If I say I’m going to do something, I do it. There is no such thing as too small in this category. One’s word, is one’s word, and that is all there is to it. The blank screen of a broken promise is a huge opportunity for projection of fear. This is remedied through consistency and predictability—the bedrock of trust.

What seems true is that every organization will usually have one big fear (loss of control or identity) and that during any partnership discussions susceptibilities to that fear run high. It is easy to trigger an unseen landmine if you’re not careful, and so the bigger the stakes, the more impeccable the need for high level behavior. The simple actions of 1) discussing your fears with the other party and 2) making sure that you then act accordingly to the other’s concerns can go a long way in creating reassurance and safety. And of course, say what you mean and do what you say.

Finally, it’s important to note that it is a great illusion to think that power or manipulation works well over others. At best, relationships based on these fear-based strategies are temporary and unsustainable, and typically emotionally debilitating and long-suffering.