After the Final Merger

Charles Smith December 26, 2011 0
After the Final Merger

NOVEMBER 18. 2015

Call me Frank. I was CEO of a Fortune 500 company in the year 2000. Back then, the stock market kept going up and most of the world measured its success by how well the economy was doing.

I spent most of my time on mergers and acquisitions. My main job was to swallow up or be swallowed by other companies that would give us new markets, new products, and new “synergies” as we used to call them. With synergy, two plus two was supposed to equal five. That hardly ever happened, of course, but we kept saying it anyway. Every time we merged, we changed the names of our companies. Bestar Bank became Moon Bank became Horizon Bank became Gesellschaft Bank. As time went on, the names meant less and less, but we kept making up new names in the hope that we had finally reached the critical mass we had been seeking.

Looking back, all that merger mania was more about finding ways to deal with our lack of creativity, our always increasing costs, the constant drain on our people, and our lack of anything but the same corny old visions: shareholder satisfaction, globalization, results. After trying any training program that looked promising and reorganizing ourselves to the point of boredom, we resorted to masking our problems with mergers.

Human nature, however, didn’t want to cooperate. People became selfish, careerist, and power hungry. Groups seemed small-minded and almost everyone avoided conflict or saying what they really thought. In this world, the CEO was the hero, the more decisive and commanding the better. Sometimes I thought we had done no more in centuries than shift from a system of royalty to one of corporate hierarchy or even corporate slavery where culture, rewards, and the encouragement of timidity had taken the place of chains and physical threats. There was little honest enthusiasm on most people’s faces.

As a country, we were a well-developed democracy. We had a bill of rights protections for individuals, and free speech in public places. In companies, though, people had almost no rights. They had no right to assemble, little free speech, and almost no due process except within employment contracts. Senior managers determined what counted and if their lower-downs dared to disagree, they were shunned or otherwise exiled to hinterlands of unimportant activity.

As long as we were growing it was easy to make light of many of our problems. It was easy to say that they would be solved by the next stage of growth, cost cutting, and reorganization. It made sense at the time. Plus, with everyone closed off into gated communities and fenced off even from their own self-experience, who was to know? People didn’t think much in those days. They did what they were supposed to do. Consultants made a lot of money. Many consultants thought very well and made great suggestions. The results were almost always short-lived and the consultants also didn’t fight for what they believed because they wanted more business. Keeping people from being upset was the game.

I’ve lost my last CEO job. I was running the number two machine tool business in the world and could do no wrong. Markets were safe. There were only two machine tool companies on the planet and we were able to control prices and customers seamlessly. Our 400,000 employees didn’t complain much in public, and I was always at the main table at major political dinners. Our contributions went a long way towards determining who was elected. Then the number one company bought us and I was out on the street along with a third of our workforce. Of course, they said that much of this could happen from normal attrition and no one would be treated badly. It’s amazing how gullible people are even when they hear the same lie over and over again.

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