A mega merger between Shell and BG Group in the headlines this morning with news that “Royal Dutch Shell says it has agreed to buy oil and gas exploration firm BG Group in a deal that values the business at £47bn.”
Mergers and acquisitions pose some of the most complex and costly Belonging challenges for business.
This promises to be one of the biggest mergers so far of 2015 and the first big energy company merger in a decade.
It comes just a couple of months after Helge Lund took up his position as CEO earlier than planned in order to get stuck into the challenges of reviving BG’s fortunes.
Interesting times. As the oil and gas market continues to crash, taking economists into a tailspin, what future – in a sector where big is not just best but apparently the only way – other than the gobbling behemoths?
The numbers look impressive. But beware the excitement of ‘look at the size of my merger’.
Time and again the early promise of big mergers ends in small value – and, after the swag claims, headlines of disaster. KPMG, among others, a few years ago found that more than 80% of mergers fail to create value – and over 50% actually destroyed value.
And the biggest cause? Failure to merge cultures.
Culture can be the greatest invisible threat to business – or the most powerful intangible asset.
What does it mean to belong to this newly merged company?
What is our ethos, what is ‘doing the right thing’?
This is what guides decision-making in daily business, far more than stated strategy or policy.
The question for employees post-merger, once they have some assurance that they still have a job, is “What do I belong to?”
BG group has done steady work on creating a new brand, though whether for employees this meant a confident sense of belonging is unclear from the outside. Shell has a deep-rooted sense of belonging in its blood-line. Its mammoth scale with 92,000 employees dwarfs BG Group’s 5,200.
Both companies make fine claims about values and principles that, in theory at least, sound compatible. But the reality of integration is all about how those values are put into action.
And how well people with different heritage and specialism can work together – quickly.
Far from being soft, this is hardcore: culture and belonging can make or break the success of a merger. The need for rapid shifts to survive, reconfiguring teams and structures, intuitive collaboration, upholding shared ethics… this takes deep commitment within – not separate from – daily business activity.
And what of leadership? Does BG still gain the opportunity from Helge Lund’s direction?
While a lot of focus in the British press was on his pay offer, more interesting is his style.
In over ten years as President of Norway’s Statoil Lund gained respect for both shrewd commercial direction and careful stewardship of the wider impact on society. His emphasis was on values, safety and sustainability alongside profit.
It’s an unusual balance that business – especially the oil business – sorely needs. And requires much subtle craft in culture behind the strategy.
So let’s watch this merger carefully.
Will cultures merge to support success?
How will the business create a sense of belonging?
And will shared values turn into value?
At Belonging Space we help organisations create a sense of belonging, putting ethos at the heart of their business as the greatest intangible asset.