8 Reasons To Choose A Startup Over A Corporate Job

Sure, a corporate gig might (initially) pay more than a startup and come with cushy benefits, but there are real, career-defining reasons to heed the siren song of a startup.

You've graduated from college, diploma in hand (or in the mail), and you have a couple of job offers on the table. Other than being one of the lucky graduates in a weak economy, you have a choice to make. On one hand is a high-paying entry level position at a reputable brand in your field. On the other hand is a job offer from a small startup that is just kicking off. You've seen their product, believe in their mission, and like their approach, but aren't sure you want to take on the risk of working at a startup. You're leaning toward that corporate job and good pay with nice benefits. The smart choice.

Or is it? 

Here are 8 reasons why you should take the plunge and enter the startup world instead.

1. You'll have more responsibility. 

Working at a startup probably means you're part of a small team, most likely in the single digits. Because of the nature of having such a small team, there is probably nobody else in the company who has the same skillset as you, approaches problems in the same way you do, or even thinks the same way you do.

When I joined Wanderfly, the core team was pretty much already in place, with directors of business development, marketing, and site production already on board. However, graduating with a writing degree and having extensive travel experience, I was able to join Wanderfly as a writer, traveler, and content manager to make sure they had a voice and a direction in the travel field (they had the tech-savvy swing taken care of). After just a few weeks, I became the de facto man for writing, editing, and blogging needs. A few weeks later, I was part of a content management division that included me and myself. Content needs, upgrades, and management all came to me and my little island of responsibility. This pushed me to be more versatile, more reliable, and more productive than in any other project I'd undertaken--in other jobs or at any time during school. At a bigger company, I may not have been given the same opportunity or had an entire company rely on the work that I did. Was I the most important part of the team? Definitely not. But was I an integral part of it? For sure. And that's an empowering place to be right out of school.

2. You'll be given more opportunities. 

I probably don't need to tell you that most startup jobs won't pay as well as some of the bigger corporate and business jobs. You (or your degree) may be worth more than a startup is able to pay. But working at a startup offers a different type of reward: an incentive-based system that isn't based on dollars, but rather in skills attained and opportunities seized. The experience will outweigh the pay cut. I (almost) guarantee it. When I first started at Wanderfly, all I had to my writer name were a few pieces in local publications. One year on, and I've had a column on the Huffington Post, been featured on National Geographic, published over 150 blog posts for Wanderfly, and (look, Mom!) an article on Fast Company. Other than being a thinly veiled explain-a-brag, this convinces me that I've had more opportunities to grow as a writer and build toward any future undertaking. I know that if I would have sought out a smaller position at a higher-paying and recognizable travel company I would still be reading through the slush pile of submissions. No thanks.

3. You'll be able to do a lot of different things. 

One of the biggest complaints I hear from peers who have entered into a more-structured, corporate position is that they are generally stuck with their main task and don't get to branch out into other areas. Whether it's writing, designing, filling out spreadsheets, or any other task, it's usually a one-person-fits-one-task kind of position. If that sounds like your startup job, then, I hate to tell you, but you're doing something wrong. Working at a startup will allow you to try on a lot of different hats, even that weird one that you didn't think you would ever like, but find out that you did. Looking back on the past year that I've worked at Wanderfly, I've lost track of all the different tasks that I've been able to take part in, from video editing to destination categorization. I came into Wanderfly as a writer, but now I feel comfortable in a lot of different areas, even explaining to the developers how I broke their site and need their help to fix it. All in code-talk.

4. You will learn from true innovators. 

People who start their own business have a different mental and professional makeup than those who have never gone off to create something of their own. Entrepreneurs are defined by seeing a problem and thinking of an innovative and original way of addressing it. Because of this innovative nature, entrepreneurs are some of the best people to learn from. They approach problems differently, are constantly finding solutions, and are driven to make the most out of their time and work. The Wanderfly cofounders continually challenge me when I present a problem because they often view it from a different perspective than I do, giving me a wider appreciation for the different avenues that exist for finding solutions. Innovation is more than creativity. It's action and reaction, solving problems in a new, enlightening way. Every successful startup has true innovators, and if you find the right ones, you'll learn plenty.

5. Your work will be recognized (as will your failures).

If I've learned anything from watching TV shows and movies, it's that if you work at a big company, chances are that all of your hard work is going to be ignored by the boss or someone else is going to snag the credit. But at a startup, it's nearly impossible not to notice a job well done or to give credit where credit is due. If you succeed, the small team will recognize it instantly, and the praise and glory is yours to bask in. Spread your arms in glory, my friend, your work has been recognized. On the flip side of that coin is that it's also really easy to see when you've screwed up. For two reasons, this is a good thing. The first is that it's nearly impossible to slack off to. Within a few days, your coasting and slacking will be noticed and the rest of the team will wonder why they are working harder than they have to. That keeps you focused and on your game. The second reason is that because failure is easier to notice, you'll make sure to eliminate mistakes in order to avoid disappointing your colleagues. Stay focused, startup employee, and your successes will be recognized and your failures minimized. And when the rest of the team says "We couldn't have done it without you," you can be confident that they mean it. 

6. You'll work in an awesome atmosphere.

Let me count the ways: 

• I wear jeans to work. In the summer, I wear shorts and sandals.
• If there isn't at least one really good joke in an hour, it's probably a slow day.
• Everyone else who works at a startup has the same drive and excitement for creation as you do. 
• The startup community (and, in Wanderfly's case, the travel community) is a great, close-knit group. All around you, people are coming up with innovative solutions to age-old problems or making that new tool that simplifies or enhances your life in some way. That entrepreneurial spirit is contagious, and if you don't feel it or catch it, then you're actively avoiding it. 
• You can drink beer at work. But only on special occasions. Wink.

7. You'll learn to be frugal. 

Working at startup probably means that money is tight. Whether you've been showered with investor love or the founder has a really wealthy uncle, the company will still be thinking of ways to do more with less. No extravagance, no frills, no extraneous booze cruises (heartbreaking, I know). Instead, the business development intern will learn how to design and code the blog, the writer will sometimes do the dishes, and at the start you'll find a way to fit nine people around an eight person table (hint: extra chair). This frugality and monetary responsibility will undoubtedly bleed into your own life as well, and you'll end up finding new ways to find fulfillment other than burning the money you earn. Instead, you'll probably discover a joy in creating and doing, rather than consuming. You'll find happiness in being part of a team that is trying to make other people's lives easier, more fun, and more manageable. Your entire life will take on a meaning of creation, and you'll be more energized, both physically and mentally, to take on new hobbies and start your own personal projects. In the startup world, it's all about creating more and consuming less (this does not apply to Thai food or burritos).

8. You'll be instilled with the value of hard work, ownership, and self-sustainability. 

Maybe more important than any other benefit of working at a startup is the realization that hard work, creative thinking, and tenacity are worth a whole lot. Once you've created something of your own, something tangible and whole, something you can touch, feel, or use, you really begin to appreciate personal ownership. For those who do not actively create, or are continuously creating for someone else's benefit, it's difficult to understand the great importance of personal ownership and the liberty needed to pursue that ownership. Working at a startup and spreading the news of your team's product, a product that you helped bring into existence, instills the value of that ownership and gives you pride in your work. It is this pride, in your team's hard-work and ability, that teaches you the importance of protecting those who do create innovative solutions and take risks. 

Working at a startup also means that you and your small team are the only people responsible for your success. For some, that may trigger a response to go crawl into a corner and hope someone comes and spoon-feeds them their paycheck. For others, it's the greatest motivation there is. To be cut off from relying on others to provide for you will undoubtedly surface skills and a determination that you didn't know you had. At a startup, that natural wish to be self-sustainable is magnified and multiplied, triggering the do-or-die attitude that is often the difference between success and failure. No matter where you go after your stint at a startup, and especially if it is to go off and create a company on your own, that need to be self-sustainable, and the skills you picked up to make that possible, will power everything that you do.

--Kerrin Sheldon is a writer, photographer, and filmmaker, and is the content manager forWanderfly. He prefers to be underwater in Belize, but also likes climbing, running, cycling, and is strongly considering taking up flying. Find him on on Twitter @kerrinsheldon or on the brand new Wanderfly. 

The Feminization of HR - Where Have You Been?

Did you read the lead story in Human Resource Executive? If you haven't you should and if you are surprised then you must have had your head in the sand for the past 30 years. I am really astonished that HRE would publish a lead story like that when it is so obvious that the HR field is and for the most part has always been dominated by women. The only major change in the last 20 years is that women have started to dominate the top level positions. And since this writing I would guess that they do dominate top spots today. 

I for one am not surprised and have seen the rise in women in management over my many years in the HR field. If you have been recruiting for a manager or director in the last 10-15 years you tell me how many male resumes you have seen come across your desk. Not many, and I have lived in the Northeast, Southeast, and Mid-west and the recruiting story is the same, more women than men. 

All that being said, I do think that women think very different than men on the fly and that is important in business. They make more rational full-view decisions in general. I give them credit and am not taken anything away from men and their decision making.

But, again, if you have been in HR this trend of women dominating HR has been going on for 30 years and will continue. I also think that there at some point needs to be a balance in the genders but how many men want to get into a women dominated field? For that matter, if I am not mistaken the US population is not more than 50% female. Correct????

Check out the lead story in the Human Resource Executive March 2012 issue. 

10 Ways to Keep Employees Off Facebook

Facebook is one of the most valuable promotional and networking tools available to business owners, but it can also be the source of countless wasted hours for your employees. Tackling the subject of lost productivity due to Facebook can be tricky; here are some tips to prevent excessive use during work hours.

1. Be Realistic – As the internet-dependent Generation Y enters the workforce, it’s important to be realistic about their use of social networking. It’s not generally recommended to block access to Facebook altogether unless it’s proven to be a real problem; if productivity isn’t suffering, it might be best to take a wait-and-see approach.
2. Look Into Blocking Programs – If other attempts to curtail Facebook use have failed, there are programs that will block access to certain sites. Small businesses can even find free open-source programs to do the job, making it a cost-effective option.
3. Institute a Usage Policy – Writing a realistic usage policy is one of the best ways to keep Facebook use under control. Making allowances for use during breaks can keep employees on their toes during the rest of their workday without causing dissent.
4. Consider the Smartphone – The proliferation of smartphones means that there is no surefire way to keep your employees from accessing Facebook if they’re determined to do so. Hiding out in the bathroom with an iPhone to stay connected is a much bigger drain on productivity than a policy that allows for some use throughout the day.
5. Encourage Use of Blocking Apps – There are web-based apps and browser plug-ins designed to block access to time-wasting sites during specified hours; encouraging your employees to use these apps of their own volition is a great way to boost productivity and avoid mutiny.
6. Provide Productivity Incentives – Taking an indirect approach to discouraging Facebook use can also be effective, as instituting performance-based incentives make it easier for workers to keep a goal in sight. Without ever mentioning the social networking giant by name, you can discourage most employees from overuse.
7. Use Monitoring Software – There are dozens of monitoring software options on the market, with varying price points and features. Choosing to monitor your employees web use can be a tricky decision; be sure to disclose that their use will be monitored and have signed documentation on file to avoid potential privacy issues.
8. Treat the Issue Like Any Other Infraction – Wasting time is frowned upon in most workplaces, regardless of the reason. Treating productivity-hampering Facebook use as any other infraction ensures that your employees know exactly what is allowed and what you expect of them.
9. One-on-One Discussions – If your current policy is rather lenient or non-existent and still effective, with the exception of a handful, it might be best to approach troublemakers on an individual basis.
10. Frequently Remind Workers of Policy – Once a policy has been instituted, reminding employees at meetings and through memos regularly might be the best approach. Doing so will prevent confusion about acceptable use and keep all of your employees on the same page.

Always remember that your employees are people, too, and should be respected. If your demands are reasonable, they will be more apt to accept them. Make sure you know what the issues are and plan accordingly.

Shrewd Investments in Networking

Everyone is told they need to network. We all know the benefits; or at least we know them intellectually. Yet it still takes time and effort to get out there and do what you need to do. And, of course, we do not have very much time to spare. Getting a little more focus helps to make it easier to do.

Instead of thinking of networking as a cost (time, energy and cash),think about it in terms of an investment. Convert the time and energy into a monetary equivalent. Now...

• What are your investment objectives? What significant goals in your life do you think could be aided by new people? Therefore, what do you want to get out of your networking?
• Linked to the above, what is your investment strategy going to be? Short, medium or long term? Gordon Gekko asset stripping or Warren Buffet in it for the long haul?
• Are you going to spread your investment? Rather than put all your eggs in one basket, using a variety of different channels spreads risk but also dilutes your time. What is the right balance for you based on what you want to achieve?

I could go on, but I am sure you can take it from here. Using the investment metaphor is just one way of filling your networking with new ideas and action. And, if you are not too keen on investing, how about gardening?

Posted by Colin Gautrey on the Influence Blog @ http://www.gautreygroup.com

10 Leadership Lessons from the IBM Executive School

But failure was not an option for Mobley, and after many a dark night of the soul he hit upon the answer that turned IBM into the fastest growing and most admired corporation in the world…

In 1955 IBM’s legendary CEO, Tom Watson Jr., gave my mentor, Louis R. Mobley, a blank check and carte blanche to create The IBM Executive School. Fresh from successfully implementing IBM’s first supervisor and middle management training programs, Mobley confidently set about churning out executives as well.

The first thing he did, in conjunction with GE and DuPont, was hire the Educational Testing Service (ETS), the same company that still does the SATs, to identify the skills that make great leaders great. Once these intellectual skills were identified, Mobley and his colleagues at GE and DuPont assumed that spitting out executives would simply mean “training to the test.”

ETS dutifully rounded up a bunch of proven leaders and tested them every which way from Sunday looking for their common skills. The results were astounding and more than a little disturbing. As Mobley put it, “No matter what bell shaped curve we drew, successful leaders fell on the extreme edges. The only thing they seemed to have in common was having nothing in common. ETS was so frustrated that they offered us our money back.”

But failure wasn’t an option for Mobley, and after many a dark night of the soul he finally hit upon the answer. Unlike supervisors and middle managers, what successful executives shared were not skills and knowledge but values and attitudes. And over time Mobley identified the values and attitudes that great leaders share.

1) Great Leaders Thrive on Ambiguity. While most of us like black and white decisions, successful leaders are comfortable with what Mobley called, “shades of gray.” Great leaders are able to hold apparent contradictions in tension. They use the tension these paradoxes produce to come up with innovative ideas.

2)   Great Leaders Love Blank Sheets of Paper. Supervisors and middle managers use a framework of policies and procedures to guide them to the proper decision. They want a plan that reduces their job to filling in the blanks or what Mobley called “following the bouncing ball.” By contrast, leaders create the blanks that managers fill in. Like some business Einstein intent on reinventing the universe, every great leader relishes the opportunity to “think things through” from scratch.

3)   Great Leaders are Secure People. Successful executives thrive on differences of opinion. They surround themselves with the best people they can find: people strong enough to hold a contrary opinion and argue vociferously for it. Great leaders crave challenges, and this means hiring the most challenging people they can find with no regard for whether today’s challenger might be tomorrow’s rival.

4)   Great Leaders Want Options. Long before it became fashionable,Mobley was a huge proponent of diversity. However his definition meant a diversity of opinion rather than the kind we usually associate with political correctness. Mobley’s great leader constantly demands diverse options from his team, and uses these options to produce creative decisions.

5)   Great Leaders are Tough Enough to Face Facts. At heart Mobley was a spiritual man who valued the Truth for the Truth’s sake. Successful executives face facts, and this means being open to the truth even when it is not what we want to hear. One of the most successful executives I know offers cash rewards to anyone in his company who can prove him wrong. Great leaders have a nose for B.S and abhor it.

6)   Great Leaders Stick Their Necks Out. It is a natural human trait to fear being evaluated. We crave wiggle room so we can deflect blame and get off the hook when things go wrong. In business what is often passed off as a collaborative effort is actually just an attempt to avoid individual accountability. Great leaders want to be measured and evaluated. They continually look for ways to measure things that may seem immeasurable, and they cheerfully accept the blame when they are wrong or fail to deliver. The old adage that success has a 1000 fathers while failure is an orphan does not apply to great leadership.

7)   Great Leaders Believe in Themselves. While great leaders crave advice, options, and strong colleagues, they all share a profound belief in themselves and their judgment. Mobley described great leaders as “people stubbornly following their star who don’t know how to quit.” Holding this stubbornness in tension with a willingness to be wrong is perhaps the greatest trick that every great leader must perform.

8)   Great Leaders are Deep Thinkers. Managers get things done. Executives must decide on the things worth doing in the first place. Though very difficult to quantify, great leaders are deep thinkers. They constantly dive below surface “facts” searching for new ways to knit those facts together. Great leaders are generalists not specialists driven by an omnivorous curiosity. They know that the answers they are seeking will probably emerge from outside business and from disciplines that may seem utterly unrelated.

9)   Great Leaders are Ruthlessly Honest with Themselves. Self-knowledge is perhaps the most critical trait that all great leaders share. Leaders question assumptions and disrupt complacency by relentlessly asking the question: “What is the business of the business?” This exercise develops and refines the organization’s mission and purpose, and it is little more than the age old question “Who am I?” applied collectively. If you are not clear about the purpose of your own life how can you provide a sense of organizational purpose for others?

10) Great Leaders are Passionate. They may be loudly charismatic or quietly intense, but all great leaders care deeply about what they are doing and why they are doing it. Perhaps most importantly they care about people. Every business is a people business, and passionately caring about people whether they are employees, customers, vendors or stockholders is an essential leadership value.

Once Mobley compiled his list, he was faced with another even more difficult problem: How do you instill values and transform attitudes? He discovered that unlike supervisors and middle managers, executives shared another trait: They were constitutionally untrainable and reacted with hostility to any effort to “brainwash” them with “training.” Worse, Mobley discovered that values and attitudes are not only impervious to typical training techniques, but hectoring people to change often had the unintended consequence of hardening existing attitudes instead.

As the result some deep thinking of his own, Mobley eventually realized that what was needed was “a revolution in consciousness” rather than the kind of step by step curriculum that leads to a single “right answer.” Taking a leap of faith, he decided that the values and attitudes he was looking for could only be brought about as a side benefit or unintended consequence of what almost might be termed “spiritual work.” Rather than converging on a super set of skills, the IBM Executive School fostered the divergence that values uniqueness and individual authenticity.

The risk of failure was real, but if Mobley was going to produce people willing to stick out their necks he had to stick out his own first. He abandoned lectures and books in favor of games, simulations and other experiential techniques designed, not to “train,” but to “blow people’s minds.”

As for the personal accountability and measuring results, Mobley’s record speaks for itself. He ran the IBM Executive School from 1956-1966. It was his students that turned IBM into the fastest growing and most admired corporation in the world in the 1960s and 70s…

August Turak, Contributor to Linkedin 

New Blog Connection

I am pleased to announce that my blog has been added to the Network Corporation at www.tnwinc.com

What is Innovation?

What is innovation? The Oxford English Dictionarydefines it, somewhat unhelpfully, as: “the action or process of innovating”; but, then elaborates: “a new method, idea, product, etc.”  It then goes on to note: “innovation is crucial to the continuing success of any organization.”

As innovation is so important, I thought I would unpack the idea a bit. Many people think that “true” innovation is the invention of genuinely novel things which have never before been seen in the world. However, this is a very high bar at which virtually everyone would fail. Humans have been around for over 200,000 years and there are billions of us, so most things, one way or another, have been thought of before.  In my view, this strict definition isn’t particularly helpful.

I think a more useful definition is something like this: “The recognition and implementation of an idea or combination of ideas which brings a unique utility not before seen or used which adds value by fulfilling a consumer need.”

I spent Christmas 2011 reading Steve Job’s biography by Walter Isaacson. I have always thought of Steve Jobs as intrinsically innovative; but, what was special about him was not that he came up with entirely new ideas – the graphical user interface on the Macintosh, for example, had been invented by Xerox Parc and there had been many MP3 players before the iPod – but, that he came up with unique combinations; which, taken together, added real, never-before-seen value to the consumer.

Take the iPod: As a music player, it was certainly very elegantly designed; but, its capacity was well below the best that was available--at the same price--on the market at the time. What Apple did was combine the player with the web (in the form of iTunes) in such a way as the combination was unique. Suddenly, tasks that were really difficult, or close to impossible to do on the player, could be done on the Mac, thus freeing the player to do what it did best: play music. And, by deconstructing the album into songs--and miraculously persuading the music industry to play ball--it created a huge new market for legal downloads. The rest, as they say, is history.

Or take the iPhone: There were smartphones before the iPhone; but, they weren’t very smart. The iPhone’s unique advantage, apart from the legendary great design, was the App Store. Suddenly, the phone could become whatever you wanted it to be; thus, the real revolution in smartphones that we are living through today was born.

Google provides another good example: Google’s revolutionary idea, apart from its blisteringly good search, was AdWords. But, Google didn’t invent key word advertising; that honour went to Idealab that spun-out GoTo.com which was later renamed Overture and was then bought by Yahoo!. However, it was Google who hit the jackpot with search advertising, and it did so by reinventing the model. Overture had ordered ads by whoever bid the most that quite often resulted in the top advertisement not being the most appropriate.  It was simply the one with the deepest pockets.

Google changed the rules. It ordered results partly by the bidding and partly by the success of the ad which was measured by how many people clicked on it and on the quality of the ultimate landing page. And, it also limited the power of those with the deepest pockets by charging only one cent above the amount of the second highest bidder. These innovations revolutionised the medium.

So my argument is innovation comes from  the real innovators who can be—and often are--those that take ideas already out there and reinvent and recombine them in ways which create real utility for the user. As Steve Jobs said, paraphrasing Picasso*: “Good artists copy; great artists steal.”

In the innovation process at RBI Data Solutions, we always try to think as broadly as we can about customer problems. Of course, we would love to invent some genuinely and completely novel services that the world has never seen; but, we are just as happy if we construct combinations of already-existing components, provided we produce an elegant solution in the end. We are not yet as good as Steve Jobs at this process, but we are working on it.

First published on the internal Reed Elsevier Innovation website, February 2012

reblogged from Jim Muttrams blog bloggingrbi.blogspot.com

The Role of Identity in Successful Post-merger Integration

In an elementary school math class, stating that 1+1=1 would quickly incur markings from a teacher's red grading pen. But in the world of mergers and acquisitions, 1+1=1 is the goal: Taking two (or more) companies and seamlessly integrating processes, products and people.

When trying to pull off a successful deal, however, many senior executives focus their attention on the financial aspects of a merger and fail to consider their psychological implications, Wharton management professor John Kimberlysays. In a new paper, "Making 1+1=1: The Central Role of Identity in Merger Math," Kimberly and co-author Hamid Bouchikhi, a professor at ESSEC Business School in France, discuss the common mistakes firms make in their efforts at identity integration and offer four approaches for ensuring that deals work on an emotional level.

According to Kimberly, the traditional "merger math" is that one plus one will be greater than two, that merging two companies will create an entity that is greater than the sum of its parts financially. Executives tend to pay the most attention to that principle, he says, focusing on the financial architecture of the deal. But he notes that the "new" merger math has two pieces to it -- economic synergy and psychological synergy.

In addition, says Kimberly, firms should not confuse identity with culture. "Culture has to do with 'the way we do things around here.' Culture is very powerful and very important, and the cultural differences between one organization and another need to be taken into account in any sort of effort to combine operations." But Kimberly says identity issues are more deeply embedded in the fabric of organizations as a whole, and in how individual employees see themselves. "It's the answer to the question, 'Who are we?' It's the areas of agreement around 'who we are' that are the basis of the identity of any company." 

Merging two or more firms "seriously disrupts the identities of the two involved organizations, generates fear of identity loss on one or both sides, and raises questions about the identity of the new combination, which may hinder trust in and identification with it," the authors note. Integration "cannot succeed before employees of the merged entity feel a sense of belonging to a single enterprise with which they can identify and to which they are motivated to contribute."

In some cases, the identities of players in a potential merger may be so at odds that "no matter what you do in the post-merger integration phase, it's just not going to work," Kimberly says, noting that this is particularly true, for example, when the two organizations contemplating a merger have been fierce competitors for decades. "To expect that the employees of the two will suddenly become willing and enthusiastic collaborators is a stretch, to say the least." Another thing to watch out for is when the two organizations have served different customer segments that have different service needs and require different organizational and managerial approaches. While the rationale of broadening the customer segments served by the firm may be seductive from an economic perspective, deeply embedded organizational routines and their psychological consequences may get in the way, Kimberly warns.

The unhappy merger of Dean Witter and Morgan Stanley illustrates the danger of underestimating the significance of the psychological dimension, Kimberly says. That's why the researchers stress that firms need to begin thinking about the issue at the start of any merger process. Delving deeply into a firm's (particularly a competitor's) identity can be difficult during the secretive early stages of acquisitions. "You bring in some outside resources that are skilled in making these determinations and you listen to what they have to say because they'll have access to data that you don't," Kimberly notes. "Then you have to make a judgment about whether what they come up with is convincing."

Potential Pitfalls

Once executives determine that identity issues are a barrier that can be overcome, Kimberly advises that they think early on about what type of integration strategy they plan to use. In the paper, he and Bouchikhi use several real-world examples to detail the common mistakes that businesses tend to make when dealing with the emotional impact of mergers and acquisitions.

Many firms simply choose to ignore identity as a factor. The researchers write about SSL International, a company they worked with that came about as a result of a three-way merger. The firm waited more than two years after the deal was completed to deliberately focus on identity integration -- and only after a severe crisis caused the board to bring in a CEO from the outside.

Once the company began to think about identity, executives realized that, although all of the merged businesses had operated in the same sector, there was a disconnect because some employees had spent their careers making and selling products for large professional clients, while others were used to manufacturing and marketing branded goods through retailers. "Ultimately, management divested the businesses serving professional customers in order to focus on the integration of those operating in consumer branded products," the researchers write.

In other cases, firms may make the error of mistaking culture for identity. To illustrate this pitfall, the authors point to the attempted merger of the local branches of French savings bank Caisses d'Epargne. Employees shared similar values and ways of working -- but a key part of their identities was viewing their branch as independent and distinct from the other branches. The merger created "'Us vs. Them' reactions that culture was not sufficient to preempt," the researchers write.

Another common pitfall is confusing outward characteristics, such as a firm's name or logo, for its identity. For example, the authors write that when SBC Communications took over AT&T in 2005, the former opted to use the latter's name for the merged entity. But the majority of the post-merger executive team, including the chairman and CEO and the heads of finance, strategy and human resources, were from SBC. Thus, it was that firm's identity that prevailed, the researchers say.

Executives also can become so caught up in selling the merger to external audiences, such as stockholders and the public, that they forget about gathering support internally. Companies may also run into trouble if leadership sends mixed signals about identity integration -- verbally detailing one plan, while taking actions that suggest a completely different approach. "They're trying to get something past the public, and they do it without thinking about the implications," Kimberly notes. "When they shift gears and do a turnabout, all of a sudden there's a set of consequences, both internal and external, that they have to deal with."

In the paper, the authors point to the example of Kraft's purchase of United Kingdom-based Cadbury. Although Kraft executives have publicly stated their intentions to preserve Cadbury's identity, "early decisions regarding the dismantling of Cadbury's corporate headquarters and the transfer of decision making to Kraft's European headquarters in Zurich, Switzerland, suggest that the Cadbury organization is set to die."

Solutions

Kimberly and Bouchikhi offer four potential approaches for achieving identity integration: assimilation, confederation, federation and metamorphosis. Assimilation occurs when one firm is completely absorbed into the other's operations and identity. At the other extreme, confederation allows both organizations to preserve their identities, names, management structure and autonomous decision-making. Falling somewhere in between are federations, in which the merged firms keep their identities but also develop an overarching character that both can thrive in. Finally, a metamorphosis involves both firms dissolving their former identities and creating a new entity that did not exist prior to the merger.

Before deciding what avenue to take, company leadership must consider to what extent they want, and to what extent it is strategically prudent, to preserve the identities of each firm involved in the merger. "It's important for senior management to understand those four different approaches and what they mean with respect to how much you need to know about your partner in the operational sense and in an identity sense before the merger is consummated," Kimberly notes. Merging identities more tightly -- for example, through assimilation -- often achieves the most cost savings, he adds, but those methods also require that more attention be paid to identity issues.

Kimberly cites the merger of Japanese automaker Nissan with French car company Renault and that of Air France and Dutch air carrier KLM as examples of confederations where the acquiring firm (in those cases, Renault and Air France) left the acquired companies' identities intact, while at the same time introducing new manufacturing and managerial practices. "At some point down the road in both cases, these firms will become more fully merged entities," he notes. "At that point, leadership will have to again confront this identity issue of who are they going to be. Are they going to be KLM or Air France? Are they going to be Renault or Nissan, or are they going to keep the brands differentiated?"

Often the deciding factor in such a debate is the relative costs of remaining separate as compared to the value generated by keeping either or both firms' identities intact. For example, Unilever purchased American ice cream company Ben & Jerry's in 2000, but has gone to great lengths to preserve its autonomy -- to the point where it is difficult to find a mention of the British-Dutch conglomerate on the Vermont-based brand's website. "Ben & Jerry's has a very distinctive identity and a very distinct sense of who they are and how they are separate from and different from other people in the same business of producing ice cream," Kimberly says. "It's a very clear, distinct and value-creating identity."

Published: February 29, 2012 in Knowledge@Wharton