One month out from Alaska Airlines’ victory in the bidding war to purchase Virgin America, the future of the combined company is anything but certain. Now standing among the ranks of America’s top five largest carriers alongside giants like Delta and United Airlines, Alaska Airlines-Virgin America will need to tap into the very unique qualities that have respectively earned each company strong customer trust and loyalty over the years. Together they must define a future that is more than merely additive, but taps exponentially into the synergies between the two companies to go beyond ‘one-plus-one-equals-two’ – which, in many cases, actually ends up being 1.5.
Here are three mistakes they should avoid making that could easily derail a successful integration:
1. Failing to define a vision – before the integration occurs. Crafting a vision that clearly spells out the opportunity inherent in the transformation ahead should, but often doesn’t, start long before a deal is pursued. Drawing from an ‘expanded due diligence’ process that explores both quantitative metrics, like company operations and financials, as well as the people and culture of the merged entity, Alaska-Virgin leaders must build and communicate a vision of success that is understandable, tangible and compelling to employees throughout the ranks of both companies. Factoring in what is valued in the people assets and cultural elements of each company will empower leadership to look beyond the basic additive advantages of the deal and construct a more holistic vision – inspired by both head and heart – for the opportunity ahead.
2. Forgetting to ask, “What more could we become together?” The single biggest pitfall that derails successful M&A transactions during the actual integration process is focusing too heavily on ensuring the tactical aspects of the deal are covered, including technology integration, financial reporting, operations and merging organizational structures. The real power of any merger deal comes from both organizations challenging each other to ask, “What more could we become together?” How can we learn from the best of each respective organization and let go of our old biases? This will build the two parts into a better whole. Viewing the integration process through this lens will help build collective urgency and alignment around shared goals and generate excitement among employees for Alaska-Virgin’s future.
3. Underutilizing your people to drive change. Your own people are your best consultants. Throughout the merger integration process, leaders at Alaska-Virgin should deliberately involve a diverse cross-section of the organization in leading an employee network structure to run alongside the traditional organizational hierarchy of the combined company. This ‘dual operating model’ is critical to empowering employees at all organizational levels to join and lead a volunteer army to accelerate the transference of ideas and inspire the desired culture of the new combined company. While hierarchical organization structures will be crucial to continuing delivery of the service levels customers expect, the more informal, networked groups running alongside will drive transformational changes and ensure cultural traits, like Alaska’s emphasis on timely departures and Virgin’s dedication to superior customer service, are maintained within the DNA of the new company. Composed of leaders at all levels, the informal networked groups can work with more agility and adaptability than a hierarchy alone could act, which will be important as the two separate businesses gradually become one.
written by Kathy Gersch – Executive Vice-President at Kotter International