Why business is like... Marriage

Mergers are often compared to marriage, which is accurate in one sense, at least - they often fail. Divorce rates are sky-high, and M&A has been said to destroy value in more than 70% of cases, the Daimler/Chrysler and Time Warner/AOL nuptials being prime examples. So it seems curious that M&A is once again on the rise, surpassing even the dot.com era figures. If our objective is sustainable growth, shouldn't we be looking elsewhere for inspiration? And can the field of human relationships provide any more useful analogies?

by Jenny Harris
Last Updated: 31 Aug 2010

Some relationship counsellors suggest cohabitation first - or, in business terms, a strategic alliance, which provides a way to dip a toe in the water. But research by Boston Consulting indicates that loose arrangments are just as hard to manage and frequently fail. Surprisingly, marriages that follow a period of cohabitation are even more likely to fail, perhaps because of the difficulty of shifting gear from a low-commitment relationship to something deeper. Which is interesting but not very useful if you're looking for a constructive model for growth.

So if neither marriage nor cohabitation offers much other than a warning sign, where should we look next? Maybe polygamy is a better means by which to expand the family unit. Johnson & Johnson, one of the most profitable companies in the world, has never undertaken a major merger, preferring instead to acquire smaller businesses and nurture them rather than absorb them. Its success over 100 years would suggest that this form of getting it on provides a more reliable model for sustainable value creation. We don't recommend that you apply the same rationale to your home life. Unless you live in Salt Lake City.

Jenny Harris is Young Businesswoman of the Year and director of JRBH Strategy & Management

Tags:
Strategy

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