In December of this year (2005), Steve Case--co Founder of AOL, wrote a piece for the Washington Post where he advised AOL/Time Warner to break the company up into at least three independent companies. Case was a big proponent of the merger when it occurred. You can read his article here.
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Here's an interesting section from the article:
At the time of the merger, there was great excitement about the innovation that would occur as the company's businesses collaborated to create new growth opportunities. Unfortunately, that "one company" strategy never got off the ground. Instead, each division "did its own thing." While that staved off turf wars, it did nothing to drive innovation. As a result, the company's growth has slowed, and the stock is now trading at about half what it was four years ago.
By early 2004, it was clear that Time Warner had to "integrate or liberate": make the divisions work together or set them free on separate paths to pursue their own opportunities. This past July, having concluded that integration would never happen, I proposed to the company's board that it was time to "liberate" and split the conglomerate into four freestanding companies -- Time Warner Cable, Time Warner Entertainment, Time Inc. and AOL -- each with its own strategy, stock, balance sheet, management team and board.
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One of the primary reasons mergers fail is failure to integrate everything--especially the culture. The integration of say, the IT of two companies, is a heroic project. However, it's small potatoes compared to the integration of human culture and relationships. If Case is correct, the human integration never occurred at AOL/Time Warner. This would not be unusual. The human side of the integration is the most challenging, but can also be the most rewarding.
Whether you're merging multi-billion dollar companies, or two teams who need to accomplish a project, relational connection is critical. Without it, all of the subtle human dysfunctions that emerge during a period of change can easily overwhelm the initiative.
Pay attention to people and relationships. It's critical for any merger; actually it's critical for any collective endeavor.
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