Alcatel-Lucent has become yet one more victim in the long list of companies which have not got the promised synergies following a merger. Serge Tchuruk, the French Chairman and Patricia Russo, the American CEO are both leaving. The results of the merged entity – created in a $ 10.7 billion merger two years ago-have made poor reading. Analysts have been disappointed that the new entity did not deliver the results expected when the merger took place in 2006. The merged entity announced its second quarter results recently- a net loss of 1.1 billion Euros or $ 1.7 billion.
It is evident that the merger has not worked because the company has not announced a profitable quarter even once since the merger took place.
I would not at all be surprised to hear that the telecom giant which employs 77,000 people in 130 countries, was troubled with cultural differences which weakened management performance. Since the merger 16,500 jobs have been cut. The fact that Patricia Russo ( who doesn’t speak French) continued as the CEO of a predominantly French company would have had lots to do in accentuatingthe cultural differences.
This reinforces the fact that mergers and acquisitions fail largely on the people front. You may have the best of technology and the best of products but you won’t succeed -if the leadership cannot get the best out of its people.
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This is Post No: 240 of the “A Step A Day” series : To provide perspective and provoke thought to facilitate self-development across a wide spectrum of issues- big and small- crucial for executive success.