Smooth Merger: Learn from Organ Transplants?

• Roddy Carter

She was in perfect health. I saw her the week before Thanksgiving every year for her annual medical. Despite her good health, she looked tired. I asked her what was on her mind. “I’ve been a CEO for seven years now,” she said. “It’s been fantastic. We’ve grown beyond expectation. I’m excited about the future because we have decided to acquire another company. I’m losing sleep over the merger. It’s a big deal, and it must work out right!”

I took my stethoscope from around my neck, and placed it on my desk. “This is interesting”, I thought. When I was a young doctor I worked in a transplant unit. I wonder if any of the science I learnt there would be useful?

For the most part, we planned a transplant to replace a failing organ. Sometimes we did it to eradicate disease, like cancer of the bone marrow. We killed off the diseased bone marrow cells and replaced them with healthy donor cells. I could see some business parallels, where a failing R&D unit is replaced or rejuvenated with the acquisition of a thriving research company. I couldn’t think of a biological replica for a merger between two similar sized organizations, but was pretty sure that the principles we worked with would be entirely valid. In most cases, one of the companies plays the dominant (host) role, and the acquired company could be seen as the donor.

A major underlying principle in transplant science is the knowledge that both host and donor are vulnerable through the process. Understanding this, a CEO should be sure that she looks out for the health of both organizations throughout the merger. Then, we worked with two major objectives: (a) achieve rapid functional alignment between the host body and the donor organ; and (b) ensure safety and survival of the donor cells; the transplanted organ would be safe if we took care of the individual cells.

I was confident that the CEO would be on top of the functional alignment. Planning for transplants was a big time commitment involving a team of experts. The CEO would assemble a senior team, including representation of both organizations under a top lieutenant from her own company. She would ensure that new organizational charts were drawn up, policies and incentives were aligned, and a detailed communication plan instituted. At the time of surgery, our priority was to be sure we have the donor organ safely embedded within its new blood and nerve supply. Similarly, The CEO would have communication and support systems aligned in support of acquired employees and teams. I didn’t think she needed much guidance on these topics.

She may be more interested in our medical approach to donor cell survival. Fundamental to our management is the understanding that the host immune system recognizes the donor cells as foreign material. The host’s immune system mobilizes to kill off the donor cells that it recognizes as unwanted invaders. The risk to the new organ depends on genetic compatibility between the host and donor. In the hospital we would do specific tests to assess how similar the donor was to the host. If the donor was an identical twin, with identical DNA, the compatibility was very high, and the risk of organ rejection low. I might suggest to the CEO that she asks her integration team to systematically look for fundamental differences in culture, systems and methodology to pinpoint merger risks. Interestingly, it was easier to transplant an organ into a young child whose immune system hadn’t yet evolved. This suggests that younger organizations where infrastructure was still plastic and cultural patterns and preferences were not yet ingrained may be more welcoming hosts in a merger. This is probably in contrast to reality where more mature, resistant organizations are the acquirer. Note to CEO: this means risk, especially if you are a large, stable acquiring entity.

As I thought about systemic resistance to the incoming organ (such as incompatibilities with IT systems, compensation and benefit scales, cultural beliefs and financial incentives), I was reminded about the humoral immune system in humans. These are the antibodies that circulate around the body in the blood. When they identify foreign cells, they bind to them and signal loudly for other immune components to neutralize or destroy the unwanted cells. The host’s immune cells that engage in one-to-one, or even many-to-one combat with the donor cells inflict the real damage. I wondered what the CEO was going to do to prevent individual employees and teams in her own organization systematically neutralizing or destroying “aliens” from the acquired company? I could think of a thousand meetings a day where subtle body language, poorly chosen jokes and deliberate favoritism would alienate willing employees from the acquired company. How would she prevent this?

In the transplant unit we used drugs to suppressed the immune system. We selectively targeted immune cells, making them less sensitive to aliens and weakening their response when they encounter foreign material. I was hopeful that the CEO, the immune leader would lead by example in welcoming donor cells. Could she also brief leaders to look out for more assertive managers and employees at greatest risk of driving rejection? Could she screen employees for compatibility traits? Coaching or out-placing immune ringleaders may be a successful short-term strategy.

Finally, I suspect that leaders of the new organization would quickly shift focus back to urgent business issues like increasing revenue and improving financial efficiency. I hoped that the CEO would take a note from the long-term surveillance we conducted with our patients post-transplant. We followed them very closely, looking for two major complications. We continued to look out for donor organ rejection. Secondly, we were looking for infections that arose by suppressing the immune system. I hoped that she wouldn’t disband the integration team as soon as the new company logo was launched. I hoped that the team would continue to monitor individual employee happiness while they tracked major corporate indicators of success.

I must have been gazing out the window for a long time. My patient was still there, waiting patiently, perhaps even listening to my thoughts. “Happy Thanksgiving”, I said as I made a note in her file to ask at her next visit how the merger had worked out.

Have fun,

Roddy

(Roddy Carter is an executive consultant who uses nature to provide analogues for human organizational structure and function. Through the BioSimilar Programs he helps organizations select and learn from a species or environment that closely resembles their own circumstances. This is a fun way to build and implement strategy and to enhance performance. Please reach out through the connect tab at Body-Corporate.org if you’d like to explore a BioSimilar Program in your organization.)

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