Mergers in professional firms have failed in the past and will fail in the future. What really causes mergers to fall apart?

Often firms are driven by the immediate desire to boost financial performance: To increase top line and improve profitability. Leaders of service organisations do not pay sufficient attention to the strategic and cultural fit. They do not focus enough on synergies and challenges of a combination.

To achieve success, one must carefully study the role of organisational culture in a combination. Charles Handy in his book, Gods of Management, categorised organisation cultures into four buckets and named them after four Greek gods: Zeus, Apollo, Athena and Dionysus.

Zeus is characterised by a Club Culture. Most power is concentrated in the hands of one individual. The organisation web shakes with each move of the “spider”, who is at the front and centre of every initiative. Proximity to the boss is vitally important, as he frequently uses his network of friendships and old boys. Owner-owned businesses, start-ups, investment banks and brokerage firms usually reflect a dominant club culture.

Apollo is known for its strong role culture that focuses on structures, order and efficiency. Power is hierarchical and clearly defined in a company's job descriptions. Decision-making occurs at the top of the hierarchy. Manufacturing companies usually reflect an Apollonian organisation.

Athena represents the task culture. Power is derived from the skills and expertise required to complete a task or project. Decision-making occurs through meritocracies. Task culture fosters a high level of adaptation by focusing on talent, youth, creativity, diversity, innovation and problem-solving --in a team mode. Professional services organisations, consultancies and ad agencies reflect a dominant Athenian culture.

Dionysus embraces an existential culture. Organisations exist for individuals to achieve their goals. Employees see themselves as independent experts. Decision-making occurs by consent of the professionals. Universities and research institutions reflect a dominant Dionysian culture.

In reality, no organisation has a “pure” culture that is exclusively one of the four. Handy himself was quick to point out that usually you would see the co-existence of multiple cultures within the same organisation, but typically there would be one dominant culture. The Greeks themselves worshipped all four Gods simultaneously.

A professional services organisation embraces the Athena culture. Imposing a Zeus culture in a professional services organisation is likely to spell disaster, although certain parts of of a consulting firm may benefit from an Apollo way of bringing in some structure and processes. In mergers, cultural assimilation is a subtle exercise that orchestrates the multiple aspirations of human talent and unleashes innovation, creativity and problem solving. It is the delicate art of a goldsmith and not the heavy-handed craft of a blacksmith.

Little things matter. When Andersen Consulting changed its name to Accenture and floated its shares on the market, it did not change one thing that was close to the heart of its leaders – the title of “Partner”. It did not make any legal sense to call a consulting leader of a listed company a “partner” but that is exactly what it did. The pride and entrepreneurship that are at the heart of a partnership culture was sought to be preserved by Accenture.

In a more extreme case, when IBM, whose dominant culture is Apollo, acquired a global consulting business, it not only preserved the title of partner in the acquired business, but even embraced an Athena culture in their consulting outfit, although their overarching corporate culture continued to be Apollonian. IBM’s merger integration was arguably one of the most successful combinations in the professional services business.

Respect for diversity and the nurturing of a global, mobile talent pool are critical to the success of international combinations. Unilever was one of the pioneers that sowed cultural diversity. Often, their territory CEOs came from another country. But equally, managers from developing countries such as India not only had the opportunity but actually joined Unilever’s global management team. At consulting firms that embrace meritocracy and celebrate diversity, many Indians have reached the top. Rajat Gupta led McKinsey globally, Shumeet Banerji is the CEO of Booze & Company and the US CEO of Deloitte Consulting is Punit Renjen.

In organisations where a Zeus culture predominates, diversity is difficult to celebrate. A single “black swan event” causes panic and triggers the infamous Zeus “huddle”. True to its “club culture” Zeus implements a predictable set of actions. It quickly implements a “regime change”, brings in trusted “old boys” from the headquarters and ignores local talent in choosing a successor. Trust and loyalty are more important than merit and competence. Professional organisations in India with a Zeus culture will witness an unprecedented flight of talent and their combinations will fall apart.

To preserve the value of combinations, it is critical to walk the talk. If a professional services organisation is unable to practice what it preaches, its credibility will be severely dented. If a pharmacist with no hair vends magic potions as a cure for male baldness, he will not be taken seriously. Finally, will you as a client seek out a firm that cannot preserve its own combination to advise you on how to acquire and merge successfully? You are in safer hands with a voodoo man.

The writer is managing director, Deloitte Consulting, India. The views are personal