Scaling new business models in corporates: Similarity of M&A and digitization initiatives
Scaling new, unfamiliar business models is a popular topic in large corporates. These new business models might originate from internal or external initiatives, even from acquisitions. How can corporates scale new business models successfully in such situations? Here are my views on it.
Not the usual merger
A widespread perception of mergers and merger integration is that an important objective of such activities is collecting cost synergies or consolidating industries or buying your way up and down the supply chain. Scale and growth are a second thought, if at all. This is different in high tech industries, such as pharma and software. This is different and even more challenging when acquiring and scaling new business models.
Similarity of M&A and Digitization initiatives
A large company acquires a small company to adopt a new business model. An intrapreneur tries to implement a new business model in a large corporate. Both represent the same type of challenge: making an existing organization adopt a new business model. Both can be solved with appropriate, new approaches.
Modulating the corporate immune system
Integrating new business models needs new approaches. The acquirer has to ask the question: “Why have we acquired the company?” If the answer is: “Because they are different” or “Because they have a business model that is new to us”, the acquirer should carefully select integration speed and depth. The acquirer should also make sure that he is preparing his own organization to be ready and able to integrate the new business model. Getting prepared for that might take some time, which influences integration speed.
The acquirer also has to manage the “corporate immune system” which typically rejects new business models due to employee statements like “not invented here” and “that is not the way we do it”.
Change intensity in your court
While in usual merger integration most of the changes happen to the target, this is a different ballgame. A massive change in the operating model of the acquiring organization is needed. Such change is only possible if the large organization is willing and able to change. In addition strong empowerment and executive support is needed to establish such change.