Tag Archives: conflict

Invisible Conflict

There was no ticker-tape parade. It was much too early to celebrate. In May of 1998, Wall Street celebrated one of the largest corporate mergers in history. Daimler-Benz, the maker of Mercedes-Benz automobiles, and Chrysler Corporation announced a “merger of equals.” The combined company was valued at more than $36 billion, and analysts predicted more than $1 billion in bottom line value creation. It looked like the perfect strategic fit.

Chrysler brought strong North American distribution, a line-up of mini-vans, Jeep models and light trucks. Daimler brought German engineering in a luxury brand. Each company had a successful culture that sparked a conflict of invisible disagreement. Each had its own unwritten set of rules that were about to collide.

At Mercedes, precision mattered. Decisions were deliberate, carefully documented and followed a formal process. Chrysler built its success on speed. Cross-functional teams solved problems quickly and products cycled to market faster.

Neither company was wrong in its own world, they were just wrong together. The merger failed. It wasn’t engineering. It wasn’t manufacturing. It wasn’t finance. It was the belief system held by each respective management team.

The breakup was a war of attrition, not a visible conflict. Meetings became longer. Decison making slowed. Impatient Chrysler executives left. The power dynamic shifted. To many Chrysler executives, the merger of equals increasingly felt like a takeover. The individual belief systems could not exist in the same container.

After paying $36B to acquire, Daimler made the decision in 2007 to sell 80 percent of Chrysler to Cerberus Capital Management for $7.4B. Chrysler was eventually purchased out of bankruptcy by Fiat and is now part of Stellantis North America.

The most interesting question isn’t why the merger failed. The question is “What did Daimler have to believe for its management system to make perfect sense?” And, “what did Chrysler have to believe for its management system to make perfect sense?” Financial models are remarkably good at estimating purchasing efficiencies, manufacturing savings, and economies of scale. They are much less effective at estimating what happens when two organizations bring fundamentally different beliefs about authority, decision making, accountability, and risk into the same conference room.

Culture isn’t an employee engagement survey. It isn’t a list of values framed in the lobby. Culture is the collection of management decisions that become so consistent they eventually define “the way we do things around here.”

The Daimler-Chrysler merger wasn’t undone by incompatible automobiles. It was undone by incompatible beliefs.
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Kicking the Can

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“Things didn’t get nasty,” Ron reported, “but, I think it’s because I put the brakes on the meeting, and simply adjourned it pretty quickly.”

“What happened?” I asked.

“Two of our managers went after each other in the meeting. One complained about the other in front of the rest of the executive team. That immediately turned into defensiveness. I stopped the conversation from escalating and told everyone we would pick this up next Monday.”

“Timeouts are not necessarily bad, especially when the emotions speak so loudly that we cannot even hear the words. But, tell me what impact this had on the rest of the team? What did this exchange teach them about how things work around the company?”

“Well, for one thing, it clearly communicated that I will not tolerate rude or insulting behavior,” Ron explained.

“And, what else did it teach them?”

“That if the behavior persists, I will shut it down. I won’t tolerate it and I will take action.”

“And, what else?” I pressed.

“You have something in mind when you ask the same question three times,” Ron chuckled.

I nodded yes.

“Okay. The team learned that when things get rough in a management meeting, where emotions surface in the conversation, we will avoid the confrontation and kick the can down the road.”

“Now, we are getting somewhere,” I said.

Getting Consensus?

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Adelle emerged from the conference room after two long hours of debate. She shook her head from side to side, a genuine look of despair. “I tried,” she shrugged, “but we didn’t make a whole lot of progress. What we ended up with was mostly crap.”

“What do you mean?” I asked.

“Oh, we have been trying to figure out the best way to solve this problem and there are a bunch of ideas, but we just can’t reach a consensus on which way to proceed. I am afraid to get started until I know for sure that everyone is on board. But every time we make a compromise, other people drop off and want something different.”

“What happens to the quality of the solution every time you compromise?”

“That’s the real problem. It’s the compromising that kills it. After listening to all the input, I know what we should do and the little compromises just water it down. We might as well junk the whole project because, in this state, it will not do what the customer wants it to do.”

“Whose meeting did you just walked out of?” I asked.

It was Adelle’s turn to ask, “What do you mean?”

“I mean, was it the team’s meeting, or was it your meeting? Let me put it a different way. Who is your boss going to hold accountable for this decision?”

“Oh, I tried that once, blaming a decision on the team. I got the message. My boss is going to hold me accountable for the decision.”

“Then, it wasn’t a team meeting. It was YOUR meeting that the team got invited to. It is your responsibility to listen to the input, and it is also your responsibility to make the decision. And you don’t need agreement, you just need support.”

Adelle had to sit down to think about this one.

Priority Conflict Between Two Managers

It’s Just a Dotted Line on the Org Chart

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It’s been a whirlwind of a week. I would like to welcome our new subscribers from workshops in Minneapolis, Des Moines and Austin.
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“What do you mean, she doesn’t know she is accountable? It’s very clear to me,” Megan complained. “She has a very clear dotted line to that area of responsibility. I know it’s not her highest priority, but still, she is responsible.”

“So, there is a conflict in her priorities?” I asked.

“Not a conflict, really, she has to get it all done. Just because it’s a dotted line doesn’t mean she can ignore it. Besides, at the bottom of her job description, it says, -and all other duties assigned.- That should cover it.”

“As her manager, what do you observe about the way she handles the conflict in her priorities?” I pressed.

Megan thought. “I think it’s an attitude problem. It’s almost as if she doesn’t care about one part of her job.”

“I thought it was just a dotted line?” I smiled.

Megan stopped cold. “You think the problem is the dotted line?”

“Dotted lines create ambiguity. Ambiguity kills accountability. What do you think?”

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Management Practices based on the Time Span research of Elliott Jaques.