How to Avoid the Number One Team Trap
I want to talk about this trap through the story of another group of people that kind of smashed together, a merger you could call it. Actually, it literally was a merger. I want to talk about the not so happy marriage of two car companies, Daimler and Chrysler. Now around the time when Wu-Tang went to number one, Daimler and Chrysler, two of the biggest car companies in the world, decided that they were gonna have their own kind of union, so to speak. And they wanted to make something great, just like Wu-Tang, but in a different category. So Daimler, German car company known for innovation, known for quality and kind of beautiful machines. They made Mercedes. They made Maybach. They were well known for that. Very poor profit margins. They had a lot of problems kind of squeezing money out of this, getting people to pay for this amazing R&D. They were worried about Ford. That was sort of the best selling car company out there and also Toyota, which was sort of this threat from the E...
ast that was starting to really develop great cars and sort of take market share. Chrysler on the other hand in Detroit, they had this cowboy can-do culture. They made quality cars but affordable cars for families. And they were known for really good profits. But they were losing to Ford. And they were really worried about Toyota. So these two companies basically took a look at each other and they said, "Hey, we have heuristics and perspectives "on car making that if we combine them, "we could maybe make the greatest car company ever. "We could beat Ford. "We could beat Toyota." And so they shook hands, and they made a merger. And they called it a merger of equals, a merger of unprecedented strength, these two companies that were roughly $60 billion each combined to form this massive car company. And then they went down in history as being the worst business decision ever, the worst merger to have ever taken place in the history of modern business. And they could have seen this coming. Well, they knew that statistics, which are that most mergers do not actually achieve synergy. Most companies when they merge together within five years, they're not worth more than the sum of the two companies were before. That's just a statistic, which is sort of weird. Why do we have so many mergers? Even worst statistic, something like 50% of companies actually lose value when they merge in the first couple of years. And then an alarming percentage of companies actually fail after mergers. So they knew about these statistics. And they knew also what the researchers posited lead to these failed mergers, which was not that mergers were a bad idea, not that the combination of the different pieces was bad, but that usually mergers failed because of culture clash. So you had here the Germans, who have generally their different way of doing things, different way of approaching things. And certainly social interactions are different in Germany than in America. And then you had the blue collar Detroit crowd in Chrysler with the can-do cowboy attitude and very different things that they cared about. The culture inside their companies was different but also their just ethnic culture was different. So they knew about this, and they knew that this could be a problem. And so they did all these trainings like German dining etiquette and harassment in the American workplace, and German classes for the Americans, that sort of thing. And they said, "We have so many similarities. "We all care about cars. "In Germany, in America, we're not so different. "but we know about these culture differences. "So we're gonna try and make this a smooth transition." What happened is actually they fell apart after a few years as fear set in. So the fear of this culture clash actually took such hold that they tiptoed around the merger itself, around the actual integration of these companies. They didn't move a bunch of people from Germany into Detroit. And they didn't do vice versa. They wanted to keep things separate and clean. And they worried about people fighting and arguing to the point that the two CEOs of the two companies would spend weeks without even talking to each other. They wanted to keep sort of a cold war going essentially 'cause they didn't want anyone to destroy each other to the point that the fear actually was the most salient emotion going on in this. And VPs started getting poached by Ford and Toyota. And they left to jobs where they weren't afraid of this coming train crash between these two cultures. Turns out that the thing that killed Daimler and Chrysler was not culture clash but something called organizational silence. It was the opposite of culture clash. It was not actually communicating. It was not fighting that killed their merger. Organizational silence is this interesting term in psychology that basically means that when you communicate inside your organization, it's all superficial, that you're not having the important conversations that are tough. And some researchers did some interesting studies on mergers and organizational silence a few years ago where they actually put little tracking devices on people at companies that merged and then had to move to the same offices. And they tracked where people went in the building. What they found is that the mergers that didn't go so well, people did not go mix with other people from the other former company. And they tracked the conversations. And another study tracked email conversations. Who are you emailing? Who are you having calendar invites with? And the companies that didn't mix the two groups of people were the ones that had the most problems post merger. So kind of what happens with organizational silence are, well, back to our mountain diagram, a few things that can happen. You have a group of people that have one solution, one way of doing things. And you've just merged with another group of people that have another way of doing things. Potentially you could get here to the top of the mountain. But one group is saying, "We're not listening. "This is what we want to do. "We're not gonna even try." And you potentially have someone who's saying, "Hey, our way of doing things can help" or you have someone who feels like they can't say anything because they're over here. And they are afraid of the conflict or afraid of what's gonna happen if they do say something. And sometimes you have people who are well equipped to help you find that next mountain peak. But they say, "I'm not gonna speak up "because screw those guys." And this is what organizational silence is about, so what happened inside Daimler and Chrysler. All those things kind of were going on. It was the fear of mixing those things. You can imagine this on a smaller level than just two massive mergers, right, two massive companies merging. Imagine that you are brought into a new team. And you're the one who's on this mountain peak over here. You're brought in and you see things differently. If you don't feel like you can speak up, if you feel like they're saying, "Get off your mountain range. "Come over here. " Climb up, and get on the one, and fit our program," that's an awful feeling. You're liable to want to quit. That's why there's so much turnover in companies that have diversity hiring programs turns out. They have more turnover because that dynamic happens. And then there's also you have something to say, but if you feel like you're being slighted by the other group, the majority, you're liable to quit and start your own company rather than share that with people at a certain point. That's kind of what happened with Daimler and Chrysler to the point that the merger went so badly that after a few years, the company combined was worth less than either of the companies were before individually. They spun out Chrysler to like a private equity firm or something like that. And then that company went bankrupt. That's how bad it went and spent years and years trying to rebuild that thing. The CEO of Daimler said, "What happened to this cowboy can-do culture I thought I had merged with?" The cheesy analogy would be that the cowboys were still at the rodeo. They just had stopped riding. They were there, but they check out. So this is why despite immigrant cities having so many patents, there's also less voter participation. There's this paradox that people don't participate with each other in civic life when they're afraid of each other, when there's this sort of underlying fear. And yet those are the cities that have the most potential to make progress because they have different ideas that can lead the group to do better. So it's the fear of the rubber band snapping that prevents all of this from happening. If Daimler and Chrysler had thought about the cultural conflict as fuel, as energy for moving forward, if they thought about, well, how can we make sure that we set the parameters so that the rubber band doesn't snap, but we stretch it as far as we can, they might just have made the most incredible car company ever. They certainly had the potential to do that.