HP/COMPAQ MERGERIMPORTANCE OF CULTURAL DUE DILIGENCE DURING

MERGER PROCESS

Akash Jain Preksha DubeyAmit Pandey Sanghmitra Wankhede

THE MERGER PROCESS

Theoretical Aspects

Comparison between the two

Companies

Creation of New Values and Objectives

Change Implementation

through Processes

Due DiligenceAnd

Cultural Due Diligence

Values &

Objectives of HP and Compaq

Creation of New Values and Objectives

Step-by-step Implementation and Evaluation

Due Diligence

Due diligence is an investigation of a business or person prior to signing a contract, or an act with a certain standard of care

Analysis through Due DiligenceHistorical activity

Ownership and structure of entity

Management team

Products and services

Assets and liabilities

Information systems and technology

Organizational culture

Cultural Due Diligence• It analyzes key cultural domains

• leadership and management practices, styles, and relationships• governing principles• formal procedures• informal practices• employee satisfaction• customer satisfaction• key business drivers• organizational characteristics• perceptions and expectations• how the work gets done in organization

CULTURE DUE DILIGENCE DURING HP/COMPAQ MERGER

• Values enabled the realization of the merger making it possible to build a new organization

• Value Democratization is a process of forming a new organizational society by discovering common values

• Core values were not imposed on the employees by top management• The process of discovering, defining, and adjusting organization activities to

its main values has made each New HP employee identify with the values and goals of the organization

VALUES

HP COMPAQ•We have trust and respect for individuals • Listening and solving customer problems•We perform at a high level of achievement and contribution

• Being passionate about everything we do

•We achieve our results through teamwork • Driving innovation and building cool stuff•We act with speed and agility • Partnering for our customers’ advantage•We deliver meaningful innovation • Communicating openly and honestly•We conduct business with uncompromising integrity

• Doing what we say

•We are passionate about our customers

• Having fun

CORPORATE OBJECTIVES

HP COMPAQ• Customer Loyalty • Extend our enterprise Capabilities

• Profit, Market Leadership and Growth • Grow and achieve critical mass in services

• Employee Commitment, Leadership Capability and Global Citizenship

• Improve PC economics and increase supply chain velocity

AFTER-MERGER VALUES

• PROBLEM: Completely different cultures

• STEPS TAKEN

The research sample covered 127 directors, 138 focus groups, 1600 managers, and employees from 22 countries

The subject of study was organization culture, differences and similarities between two corporations

Conducted comparable analysis of their organization

MODEL OF ORGANIZATIONAL FUNCTIONING

INPUT

Environment

Resources

History

Work

OUTPUT

System

Unit

Individual

FormalOrganizatio

n

InformalOrganizatio

n

Poplee

Strategy

CULTURAL GAPS

Cultural Gaps 1 2 3 4 5  Precedence. Looks to the organization’s rich history as a source of knowledge.

     

   

    Inquiry. Focuses on future possibilities and learn as they go.

Internal Focus. Focuses mostly on improvement of internal processes and structures; has moderateawareness of our competitors.

        

    External Focus. Focuses mostly on pursuit of new markets and customers; is very much aware of competitors and closely follows the moves they make.

Systematic. Relies heavily on organized plans for our work. Work processes are clearly defined.

        

  Spontaneous. Relies on ability to respond to just-in-time opportunities; continually “turns on a dime” to meet demands.

Precision. Getting the job done “right” is more important than getting it done quickly, even though it may take extra time.

        

    Speed. Getting the job done fast makes “roughly right” outcomes acceptable even though we may sacrifice discipline or rigor.

Reflection. Values review of significant events; debrief events to share insights and best practices.

        

    Iteration. Values a “trial and error” approach; forges ahead without looking back.

Cultural Similarities 1 2 3 4 5  Winner Focused. Conflicts are resolvedby debating until there is a winner.

        

    Issue Focused. Conflicts are resolved by exploring the merits of differing points of view.

Competition. Peopletend to be focused on their own advancementand achievement.

          

    Cooperation. People tend to offer help and support to ensure others are successful.

Dominance. Persues growth through product proliferation/line extensions and acquisitions.

          

    Value. Pursues growth through product innovation and anticipation of emerging customer needs.

Threat. Is anxious about their future. Past successes are not sufficient to ensure continued performance.

        

      Opportunity. Is excited about their future. Track record has positioned them well for future success.

Reaction. Changesin response to significant events.

            Initiation. Initiates changein anticipation of significant events.

HP values (1989)

• Trust and respect for individuals

• A high level of achievement and contribution

• Uncompromising integrity

• Teamwork

• Flexibility and innovation

Compaq values (2001)• Listening and solving

customer problems• Being passionate about

everything we do• Driving innovation and

building cool stuff• Partnering for our

customers advantage• Communicating openly

and honestly• Doing what we say• Having fun

The new HP values (2002)• We are passionate

about our customers• We have trust and

respect for individuals

• We perform at high level of achievement and contribution

• We achieve our results through teamwork

• We act with speed and agility

• We deliver meaningful innovation• We conduct business

with uncompromising integrity

CREATION OF NEW VALUES

HP ObjectivesProfit

Customers

Our People 

Citizenship

Management

Field of Interest Growth

 Extend our enterpise CapabilitiesGrow and achieve critical mass in services

Improve PC economics and increase supply chain velocity

Compaq Objectives

 Customer Loyalty

The new HP Compaq Objectives

Profit

Market Leadership

Growth

Employee CommitmentLeadership Capability

Global Citizenship

CREATION OF NEW OBJECTIVES

 

RELATIONSHIP BETWEEN

VALUESCORPORATE OBJECTIVES

AND CORPORATE PROCESSES

AND POLICIES

FAST START PROGRAMME• A dedicated program to stimulate the core values of new HP• Two day business meet to intact teams• Designed to provide:- - clarity of direction and roles - engage managers and their teams• Every manager was required to conduct a Fast Start meeting for

his/her intact team• Fast Start meetings had specific deliverables

KEY OBJECTIVES

• Accelerate leadership readiness throughout HP• Deploy critical business information• Establish team agreements• Review and action plan for change and HP integration management.

REQUIREMENTS FOR FAST START

• Session to be completed within 30 days of team announcement• Majority of team members to be present at sessions• Workshop time for information sharing , discussions and

dialogues:-• New HP Strategy, Structure, Brand & Culture and its

implications• establishment of team agreement,team norms & key goals• Producing an integration plan of record(I-POR)

FAST START PROCESS

RESOURCES CREATED TO FACILITATE FAST START SESSIONS

• Facilitation Guide for managers and consultants• Fast Start checklist and discussion guide• Fast Start line manager’s presentation• Printable version of black and white printer• Fast Start supplemental slides• Fast Start FAQ’s• Fast Start performance tracker• Supplemental resources

MODULES IN THE FAST START WORKSHOP

• Welcome and Meeting Objectives

Module 1

• IntroductionsModule 2

• The HP Business contextModule 3

• Leadership SessionModule 4

MODULES IN THE FAST START WORKSHOP

• New HP culture in actionModule 5

• Team Agreement DevelopmentModule 6

• Organization Design and Selection

Module 7

MODULES IN THE FAST START WORKSHOP

• Management ResourcesModule 8

• Review of Integration Implementation PlansModule 9

• Action Planning and Team DebriefModule 10

THANK YOU