How Kraft can do the UK a big favour

Putting lipstick on the gorilla? I don’t think so.

It will come of no surprise to anyone that mergers and acquisitions are notoriously difficult to deliver on the synergies predicted by the advisors and analysts. It may surprise most when I predict that Kraft is in a good position to buck the trend.

It’s my view that M&A’s are driven by 3 key assets – brand, people & customers. Of course, none of these assets are mutually exclusive and, in fact, it’s the people within organisations that build great brands which attract and retain loyal customers and attract and retain great people. In other words, the rationale for an acqusition is a virtuous cycle that starts and ends with people.

I think Kraft get this. At the time of their acquisition of the French Danone biscuits business two years ago at, Kraft was criticised for taking over a great national brand and draining money out of France. Sound familiar?

Kraft responded by promising not to close any of the Danone biscuit manufacturing facilities in France for at least three years. They have not only delivered on that promise they have made further commitments. They have recently announced plans to invest €15m in a new innovation centre for biscuits, positioning France at the centre of innovation in a strong European market – a great example of asset building, not asset stripping.

So my optimistic prediction comes from the fact that Kraft has a strong track record on delivery and an equally strong commitment to social responsibility, how can they fail?

Well, I suppose they could always do one or more of the following:-
1. fail to create an inspiring and compelling vision for employees
2. fail to communicate their commitment and plans on how they will achieve this vision
3. fail to demonstrate and communicate quick wins
4. fail to identify and share the pockets of best practice from both businesses
5. fail to remove obstacles to success
6. fail to lead and support their colleagues through the transition.

Each of these are disastrous in their own right but any combination of the above would be even more disastrous than failing to deliver on their existing commitment to the 2012 Olympics.

So, if Kraft are planning to divert even a fraction of the £20m pledge to LOCOG I would advise them to come clean, quickly.

I could also advise them on successful integration, providing a significantly larger ROI for shareholders and greater economic benefit to the UK.

4 Comments

  1. Hi Sean – I’m based in California. The Kraft board believed management’s point of view indicating that Cadbury would lead to significantly more $$$. Financial results may trump the items on your list, though you are right – smart management would make sure each item is ticked on the way to profits.

  2. Thanks Marsha, I’d add to your point by saying smart leadership is less about box-ticking en-route to profit-taking and more about looking after the people, the dollars will take care of themselves.

  3. Good comment Sean. Its a message we have been putting out for a long time now.
    Profit is a by product of people.
    You can have all the tools and techniques you want , but, they inert without people.
    One must understand if changes need to be made its explination, belife and trust that comes first.

  4. A pertinent post at the time Sean. We clearly haven’t heard the last of this either as this BBC report tracking the fallout from the acquisition shows: http://news.bbc.co.uk/1/hi/business/10166241.stm.

    Whether you fall into the “conserve national institutions” camp or are a hrad nosed capiltalist realist, there’s no denying that the Cadbury staff, especially those in Somerset, were “betrayed” twice:
    – first by their own executive board who came up with the Poland relocation strategy
    – secondly by the Kraft board who made promises they either couldn’t keep or had no intention of honouring.

    Critics can claim that Cadbury is so far removed from its Quaker past that the values of the founding fathers count for nothing. But given the impact the founders had in the broadest sense, it’s unwise to ignore their legacy.

    In my view, this is yet another brand which has not placed a true value on its legacy; has not truly appreciated and leveraged the brand by understanding and where necessary re-positioning the internal culture to reflect and become fit for purpose re the realities of modern commerciality.

    The Cadbury/Kraft story is yet another reminder of how important the less than tangible elements are to the acquisition strategy. Let’s hope someone now has your 6 points in mind, as a minimum!

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