Grab announced its acquisition of Uber business in Southeast Asia on 26 March 2018. Following the announcement, there were several articles by Singapore mainstream news broadcasters highlighting that the Competition and Consumer Commission of Singapore (CCCS) were not notified about the deal, hundreds of Uber staff were told to pack up and leave within 2 hours, Uber drivers are worried about their car rental contracts, and etc. Based on all these articles, it is obvious that Grab has not consider all of its different stakeholders’ needs and concerns and identify actions to address them before announcing the acquisition of Uber and the shutdown of Uber app to the public. As a result, many stakeholders were thrown off by Grab’s swift announcement and actions.
Given the CCCS has recently requested for the shutdown date of Uber app to be extended from 8 April to 7 May and for both companies to maintain part of their operations until CCCS investigation has been completed, Grab is now presented with more time to plan for a better merger and acquisition (M&A) process. As such, Grab (and other organisations about to engage in M&A) might want to take the below pointers into consideration when planning and managing its current and future M&A.
As organisations such as Grab and Uber grow their businesses in today’s rapid pace of disruptive change, it is easy for them to lose sight of what is key in each stage of the evolution. What made Grab and Uber successful in a very short period of time was the fact they came out with a brilliant concept and provided an alternative in the market as market leaders. However, given what had happened with its recent M&A, it seems that Grab and Uber might have overlooked the importance of execution. In another word, while the focus on concept and speed has led to the success of Grab and Uber respectively, the lack of focus on execution and accuracy has led its recent M&A to disaster. At the end of the day, Grab and Uber need to be aware that it is ultimately about making things happen, thus, execution and accuracy are as equally important as concept and speed.
While it is undeniable that Grab and Uber have done a pretty good job in communicating the M&A to the public and their customers through email communications, news release and a well-designed artwork stating “Grab & Uber Are Coming Together To Serve You Better”, the same cannot be said for their communication with other stakeholders such as internal employees and contractors (i.e. Uber drivers). Shortly after the public announcement, Uber employees were told to just leave the office and wait for updates as reported by The Straits Times and Uber drivers highlighted to Channel NewsAsia that issues such as registration, contract, and reward systems have not been ironed out. All these assertions by Uber employees and drivers make it clear that an effective M&A communication plan with Uber employees and drivers has not been developed. In the normative sense, Uber employees and drivers should have been communicated to before the M&A announcement went public. By paying little attention and focus in communicating with its employees and drivers, Grab and Uber risk projecting the image that they are only focused on profits and have lose sight of its people. Grab and Uber need to remember that humans are ultimately the heart of any organisations and so they should never lose sight of its people in the M&A process.
Next, although the entire Grab management team is likely to be involved in managing the M&A, the human resources (HR) function has a role that is particularly important. This is because a high-performing HR function can be a business partner in providing clarity to the management team in charting the end-to-end execution details (i.e. milestones, owners, timelines, and etc.) for its post-merger activities which would cover key elements such as change management processes, employee communication plan, compensation and benefits harmonisation plans, immersion programmes for Uber employees and drivers, and etc. The fact that Grab does not have the email addresses of Uber employees after the announcement was made, Grab would try to offer positions to all Uber employees in the region and Uber drivers are questioning about the change in their incentives, as reported by Channel NewsAsia and The Straits Times, point to a high possibility that Grab HR has not formulated a solid post-merger plan. As Benjamin Franklin once said “If you fail to plan, you are planning to fail”. Hence, it is important that Grab come up with a well thought through execution (post-merger) plan during the M&A planning stage.
Last but not least, technology driven organisations such as Grab and Uber might prefer to hire only people who are creative and innovative as they are aligned with the culture of the organisation. However, hiring people who possess similar characteristics to work together might not do the organisation any good. According to a study by Deloitte in 2013, diverse teams (i.e. people possessing different characteristics) outperform their peers by 80% in team-based assessments. Ned Herrmann, the father of brain dominance technology, described such diverse teams as whole brain teams whereby each team member has a different preferred thinking style (whether it is rational, practical, relational, or experimental) that can be leveraged for the group work or group project. Only when there is a whole brain team and the different thinking preferences are being leveraged will the team be able to perform at its best. As such, it is highly recommended that Grab on board people of different thinking preferences to improve its execution capabilities.
Just like overcoming any other business challenges, Grab need to identify and understand the key priorities and critical success factors in each M&A stage in order to attain a smooth and successful M&A with Uber.
About the author
Dr James Lim is senior lecturer, strategy, management & organisation at Nanyang Business School, NTU Singapore.
This commentary was published in Transfin on 19 May 2018.