Bite-size Case Study

Corporate judo strategy

Published on March 30, 2021 Originally recorded 2014   3 min
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Merger mavens would have you believe that mergers and acquisitions are a quick and easy path to riches, but savvy change managers know that this is not the case. The truth is that mergers, acquisitions, downsizing, and other forms of change, pose serious challenges to a firm's performance and profitability. The bottom line is that when a competitor makes a move against you by attempting to strengthen itself through change, the more you know about how the competitor's change processes will start unraveling, the better your position will be for leveraging the power of the competitor's change to grow your own business.
Bastien's seminal research played a big role in documenting that change-related disruptions produce dissatisfied customers and employees, open to switching their allegiances to rival firms, yielding growth and profitability in the process.
Building on this approach, Bastien, Hostager and Miles examined a series of case-studies documenting systematic patterns in the competitive psychology surrounding organizational change. In the case referred to in this slide, the president of a small community bank admitted he was initially fearful, wondering how he could now compete when his nearest rival was acquired by a large system bank housed in a major metropolitan market. In hindsight, however, he admitted that his response should have been the exact opposite, as the acquisition of his rival in reality presented him with the single best growth opportunity he had ever experienced, doubling and tripling his bottom-line results in the process.
For 18 months, he reaped a windfall of new business as dissatisfied customers and employees at the acquired bank switched their allegiance to his firm. This growth came directly at the expense of the changing competitor, and it was only made possible through a series of change-related performance declines, including increased errors and decreased satisfaction among customers and employees alike. For example, in the wake of changing policies governing customer accounts and company operations imposed by the acquiring firm, something inevitably fell between the cracks, and one customer with over $1.5 million in accounts was told he would now have to pay a fee in order to obtain a simple money order. That was the final straw that broke the camel's back. This customer was so upset that he literally walked across the street and brought his accounts to Combank, the small community bank that thought it could no longer compete when its rival was acquired by the large system bank. As he continued to gain business, it finally dawned upon Combank's president that he was in a superb position to reap the windfall of new growth at the expense of the changing rival. He actively took steps to solicit their customers and employees. Among other things, he brought in new business through hiring two of the best-tellers away from the changing rival bank, and these employees were very happy to jump ship, gladly leaving behind a toxic mix of job-related fears, uncertainties, and task overload. As a result, you see the significant window of growth this firm experienced, all from rescuing dissatisfied customers and employees from the changing competitor.