As we’ve watched the Wall Street Journal chronicle the problems with Bank of America’s integration of Merrill Lynch’s retail brokers, we’ve assumed that competitors would be going as hard as possible after BofA and Merrill clients. We figured those competitors would succeed, too, because our research is full of examples of customers being poached during transitions such as those that follow a merger. Now, though, a WSJ article describes a strategy by Morgan Stanley that may be too aggressive.
The article says Morgan Stanley wants to combine its brokerage operations with those of Citigroup’s Smith Barney, to become the biggest retail broker. There are several problems, though, even beyond the sorts of culture clashes and other formidable integration problems that have afflicted BofA and Merrill, as well as many, many others.
While many executive teams work hard to build teamwork, the excellent article about Citigroup in the New York Times over the weekend shows that getting along isn’t always such a great idea. The piece demonstrates the need to foster disagreement, even when that disagreement is painful and may cut into short-term results (and bonuses).
The piece says that the person who was in charge of evaluating the risks being assumed by two major parts of Citigroup was good friends with the two executives who ran those groups, to the point that he’d often wait outside the office for 45 minutes so they could drive home together. Not surprisingly, the risk executive seldom said no to his friends, who proceeded to put Citigroup into such a precarious position that this grand institution is having to plead for government help to avoid disappearing.