Outsourcing: Vivek Chopra of Computer Sciences Corp. (Part 11)

By guest author Tony Scott

Growing Globally through Acquisitions – It’s All About Culture Fit

Tony: Historically, for lot of companies, acquisitions have been extraordinarily difficult to digest.

Vivek: Yes. I think we have done it fairly well.

Tony: What have you done differently to allow that?  When you think about acquisition integration, whether you’re talking about one person, a hundred people, or a thousand people, the people and culture integration aspect is typically the most difficult to get right.  How have you successfully done this on a global scale?

Vivek: I think it’s not making an acquisition for the sake of it, or making an acquisition just for the talent and skills, but looking at it from a cultural perspective. For example, when we made the acquisition in India, CSC had the benefit of looking at three companies. We felt the most important thing for us to do was to look at their cultures, their value systems. How do they treat people, how do they treat customers, what is their philosophy on commitments made, what kind of hiring do they do, what kind of people do they take on, what has been the policy on retention, how many people have stayed, how many people are references, what do people from the outside have to say about the company?

I have seen in my previous life at IBM that some of the larger acquisitions have fallen off because you make a choice in a hurry, and people find later that the acquired company is quite different from them culturally. IBM has learned from the recent past and from some of the acquisitions they have made; now, they let the acquisition run themselves. Because the people have stayed, the companies that were acquired have prospered.

I think CSC does that well, and I think they do a significantly better job than most companies on acquisitions because they get into a lot more detail in looking at some of these finer aspects.

Tony: The cultural aspects?

Vivek: Yes, as opposed to looking at the profit and loss, the balance sheet, the cash flow, the data points, customers, and so forth, which typically is what you look at from a due diligence perspective. They tend to go deeper, put a team in place, and start looking at not just what they see on the ground, but what they learn from talking to people outside of the organization – talking to customers, employees, and ex-employees – and seeing what they feel. It may take a little more time, but it makes for a fundamentally stronger case for a sustained acquisition in which people stay, the customers stay, and the acquisition becomes an investment that is worthy of what is at stake. That piece I am not entirely worried about. I think there are very few acquisitions that CSC has done where the company looked back and said hey, that didn’t go off too well.

Tony: Well, that actually puts you in a very strong position if you have a history of being able to do that.

Vivek: But, on the other hand, CSC sometimes gets known as a collection of small companies.

Tony: Right – but then again, it also makes you more attractive as an acquirer to companies that are being acquired. For most companies being acquired, the fear is that they are going to be swallowed up by this giant and lose their identity. They think:  “Will we fit in, is this going to be bad for us, and bad for our customers?”  This is a really important issue in determining whether an acquisition will ultimately be successful, and a lot of acquiring companies neglect it by focusing only on the hard facts.

Vivek: Hard facts, which are easy to get and easy to understand and generalize.

Tony: Those are the easy – and very important ­– initial bars to clear. But there’s a lot that happens beyond that.

This segment is part 11 in the series : Outsourcing: Vivek Chopra of Computer Sciences Corp.
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