Career & Jobs

Sergio Ermotti’s 100-Day Action Plan As The Shocking New CEO Of UBS/Credit Suisse

Sergio Ermotti is the right man to lead the UBS takeover of Credit Suisse and administer the required shock to the people of Credit Suisse. This is the case because of three fundamental truths. The key to successful mergers or acquisitions is getting the new combined culture right. This is not a merger. It’s a takeover in which Credit Suisse’s people will need to adopt the UBS culture or go elsewhere. Ermotti has done this before, righting UBS’ culture following its own meltdown.

This is why Ermotti’s 100-day action plan as the CEO combining the entities will most likely involve shocking the Credit Suisse people by folding them into UBS’s culture. This will involve more telling than co-creation to force compliance with the UBS way of doing things. Expect this to be painful and many of the Credit Suisse people to fall by the wayside. While this is almost always the last choice way for a new executive onboarding into an organization. It’s the right choice in this case.

Shocking Credit Suisse

Ultimately, its’ all about culture. As I’ve written before, here, culture is the only sustainable competitive advantage. Further, the 83% of mergers and acquisitions that fail, generally fail because of i) poor strategic focus, ii) poor cultural integration, and/or iii) poor delivery of synergies.

In the first three editions of our book, The New Leader’s 100-Day Action Plan we talked about the importance of culture. But we changed our mind in the fourth and fifth editions. There we stopped saying culture was important and said it was all that mattered.

There are four cultural integration options in a merger or acquisition:

  1. Keep the entities and their cultures separate (eliminating any chance for synergies.)
  2. Merge A into B
  3. Merge B into A
  4. Combine the cultures to an new culture (the hardest option)

We already know what Ermotti’s going to do. UBS chairman Colm Kelleher has publicly stated that UBS plans to trim Credit Suisse’s investment bank “and align it with our conservative risk culture.”

There’s a high need to change Credit Suisse to bring it back from its failure. It’s entrenched people are not open to the change. This gives Ermotti no option but to shock those people.

Telling versus Co-Creating

There’s an elegance to Bryan Smith’s Tell – Sell – Test – Consult – Co-Create framework. Different ways of persuading are more appropriate in different situations.

  • At best, telling yields compliance – never anything more.
  • Selling, testing, consulting are invitations to contribute. Leaders can make all sorts of good progress leveraging others contributions.
  • If you want people to commit, they have to co-create.

When merging cultures, co-creation is the way to go. The only way to build a culture ratcheting up the best of each of the cultures being combined is for everyone involved to play a part in the creation of the new culture.

Credit Suisse failed. Why it failed is a different story. But part of that story involves taking on too much risk. And the combined UBS/Credit Suisse entity is no large enough to pose a rick to the entire Suisse economy as its assets are larger than the entire Suisse economy.

This is not a merger. It’s a takeover. As a whole, the Credit Suisse people don’t get a vote. They don’t get to co-create. They generally don’t get to contribute. They will be told how the UBS culture works. Like the sign in our kitchen, there will be two choices for dinner: 1) Take it or 2) Leave it.

Done it before

Reuters explained UBS’ choice of Ermotti well. Ermotti joined UBS in 2011 and was quickly named interim CEO following their $2.3 Billion trading scandal. He “is credited with executing UBS’s turnaround and scaling down its investment banking operations after a series of scandals and losses nearly caused the bank’s implosion.”

There are only three questions in any interview: Will you love the job (motivation)? Can you do the job (strengths)? Can we tolerate working with you (fit)?

Ermotti loved the job before and knows what he’s getting into. He did the job well before and has built on his strengths since then. He built the current UBS culture so he fits. The question for Credit Suisse’s people is whether they fit with Ermotti, not whether Ermotti fits with them.

Click here for a list of my Forbes articles (of which this is #825) and a summary of my book on executive onboarding: The New Leader’s 100-Day Action Plan.

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