I am so fed up with the synergies CEO think they have when they acquire. In many cases CEOs and other powerful executives are on ego trips and buy companies and immediately change the acquired company’s name to their own company. They believe that by doing so they reduce costs associated with operating disparate brands.
Rarely if ever do these companies think through the ramifications of these actions as in many cases, acquired companies have much stronger brands in the segments they occupy than the parent.
The question seems to be, the parent made the acquisition so they must have the better name for the combined entity. Right?
Wrong… Dead wrong.
Case in point is Sprint Nextel which is on record saying it will keep Sprint as the parent name and Nextel as the push-to-talk brand.
Since the merger I could never understand how Sprint did not understand just how strong a brand Nextel was. As a by product of push to talk services the company was able to build a massive network of people who could communicate in a walkie talkie style.
But like in many cases Sprint thought they knew best and renamed Nextel stores to Sprint Nextel. The entire brand was weakened in this fashion.
The challenge for Sprint is that when you think of push-to-talk, there is no one left to think about anymore. Sprint-Nextel just doesn’t have the push-to-talk aura around it.
The company would have been better off just adding a small "A Division of Sprint" label underneath the Nextel logo.
In my opinion, the two brands would have been better off living on their own and the products could have been cross-sold in each of the stores.
The crime of killing brand equity is not Sprint’s alone. So many companies do this that I really feel I am the one with the problem.
There is only one company that comes to mind in the entire technology space that truly understands brands and it is Cisco. The networking leader buys small companies with limited brands and rolls out the smaller companies’ products to the well-trained Cisco sales force.
But Cisco is smart enough to know when this strategy is flawed. When they picked up Linksys, they realized the company had a strong following in the consumer space and they subsequently left the company alone for a few years. Most people didn’t realize Cisco owned Linksys in fact. Even today, the Linksys website still says Linksys and a division of Cisco. Ditto for Scientific Atlanta.
Oracle does acquire company after company but these acquisitions are generally in fields where Oracle is well-known already and as a result Oracle does rapidly change the names of the companies it acquires to Oracle. Furthermore, the company has a magic touch that no other companies seem to have. But look to Oracle as the exception, not the rule.
So CXOs… I implore you. Just because you acquired a company, it doesn’t mean your name is the better name for the new company. I don’t care how big you are. It doesn’t matter. If you are huge in microprocessors it does not mean your name will resonate with people who build communications systems for example.
So before trashing years of marketing and brand equity, think very carefully. If Cisco can have their logo live underneath other brands, the idea can and most likely will work for your company as well.