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Grab And Uber Partner: Recipe For A Successful Acquisition

Senior Lecturer, Division of Strategy, Management and Organisation College of Business, Nanyang Business School
May 19, 2018 6:31 AM 4 min read
Editorial

Grab, a Singapore-based ride-hailing, ride-sharing, and logistics company announced its acquisition of Uber's Southeast Asia business on 26 March 2018. Following the announcement, there were several articles by Singapore mainstream news broadcasters highlighting that the Competition and Consumer Commission of Singapore (CCCS) was not notified about the deal. Hundreds of Uber staff were told to pack up and leave within 2 hours, leaving drivers worried about their car rental contracts and the future in general. Based on all these articles, it is obvious that Grab has not considered all of its stakeholders’ needs and concerns or identified actions to address them before announcing the acquisition of Uber, followed by the shutdown of the app to the public. As a result, many stakeholders were thrown off by Grab’s swift announcement and actions.

 

Grab has been presented with more time to plan for a better merger and acquisition (M&A) process considering the CCCS's recent directive to extend shutdown date of the Uber app from 8 April to 7 May, and a push to both companies to maintain part of their operations until the ongoing investigation concludes.

Grab And Uber Partner: Recipe For A Successful Acquisition
Source: Grab Facebook Page

 

 

As such, Grab (and other organisations about to engage in M&A) might want to take the below pointers into consideration when planning and managing their current and future M&A.

 

As organisations such as Grab and Uber grow their businesses in today’s rapid pace of disruptive change, it is easy for them to lose sight of what is key in each stage of evolution. What made Grab and Uber successful in a very short period of time was the fact that they came out with a brilliant concept and provided an alternative in the market as market leaders.

 

However, given what has happened with its recent acquisition, it seems that Grab and Uber might have overlooked the importance of execution. In other words, while the focus on concept and speed has led to the success of Grab and Uber, a lack of focus on execution and accuracy has led its recent M&A to disaster. At the end of the day, Grab and Uber need to be aware that it is ultimately about making things happen, thus, execution and accuracy are as important as concept and speed.

 

While it is undeniable that Grab and Uber have done a pretty good job of communicating the deal to their customers through email communications, news release and a well-designed artwork stating “Grab & Uber Are Coming Together To Serve You Better”, the same cannot be said for their communication with other stakeholders such as internal employees and contractors (i.e. Uber drivers). Shortly after the public announcement, Uber employees were told to just leave the office and wait for updates, as reported by The Straits Times. It was later highlighted by Channel NewsAsia that issues such as registration, contract, and reward systems were yet to be ironed out. All these assertions by Uber employees and drivers make it clear that an effective M&A communication plan with employees and drivers was found wanting. In the normative sense, Uber employees and drivers should have been communicated with before the M&A announcement was made public. By paying little attention and focus in this regard, Grab and Uber risk projecting the image that they are only focused on profits and have lost sight of its people. Humans are ultimately the heart of any organisation and so they should never lose sight of that.

Grab And Uber Partner: Recipe For A Successful Acquisition

Next, although the entire Grab management team is likely to be involved in managing the acquisition, the human resources (HR) function has a role that is particularly important. A high-performing HR function can be a valuable business partner in providing clarity to the management team to chart the end-to-end execution details (i.e. milestones, owners, timelines etc.) for its post-merger activities. This would include key elements such as change management, employee communication plan, compensation and benefits, harmonization plans, immersion programs for Uber employees and drivers etc.

 

Considering the fact that Grab did not have the email addresses of Uber employees, said it will 'try' to offer positions to all Uber staff in the region and changed incentives around the announcement, raises questions on Grab’s post-merger plan. As Benjamin Franklin once said “If you fail to plan, you are planning to fail”. Hence, it is important that Grab had come up with a well thought through execution (post-merger) plan during the initial preparation stages.

 

Last but not least, technology-driven organisations such as Grab and Uber might prefer to hire only people who are creative and innovative, as they are to align with the culture of the organisation. However, hiring people who possess similar characteristics to work together might not do the organisation any good. According to a study by Deloitte in 2013, diverse teams (i.e. people possessing different characteristics) outperform their peers by 80% in team-based assessments. Ned Herrmann, the father of brain dominance technology, described such diverse teams as whole brain teams whereby each team member has a different preferred thinking style (whether it is rational, practical, relational, or experimental) that can be leveraged by the group. It is only when a whole brain team with its diverse thinking preferences is at work that a company can perform at its best. It is therefore highly recommended that Grab gets people of different thinking preferences onboard to improve its execution capabilities. 

 

Just like overcoming any other business challenges, Grab needs to identify and understand the key priorities and critical success factors in each M&A stage in order to attain a smooth and successful acquisition with Uber.