While everyone was cheering or gasping over the billion dollar acquisition of Instagram by Facebook, a few were looking more carefully at just how the deal got done: by Mark Zuckerberg, working alone. Only when the deal was as good as done, did he deign to tell his board. Is this the right way to do acquisitions? Is it the smart way to work with a board?
M&A = Mess & Apologies
Most mergers and acquisitions fail. According to whose research you choose to believe, anything between 50% and 80% of them fail to achieve the strategic result for which they were executed. Most companies, driven by momentum (and their investment bankers) pay too much, rush the detail, minimize the problems, and just can't wait to celebrate. They repent at length.
Where I have seen M&A work effectively, especially in private companies, has been when the deals have been negotiated at length and at leisure. Some have taken up to three years before there was true alignment between the companies and the leadership. These deals have lasted and proved valuable. But that reflective approach is not Zuckerberg’s.
So what will happen? He'll have to hope the Instagram technology works as well as he thinks and that it will scale. If that proves disappointing, he'll have to hope he can fix the problems fast, before users notice.
Technology integration is rarely easy or quick and Facebook doesn't have a glorious track record when it comes to beautiful integration or user experiences.
So the speed of the deal may hurt but not prove fatal.
Board = Rubber Stamp
Zuckerberg's board members, if they have any gumption, may not be too pleased that they weren't consulted and, if they choose to, will almost certainly be able to pick holes in the Facebook-Instagram agreement. But they're unlikely to sulk for long and Zuckerberg may feel he doesn't need them anyway, especially given his control of the company through 57% of its voting rights. The board is there to keep compliance officers happy and for no other reason. But it doesn't speak too well of the board members themselves if they're happy to be fig leaves.
More critically, however, Zuckerberg's aversion to advice, while it may not cause any harm to board members (except a few bruised egos), could cause him harm. Every CEO I've ever seen becomes trapped sooner or later by power and money. They start to believe they're infallible--and they're surrounded by people eager to confirm that. Vast amounts of cash will solve most problems, at least for a while. Power and money together are terrific defenders against robust debate, critical thinking, and innovation. Richard Fuld, James Cayne, Dominique Strauss-Kahn are just a few examples who come to mind as imperial and narcissistic CEOs no one ever wanted to challenge.
Don't get me wrong. Zuckerberg is smart; of course he is. Anyone who can convince half a billion people to use a mediocre piece of software with monotonous regularity clearly must be smart. But no one is smart forever.