Why International Partnerships Fail

A Wall by Monsters Inc.
March 21, 2016
3 Steps Back Towards Successful Partnerships (Partnerships Part II)
May 23, 2016

After decades of trying (and failing) to find a partner in Europe, KLM Royal Dutch Airlines eventually decided to create a partnership with Alitalia in 1998. Executives and employees were excited at both companies. The numbers added up; the partnership showed synergies on paper. Integration activities were initiated quickly in 1999. In 2000, however, the alliance was over.

WHY INTERNATIONAL PARTNERSHIPS FAIL

WHY INTERNATIONAL
PARTNERSHIPS
FAIL

A Perfect Failure
KLM cancelled the partnership. Dutch top management blamed Italian politicians. At other levels, The Dutch pointed at flaws in the Italian culture: a chaotic organization and lack of follow-through. Trust quickly started to fade. The Dutch assumed that the relationship was broken and consequently demolished the entire partnership, leaving the Italians flabbergasted.

Finger Pointing
In the aftermath, the Dutch were being accused by the Italians of being too methodical, rigid, aggressive and even arrogant. While eventually the Dutch blamed the failure on financial risk due to untrustworthy politicians, my observation was -and still is today- that both sides pointed fingers and did not perceive their differences as a gap that needed to be bridged.

Culture Eats Strategy
While a full assessment would likely show more complexity regarding the KLM-Alitalia break-up, clearly cultural differences played a major role. Building a business case showing synergies is not hard. Especially in international business, the hard part starts with what is often described as the soft part: how to work together. Culture indeed had strategy for breakfast in this case.

The Same Things Differently
Not perceiving, ignoring, or not addressing the gaps that exists between how people in different countries -or between different companies for that matter- conduct business, can have a devastating impact on partnerships. It is crucial to understand that everybody does the same things differently.

3 Comments

  1. Aldo says:

    Hi,

    Yes I would say a perfect example of partnership failure but as you mentioned and I tend to stress that it was more 70% political as I had meet a few AZ friends and all were terribly excited about this perfect marriage on paper. Unfortunately as I have always sustained politicians have always failed airlines in most of the cases. You will teach me that airlines are only for professionals and the KLM was too bold at the time as AZ was not privatized and politicians although they said that they would it never did and here things did not move. As I said the partnership was fantastic idea but not being a full merger things somehow didn`t work and there were the issues of Malpensa Airport expansion immensely delayed at the time and this somehow got things to an end. Nonetheless a prefect example of cross cultural partnership which didn`t work for many intricate reasons but in this case I would staff members were very happy with this marriage no doubt then you have the unions, but I stop here. thanks for bring up this example. kind regards Aldo

    • Peter van der Lende says:

      Thanks Aldo. I would argue that ‘political’ and ‘things somehow didn`t work’ still perfectly fit within my arguments!

  2. Dear Peter,
    Same things are happening again between France and the Netherlands (KLM and AirFrance) despite the good will of the CEO’s of both organizations, cultural differences, the lack of guttfeeling, and power of the French ministers against the Unions already show that this combination is ‘loose loose’

    and it will be only a matter of time, that one of the companies will be in the most unhappy position, leading to frustrations and the decrease of motivation level, bringing our good old KLM tot the marketplace or… worse” bankrupcy… thats why our instruments work so well on http://www.nsedynamicals.net, helping to understand the other and: costing the gaps that lead to misunderstanding…

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.