It is Absolutely Critical in a Merger to Quickly Establish Unambiguous Lines of Responsibility (page 1 of 3)

What challenges do organizations face as they try to make such mega-mergers work? What is involved in managing organizations across cultural boundaries? Michael Useem, director of the Wharton School's Center for Leadership and Change Management, discussed these questions with John Ross, president and CEO of Deutsche Bank's American operations.

Useem: Before becoming president and chief executive officer of Deutsche Bank Americas in mid-1999 you served as CEO of Deutsche Bank Group Asia Pacific. What were the one or two biggest challenges in running a German bank in the Asian region?

Ross: The challenges in that part of the world had nothing to do with our being a German bank. At that time the challenge was that Asia was in a crisis. Secondly, we were trying to go from being an old-line commercial bank to a modern investment bank. As a result, not only were our clients wondering whether we were going to do what other banks were doing-which was to withdraw capital from the region-but we also had internal staff members wondering whether they would keep their jobs. This was, first, because of the Asian crisis; and second, because we were looking for a different business model. Eventually things worked out quite successfully for us, primarily because change is easier to implement in a crisis than when things are going spectacularly well.

We made a policy decision that we were going to grow in Asia rather than contract. Our clients, both government and corporate, responded very well to this decision. We were able to do things that in the normal course of events would have taken much longer. With Asians it typically takes a longer time to establish relationships, than in the West, but in a crisis, you can make things happen faster.

Our strategy of expanding in Asia and building an investment bank was very well received by our staff and by clients. The staff members came to realize that they did have the requisite job skills. We simplified the management structure and made our business objectives and organizational structure known clearly. I went to Asia at the start of March 1998 and we were completely reorganized by June. We stuck to a clear, simple strategy and conveyed it to our clients, reinforced it with the staff, and this turned out to be a very effective approach. Being a German bank made no difference.

Useem: Since Deutsche Bank's acquisition of Bankers Trust in June 1999, you have been at the forefront of integrating two very different banking cultures. Could you describe the most important cultural differences between the two banks and what you have done to overcome them?

Ross: One of the great challenges we had in the merger was convincing people that the cultures were not all that different. Yes, it is true that Deutsche Bank is headquartered in Germany. It is also true that Deutsche Bank was for years seen as a commercial bank and Bankers Trust as a wholesale bank. And obviously, Bankers Trust is headquartered in New York City, so there must be cultural differences between the two. That was the simple assumption.

The fact, however, is that before the change of control, two of Deutsche Bank's five main divisions were run by non-Germans, and approximately 35% to 40% of the staff of Deutsche Bank were non-German. The investment bank-inside Deutsche Bank we call the investment bank Global Corporates and Institutions (GCI)-is one of the five main business divisions.