On the surface, everything about combining Essilor and Luxottica makes complete sense. Yet there’s a fundamental cultural disconnect that risks haunting the merger for years to come. The more leadership focuses merging cultures early on, the more successful they are going to be over time. And the key to that is going to be changing attitudes from thinking about function versus design to thinking about function and design as complementary strengths.
Bloomberg’s Liefgreen and Ebhardt do a nice job of laying out the advantages of the combine. Essilor’s lens-making strengths add to Luxottica’s already vertically integrated frame-making work. There’s a natural combination between Essilor’s manufacturing strengths and Luxottica’s retail presence. These two were either going to battle each other or combine.
This is a merger where they will be able to complement each other and create economies of scale on the supply chain.
The issue is the cultural disconnect. Again, parts of this initially look like they shouldn’t be too much of a problem.
The organizations’ stated values aren’t all that different.
Essilor values include working together, innovation, respect and trust, entrepreneurial spirit and diversity.
Luxottica drives a culture of responsibility to our people and our environment, global work rights, health and security, diversity and inclusion and welfare.
Nothing in these is incompatible.
The disconnect is at the core of what matters and why.
Essilor is all about “improving lives by improving sight.” When I talked to Essilor CEO Hubert Sagnieres for an earlier article on “Leading with a Clear Vision,” his commitment to that mission came through loud and clear. He and his team were doing a remarkable job of improving sight through Essilor and The Vision Impact Institute and the Essilor Vision Foundation.
Luxottica is all about “beautifully crafted products known and loved throughout the world.” They proudly tell the world that “The Design of Luxottica’s products is the focal point where vision, innovation, technology and creativity converge.”
This is a classic form versus function or fashion versus practicality trade-off. Few think about the fashion aspects of lenses; while frames make a strong fashion statement.
Merging The Cultures
They don’t have to merge the cultures. They could choose to leave the different design organizations separate and capitalize on management, supply chain and go-to-market synergies. They’ll create real value for their employees and shareholders in doing this even beyond the 400 to 600 million revenue and cost synergies they’ve already identified. And with Luxottica founder Leonardo Del Vecchio continuing on as CEO of the combined firm for now, that’s what we should expect.
That way misses the big opportunity.
If they can merge the cultures at every level, they can get lens-makers to consider consumer fashion needs and frame-designers to consider societal impact even more. Like the world, Luxottica and Essilor needs three different types of leaders and needs them to value each other’s points of view.
This is hard work. Many of the “12 Ways To Make Matrix Organizations More Effective” come into play. It starts with how top management acts, measures and rewards. If Del Vecchio and Sagnieres value the creative tension between form and function, others will too. Building on that, they’ll need to drive
• Shared targets and clear accountabilities making sure everyone understand the reasons for and benefits of working across form and function, holding key leaders accountable for overall results, balancing informality and discipline, clarifying RACI and making it work.
• Live team interactions with the full leadership team, form and functional leaders, encouraging cross-disciplinary interactions and shared celebrations.
• Team-building behaviors including one-on-one interactions over stiff written communications, rooting out harmful political behavior, valuing sub-teams, coaching for success.
Getting people with different worldviews to collaborate together is hard work. In many cases it’s easier to let them work separately and then bring their efforts together later. Organizations like Apple that have found ways to make form and function work together create extraordinary value.