I ran across a semi-recent interview published by the Harvard Business School's "Working Knowledge" site that's relevant to some of the things DLB likes to talk about. A recent paper of interviewees Profs. James E. Austin and Herman B. "Dutch" Leonard focuses on the acquisitions of three small brands with some social cache ("virtuous mice") by three brands lacking that cache, but having instead piles of cash ("wealthy elephants"): (1) Tom's of Maine acquired by Colgate, (2) Stonyfield Farm Yogurt purchased by Danone, and (3) Ben & Jerry's bought by Unilever.

The authors write, "Making a virtuous mouse and rich elephant merger work is a delicate, but potentially high-value undertaking in terms of generating both greater economic and social value." This is the case when such a merger can help mice scale up rapidly and can provide terms of accountability for mice which are not so demanding as those of the market after an IPO. A merger can be good for an elephant because it allows them to explore "significantly new ideas and radically different business approaches," which are traditionally out of internal scope in terms of possible innovation.

Happily ever after?

Our question is predictable here: can these virtuous mice actually pull thorns from elephant feet, or rather are the mice destined to become mere value shills by virtue of the kinds of infrastructure and market commitments that they take on? Many elephants, the authors report, attempt to allow their mice to retain a high degree of organizational independence to prevent "brand contamination," but how plausible is this?

I can't help but think back to Nick's claim last week that corporate promises about values are generally unkeepable because the stakes aren't realistic. I'd add to this that this unkeepability might scale linearly with size. Tom's of Maine may stand for some values, but it's going to be progressively harder for that company to instantiate those values because being beholden to a corporate empire reduces their ability to take action on the kinds of ethical commitments they want to make. Presumably, part of what a mouse gets out of a merger is production and marketing infrastructure that was developed against a set of values that contradict those that the mouse has stood for in the past.

On the other hand, the authors note that "from a broader perspective, these fusions provide additional evidence that social enterprise is becoming an integral and embedded part of the marketplace and enriching the avenues for businesses to generate simultaneously commercial and social value." But even if we can concede that these social mergers are good in the sense that they promote social values, it seems equally clear that the companies doing the promotion can no longer instantiate those values (at least not as well). This in turn makes the promises on which the social enterprises are built less trustworthy. And we all know the rest.