Federated Integration and Full Integration each have their strengths and weaknesses, but at Fordhouse we believe that Full Integration is better over the long-term.
Federated Integration is a light-touch, loose integration approach. Usually the brands are unified, allowing for a consolidated marketing & sales team and budget. Beyond that there may be some easy wins like merging supplier accounts, but broadly the businesses are left to operate as they are, albeit with group leadership providing high-level oversight.
Full Integration, as the name implies, is the whole lot; everything is in scope. Post integration there should be few to no differences in the businesses at any level, whether people, processes or technology. There is only one business. This takes time, especially with areas like culture which do not change overnight and can make or break an integration.
The key advantages of a Federated Integration stem from the fact that little is changing. It can be done rapidly and with reduced short-term risk. You can queue up many acquisitions as the change and effort required for each is minimal. If you execute on a fully unified brand then the customer will, in most cases, experience a single business. You can go to market quicker, if selling the combined business is your end goal.
For a Full Integration approach, the upside is that the business gets all the advantages of truly being one unit, whether than means (i) a more collaborative team, (ii) ability to leverage resources across the group or (iii) cost savings and other synergies. In the medium-term we believe it has a lower risk profile than Federated Integration because there is less chance of experiencing conflicting ways of working and political and emotional issues as they are removed through a Full Integration approach. Looking to the long-term, to achieve a bold business strategy and implement powerful internal transformation you have to be one team, one business and one culture.
At Fordhouse, we believe that in the medium and long-term a Full Interaction approach builds a better business.