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Eight lessons from real-life mergers and acquisitions

Eight lessons from real-life mergers and acquisitions

Now is a great time to plan for the future development of your business. Customer distractions are at a minimum, and valuable thinking time needs to be used wisely. Merger or acquisition is a strategic growth opportunity that every business should keep under consideration and reading up on what lessons have been learned by others is a good way to shape your thinking. Here are EIGHT real-life lessons shared by Mieke Jacobs and Paul Zonneveld to get you started on your reading list.

Our thanks to…

Change consultants Mieke Jacobs and Paul Zonneveld advise on how to keep your next deal off the ever-growing list of M&A disappointments
It’s widely accepted that that between 70 per cent and 90 per cent of mergers and acquisitions fail to achieve their stated objectives. Despite this terrible record, M&As remain a key strategy for many businesses. Indeed, deal activity is expected to rise again in 2020.

Here are eight lessons that directors can draw on to increase a deal’s chances of success, particularly in the cultural integration phase.

  1. Know yourself and your motives.
    If you buy an entity to make up for something you’re missing and you bring it into your existing system, you’ll end up killing exactly what you wanted to acquire in the first place. Ask yourself: “What is this M&A an excuse for?” A common response will be “our inability to innovate”. Unless you address the factors that extinguished your own capacity for innovation, you will disarm your new partner.
  2. Remember that companies with a strong culture often have an “immune system” that pushes out foreign elements.
    Despite good intentions to build on the strengths of the other organisation, a company with a deeply ingrained culture will often have an overwhelming integration plan that lacks a deeper understanding of the other party. Divergent skills, attitudes and approaches are likely to be disregarded by the dominant partner.
  3. Understand the other organisation and include its history and identity in the new narrative.
    It’s critical to understand the history and repeating patterns of the new partner and to integrate what differentiates it from your business into the merged narrative. This will help you to identify compatibility concerns early in the integration process.
  4. Be careful not to alienate the acquired firm’s most valued individuals.
    In sectors where knowledge and relationships are crucial, the real value is connected to people. If they walk out and take their expertise and contacts with them, you might end up with a decommissioned asset.
  5. Understand that family businesses add another layer of complexity.
    Acquiring or merging with a family business often requires extra discernment, transparency and restoration. The underlying dynamics of a family system will play out in the organisational system, despite its members’ best intentions to keep their work and private lives separate.
  6. Consciously build the new organisation.
    “We start anew” is a phrase that’s often heard after big acquisitions. But it can be hard to negate past events, both good – the glorious early days – and bad – the recent loss of colleagues and/or corporate identity. Only by properly addressing these can you start building the new organisation’s values, methods and culture.
  7. Establish the right pecking order and beware of the power of hidden loyalties.
    Tenure, technical expertise and even nationality are some of the factors that might have made people successful in the past, but after integration you might need totally different criteria, which will be defined by the new organisation’s purpose. Given that synergy plans often result in the reshuffling of leadership teams, remember that hidden loyalties can undermine the new order.
  8. Don’t put the “integration burden” on your customers.
    When making your integration plan, you should pay special attention to your customers. Research shows that they seldom benefit from M&As among their suppliers. The “integration burden” often lands in their laps, as they are asked to build new relationships, follow new procedures and adopt new specifications.

Change management: A better way to explain the “why”

Answering properly the ‘why are we doing it’ question is so important when leaders start to talk to their people about organisational change.

Sadly, it often forgotten as we get caught up too quickly in implementing change. Always stop and think, do my staff really understand why we are changing? If they don’t, the chances of your change initiative succeeding are small.

Bob Kantor’s excellent piece here explains why this is so critical when firing up our change management initiatives.

Full article with thanks to: https://enterprisersproject.com/article/2020/1/change-management-how-explain

Most leaders can walk their team through the what and the how behind change management efforts, but fall short on the why. Here’s how to make it meaningful.

The track record for most change management efforts is pretty dismal. One missing element often dooms these efforts from the start: Most leaders focus on the what and the how, thinking that these items will carry the ball. Leaders often avoid the why because it tends to be more of an emotional message – and people are less comfortable with those.

But the reality is that people make decisions based on their emotions, and then use the data to justify and validate their decisions. If you want your teams to actively support your change efforts, you need to do a much better job of engaging them in why it matters.

Why the why matters in change management

Let’s look at a simple and effective change management project plan, which should include:

Vision for the change – what we are changing
Rationale for the change – why it’s important to make that change
List of related projects and initiatives – how we will achieve that change
Most of us can explain what we are doing and how we are going about it, but most of us either skip or struggle with why it matters. Since organizations don’t change – people do – explaining the why needs to be personalized.

Also, people don’t resist change, but they do resist being changed. Leaders must involve their people in defining the why and implementing the change. These efforts require a lot of communication. And it’s not enough to simply send a message; you also must test for how the message was understood, and adapt as needed.

Unfortunately, skipping this work is what makes the difference between people supporting the change because they feel they have to, and people supporting the change because they want to. This distinction is the critical make-or-break factor in the success of change initiatives.

People who understand and emotionally connect with the rationale for the change feel inspired rather than manipulated.
Employees who feel that they have to do something usually feel like victims and will invest the minimum amount of effort and creative energy to deliver new results.

But employees who understand and emotionally connect with the rationale for the change – why it’s important to the organization and to them – feel inspired rather than manipulated, and will do all they can to creatively support and implement the target change.

A better way to explain the why
Often, when leaders attempt to communicate the rationale for change, they focus on why the change is important to them rather than on why it’s important to the team. They overlook the critical element – we call it WIIFM: what’s in it for me?

Reverse-engineer your traditional communication process.
The best advice I have is to reverse-engineer your traditional communication process. Start with what result you want. For example, it might be staff enthusiasm and commitment to making an organizational change happen. Then identify what the team currently believes about the situation. They might think, for instance, “Going to a managed services provider means I’m going to lose my job.”

From there, identify what they would need to believe in order to enthusiastically support the change. For example, “Once we transition our infrastructure support to an MSP, I will be retrained to enhance my infrastructure engineering skills and learn how to implement DevOps. My work will become much more interesting and less stressful, and my market value will significantly increase.”

Finally, examine the gap between what your audience currently believes about the change and what they need to believe about the change, and design your communication messages and engagement process to close that gap.

There’s even more you can do to make change personal. Let’s explore five tips:

5 ways to make change personal

Once you understand how to explain the why, you need a reliable strategy for getting the message across. Here are a few practical tips.

  1. Expect to over-communicate. Most of us need to hear a message multiple times before we really get it. Yet many change leaders think that “one and done” is all it takes for others to get on board. This often occurs because the leaders have been aware of the new vision for several months, and they forget that others are hearing it for the first time.
  2. Be transparent when you don’t have all the answers. Change is hard and needs to be fluid. Leaders rarely have all the answers in the early stages of organizational changes. Rather than wait to engage teams until you do, let them know what you do know when you know it, and keep providing updates as the process evolves.
  3. Constantly test for shared understanding. As George Bernard Shaw said, “The problem with communication is the illusion it has occurred.” Most management courses advise leaders to use active listening by asking people to repeat back what they’ve heard. But that doesn’t work very well in times of change. Nor does simply asking them if they understand what you’ve said.
  4. It’s better to ask folks what they think about what they’ve heard, or what their concerns and suggestions are for moving ahead as an organization. As they share those, leaders can assess how close they are to a shared understanding and adjust their messaging, and perhaps even their change plan, accordingly.
  5. Ensure everyone in the organization is in the loop. I’ve seen senior leadership send out all-hands messages about which their middle managers had no knowledge. Then when staff members asked their immediate manager questions about the situation, they got an unhelpful response along the lines of, “I don’t know either. I just heard about this the same way you did.”

Make sure everyone in your chain of command knows what’s happening, when it’s happening, and why it’s happening. Better yet, prep them with FAQs and sample answers. Also, make sure that they are on board, and address any concerns they may have before the all-hands messaging begins.

Again, adequately explaining the why is a lot of work for leaders. But while you might be inclined to skip it or feel like it will slow you down, it will actually help you achieve change more efficiently. And that’s the whole idea, right?

Change management: A better way to explain the “why”
New Decade, New Deal

New Decade, New Deal

Although we should all keep our business planning under constant review, human nature means we often only do this when events prompt us to do so. New Year thinking often prompts big ideas. And why not? We should all think outside the box sometimes. Even Boards of Directors in mature businesses need to be reminded to plan regularly. Think big.

Is it perhaps time to buy that competitor you have always admired? Or, if you are nearer to the end of your business journey, is it maybe time to develop an exit strategy?

A business acquisition is well recognised as maybe the only way to achieve significant business growth in a short space of time. If you get the integration of your target acquisition right it can also deliver clear benefits, most likely at least one or all of the following:
• immediate access to a larger portfolio of paying customers
• a bigger group of experienced staff often with useful new ideas
• an opportunity to diversify your product offering without having to learn new things
• new positive energy and impetus for the larger business going forwards
Mergers or acquisitions do not have to involve large capital sums either. There are lots of ways to structure a deal.
If you are in the planning an ‘exit strategy’ camp, and rightly concerned about your customers and colleagues, why not hand-over gradually? Any new management team will probably be immensely grateful to have you on-hand for a period to transfer those key relationships gradually.

This is all part of what is called Post Merger Integration (PMI) planning. Getting the future plans right for the business, for its customers, colleagues and for its leadership teams.

If 2020 is a time for some big business ideas for your business and you want to discuss how you might plan for these, please get in touch for conversation.

Changeability is a strategic advantage

Changeability is a strategic advantage – one of several takeaways from a Change Management Institute virtual round table session on the challenges presented by Enterprise Change.

What is so different about supporting change for a whole organisation, or enterprise, compared to helping smaller change initiatives? How would you recommend making a start with larger change programmes? What would you prioritise first?

Only some of the questions debated by a panel of four experienced change managers from all corners of the globe who hooked up live this month facilitated by Connie Henson in Washington.

Chantäl Patruno in Sydney helpfully prescribed a “three C approach” in the important discovery phase. First, remember to assess the CAPABILITY of the organisation to change, or its change readiness. Second, analyse the working CULTURE that is present. Is it a start-up fully open to new ways of working or a more conservative or traditional organisation, where new ideas will struggle to get adopted? Third, in assessing the CAPACITY to change, discover the enterprise’s previous change history, remembering to record and later refer to both prior success stories as well as failures. Lastly, you should also consider the capacity that middle managers and team leaders have to simultaneously run and change the business at the same time and find ways to make this possible.

Sky Dow in London also endorsed a three steps approach. On where to start? Her advice was not to go in with preconceived ideas, rather, and simply: (1) go in to support the business, (2) provide the tools to support the change required and (3) grow the capability at all levels in the business, to support the change, senior down to junior.

Another good tip from Chantäl Patruno was “the bigger the enterprise, the more critical it is to get alignment across the full leadership group.” Ask them all to say, individually or in a group setting, why it is that we are doing this change? One can imagine how powerful this would be in an open forum, workshop or even Board Room setting. Seek alignment and try and get a “leadership multiplier effect” going in support of the enterprise change.

Gordon Brockway in Perth, Australia targets resistance management techniques at enterprise level. He stressed the need for change managers to facilitate the tricky conversations that really matter but do not tend to happen. Take away the fears that people have by addressing them. Nobody else will do so.

Gordon also reminds people they are capable of change by asking what successful changes in their lives they have managed well previously: “There is resilience out there and people are capable of adaption.”

“Don’t let your sponsor off the hook” when working at implementation level was a key learning from Mike Mactavish in London. Mike also stressed the need for change management today to become a core business activity and not just another strategic change initiative that takes place every 5 years. More and more organisations are starting to recognise that having an internal change management function is an effective way to fully embed business change.

This prompted my favourite takeaway, coming from Chantäl Patruno, namely, the need for the modern enterprise to no longer adopt the term Business As Usual (BAU) but rather learn to operate with Change As Usual (CAU). If you like acronyms on change, and there are lots, this one is hard to beat.

My thanks to all of the panel and Dr. Connie Henson for hosting such an interesting Change Management Institute Learning Circle event, and for agreeing to its takeaways being shared by FUSE.

Changeability is a strategic advantage
Every Change Starts with an Idea

Every Change Starts with an Idea

Every change starts with an idea.

But how many of these new ideas actually survive implementation?  Why is the effective management of organizational change so important?

As business leaders, we are trained to be creative, to find better ways of working, always looking expand our organisation’s capability. Standing still is rarely viewed as successful business activity.

We are often good at planning and we have people with the confidence to implement these new ideas, so we “crack on” and put them into practice, usually as quickly as possible.  It therefore comes as rather a shock when our plans fail to meet the approval of our colleagues or customers. Even more surprising, once we have overcome the organisational resistance to the change, we discover our plans don’t actually work in practice.

A new management discipline has emerged to help increase the chances of implementing successful business change and it is called change management.

Here is a priority checklist of what you should be asking your change managers to deliver for you:
• helping your organization recognise the need for change and define what that change is
• assessing the organization’s readiness for change and improving its appetite to do so
• measure the impact of the change and helping you plan how to prepare for this
• supporting your people’s engagement with projects, process improvements and new technology
• overall, helping to sustain and embed the change in your organization

FUSE is a niche business management consultancy practice, which specialises in change management. We can help with all of the above. We can also help set up a change capability inside your organisation.

For more information, or to schedule a first conversation, please get in touch.

Driving Change and Successful Business Transformation

The sad reality is that many business change or transformation initiatives fail along the way. Not due to any lack of effort or investment, but rather a lack of clear thinking or poor communication.

Here are some ideas to mitigate against these two common causes of failed change.

Most people like check-lists. So, start with a check-list of things you have to get right. Then, agree with stakeholders in the change process how it is that you are going to deliver these.

Here is my check-list. You can build a plan around these five points without too much difficulty.

  1. Confirm support for the initiative from senior staff
  2. Agree how the organisation expects to benefit from the change
  3. Assess how capable the organisation is of accepting change
  4. Understand how the business likes to communicate and match it
  5. Support the change process through good leadership, appropriate training & facilitation

If you like the “check-list” method try another set to help guide your communications. These “communication rules” should be agreed with your sponsors or senior stakeholders. You do not need to start from scratch. Others have got there first, of course. Try the “4 Ps approach” coined by William Bridges (Managing Transitions 2003) in his popular and much quoted text on the subject.

Bridges encourages managers to help staff with the normal anxiety that is brought on by change and accelerate through the change transition process by using “The Four Ps”:

  1. Purpose: Why are we doing this? What problem are we solving? What are we trying to achieve? People must understand the logic of a change before they can embrace it.
  2. Picture: What is the end game? How is it going to work? What is changing and what isn’t? People often need to imagine what the change will look like before they can commit.
  3. Plan: What is the road map for getting to where we need to go? What is going to happen over the next few weeks and months? What happens first, second, third? People need a clear idea of how they are going to get to where they need to go.
  4. Part: What is my role? How will I be involved? Do I have an opportunity for input into the plan? When will I be trained? People need a tangible way to contribute.

By providing information about the four Ps in all of your communications, you will help your team understand why the change is necessary, what it looks like, how you’re all going to get there, and how they fit in. Keep in mind that during times of transition, your communication isn’t just about sharing information. It’s also about how you use your communication to connect with your employees, let them know you care and build their commitment to the change.

Two check-lists to help mitigate against failed change management due to lack of clear thinking and poor communication.

What do you think?

Let me know!

Driving Change and Successful Business Transformation