Successful Mergers: Speeding to the Destination by Re-establishing Operating Expectations
I cannot change the wind but I can adjust my sails to always reach my destination ―Jimmy Dean
Mergers or acquisitions start out with a strategy – which is typically a well thought out story of a journey through risks to opportunity. Due diligence complete; the investors and management team undertake their journey to success. The “story” often includes a map of the coming voyage laid out in great detail: defining risks, how to hedge the bet, when to use “Plan B” and sometimes plan “C” just in case something goes wrong. The question is how to recognize as early in the journey as possible when we are “off course” or even worse, about to end up on the rocks due to a broken core process or a team that doesn’t collaborate.
Getting work-processes (Operations) and infrastructure (IT, Accounting, HR) integrated is one challenge. Getting culture aligned and key relationships built is another. The sooner relationships are built and a shared worldview is established, the better chance that the journey will be successful. We have seen the importance of speed; getting work-processes and infrastructure integrated requires trust and a shared worldview. How is this done?
We can simplify the critical ingredients to three key elements which completed in sequence, provide for “early course correction” so often needed in the merger journey. These ingredients are: aligning the leadership team, getting key mid- level managers engaged and taking action across the legacy organizations, re-establishing operating expectations at all levels.
Aligning the Leadership Team.Trust and strong working relationships between members of the leadership team is necessary to drive and support the success of the other elements. To build this trust and create an effective leadership team, we:
Use assessments to not only capture team interactions and behavior, but to focus uniquely on helping team members understand and appreciate each other’s contributions to the team. We use a tool called TEVS to capture the value each person contributes, while also looking to ensure that the leadership team is playing with a full-deck – the full diversity of contributions needed to make a successful organization
Engage in fun but thought-provoking activities that help people connect personally and get to know each other. Giving a chance to reflect upon and discuss the team, and its dynamics, accelerates collaboration. The activities often end with team members laughing about misbehaviors in the activity, and how they reflect upon teamwork issues
Support defining team norms (or rules) for how the top team works and acts together
Examine and promote cascading communication to all levels and through multiple means, especially communication that recognizes merger progress and successes
Engaging Mid- Level Managers to Take Action.When mid-level managers start taking action together, across the legacy organizations, the merger will become real. We accelerate this process, and mutual learning across the two organizations, through focused project work, referred to as Business-Driven Action Learning. This method creates practical, dramatic examples of the combined power of the merged organization and how integrated teams can create an impact together.
We create action-learning teams containing members from both of the merging organizations and sponsors from senior leadership. These teams are tasked with areas such as solving a key process issue or determining the scope and accountability/decision-authority for a critical role. They are also taught how to work together as a team and use basic problem-solving tools. The best approach is to help teams use simple facilitation, root cause and brainstorming tools to build a comfortable, new, shared operating-style. This reinforcement of the shared “operating style and rhythm,” as teams make progress on real issues, builds shared learning, develops relationships and accelerates the progress of the merger.
While managers sometimes protest that they don’t have enough time to be on another team, we carefully scale and scope the “problems” so that recommendations can be formulated in an efficient use of time. As we do this work, we revisit and discuss the operating principles, the establishment of teamwork and trust and build the stories of success that will propel the new organization forward.
Re-Establishing Operating Expectations. Shared expectations of how to operate, work together and “acceptable behaviors” is key to getting informal collaboration and synergy across the organization. Sometimes one company simply tries to assert their operating schedule, processes, and culture over those of the other company. However, even in acquisitions, there is always some ambiguities. These can include questions such as how are problems communicated and solved, degree of decision authority, how often do we meet, who is invited, and what are we allowed to communicate? Leaders need to make explicit these operating rules and agreements. Agreeing upon operating principles makes things concrete and communicable.
Often, we use surveys to highlight differences in cultural assumptions across the legacy organizations.
Reviewing the survey results makes it easier to discuss differences in important areas like how decisions are made, assumptions about structure and process, or corporate values and behavior. Open and candid dialogue on what is needed to improve operations and results is the goal. Creating agreement, starting at the top, on the future culture and the differences across the legacy cultures is a strong way to kick-start change and actions which will affect multiple levels of the organization.
The faster expectations are set for operating together is established, the better. This is where many merging organizations take too long. The longer this process takes, the more likely it is for people to doubt the effectiveness of the combined organization. Shared operating expectations are demonstrated as meetings become more honest, people feel safer to voice their views and concerns, and decisions are made effectively.
While not foolproof, the steps we have suggested will accelerate cultural integration during a merger and help to keep the combining teams on track. Leaders at all levels benefit from open and honest dialogue on goals, expectations and values. Shared opportunities to learn together about business assumptions and challenges helps to establish roles, meetings and progress measurements. Increased speed and steady progress build confidence in the merger, creating positive momentum to power through the typical merger issues and concerns, and reach a safe harbor thanks to a unified organization.