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Issue #189

Tuesday, November 5, 2013

In this edition of our newsletter, we are pleased to deliver the second article on Post-Merger Integrations, authored by one of Customer Centricity's first clients, Paul Floyd, who has transitioned to the world of Business Strategy consulting including helping companies with Post-Merger Integrations.  In this series, Paul shares insightful perspectives on M&A deals and what it takes to be successful at integrating new acquisitions. In our next edition, we will continue with the third article on Social Media. Enjoy!

Post-Merger Integration - The "Arrogant Cowboy" and the "Indecisive Tortoise"
by Paul Floyd

Key post-merger integration success factors were outlined in the conclusion to the last article titled “How to Improve the Odds of M&A Post Merger Integration.” The first and foremost success factor was related to People and included:

  • Pay attention to People, Cultures, and Organizations
  • Use Skilled Resources; Don’t Reinvent the Wheel
  • Have Enough Resources; Bring in External Resources as Required
  • Communicate, Communicate, Communicate

Most acquired companies are of little value without their people; however, people are often the last consideration when going through the early stages of an M&A transaction.  Some of the questions that naturally come up are:  Who will be in charge? Will I have a job in the merged company?   How will my work change? Who will I report too?  How will we put time into merging the companies when we are already too busy to get our current work done?  How will the merger be done?  How will we deal with the cultural differences between the two companies as they merge?  These questions and many more will need to be addressed as early as possible as the merger and integration progresses.  In the next section, we utilize an actual acquisition to illustrate how a company can navigate the complex environment of culture integration.

So what does the “Arrogant Cowboy” have to do with Culture and People?

Cultural differences are often the most significant challenge when integrating two companies.  Companies have their own unique cultures that need to be assessed as part of the integration planning.  There are many examples where integrations have failed due to cultural mismatches.   There may be cultural similarities that can ease the integration, but there are bound to be significant differences, such as company size, location, country, industry, method of doing business, governance approach, management style, HR policies, and history.  In addition, these cultural differences can get quite complex when the merger is between two entities from different countries and different continents.  

As an example, the importance of culture hit home when I was the leader of an integration between an acquiring US-based company and the acquired division of a large European-based company.   The US-based company was a vibrant high-tech startup that had grown rapidly while blazing new trails through rapid innovations using the latest technologies.  The division of the European-based company had been equally successful using more traditional technologies within the culture of a much larger company that had operated within a highly regulated environment.  Given this difference, culture was recognized as a significant potential challenge and arrangements were made with an external consultant to run coaching sessions for the merging entities to learn about each other and come up with ways in which the best from each culture could be leveraged. The perceptions were very revealing:

  • “Arrogant Cowboys” – This is how the people in the European-based division described the US-based company and most US companies. “Arrogant” in that people in the US were perceived as parochial and convinced that the US way was the superior and only way. “Cowboy” referring to a perception that the desire for speed often led to acting and doing before plans were in place rather than the other way around.
                   
  • “Indecisive Tortoises” - This is how the people in the US-based company described the European-based division. “Indecisive” in that decision making was slow, relying on endless meetings and consensus building sessions. “Tortoises” in that speed or the need to get the job done did not seem to be an important aspect of their culture.

Moving Past Perceptions: What is the Secret to Bridging the Differences?

Whether you agree or not, these cultural perceptions clearly needed to be addressed in order to proceed with the integration. The consultant was skilled at working through the desired attributes needed for a successful integration. We all agreed that we needed to set aside the perceptions and move forward taking advantage of the best from both cultures. The approach we adopted is illustrated by the table below:

Perceptions

Trait

Arrogant Cowboys

Indecisive Tortoises

Desired

Planning

Minimal

Endless

Plan & Execute

Assessing Approaches

My Way is Best

Consider Alternatives

Assess & Decide

Decision Making

Decisive

Indecisive

Decide & Adjust

Team Leadership

Top Down

Meritocracy

Lead & Collaborate

Speed

Fast

Slow

Fast & Effective

Having the teams discuss and agree on these attributes emboldened everyone to move forward with confidence that the challenges could be dealt with.  Over the next month we completed the planning and then embarked on a very successful integration effort that involved the full dedication of people from both companies.  Too often, merging companies do not work through the people and cultural issues leading to eventual clashes that result in a failed integration and merger.  Taking time up front to recognize the importance of the people, define the integration governance approach, and work through the inevitable cultural challenges pays off in many ways as the planning proceeds and the integration programs are executed.

In future articles we will explore integration governance in more detail including how to organize for a successful integration and how success is measured with post-merger integrations. In the meantime, if you are wrestling with an upcoming M&A deal, planning for an integration, or having current integration challenges, feel free to contact us. We are here to serve!


About Paul Floyd

Paul is an experienced technology operating executive with extensive international leadership experience and a track record for achieving rapid product and service growth on a global scale. Paul thrives on working with companies to build great products and services, and using technology to achieve breakthrough solutions for major business challenges. Paul’s experience includes large, medium, and start-up environments. Paul has led major corporate change including the evolving dynamics of a start-up and the many challenges presented by acquisitions, integrations and divestitures. He brings a strong combination of technology, business, operations, and people leadership skills to all of his engagements.






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