Mergers and Acquisitions at the Speed of Trust

Transcription

1 Mergers and Acquisitions at the Speed of Trust Culture eats strategy for breakfast. Peter Drucker The first casualty of war is truth. The first casualty of a merger is Trust. According to a study by KPMG, 83 percent of all mergers and acquisitions fail. Why? Because of the people and cultural differences. The inability to systematically integrate different cultures is they key. Frequently, the deal itself makes great sense. However, organizations stumble because of people and cultural differences. The Board Room knows this, but many leaders don t know how to do anything about it. We do. Stephen M.R. Covey says, While high trust cannot necessarily save a bad strategy, low trust will almost always derail an otherwise good strategy. There is plenty of research about the failure path for mergers and acquisitions. The missing piece is the integration of a trust methodology. How do you deliver on an effective and efficient change effort without trust? And at what cost? Leaders can t just talk about it. They must have a simple, scalable pattern and methodology that deliberately creates trust throughout an enterprise It must be seen as an INTEGRATED, STRATEGIC COMPONENT of the Merger and Acquisition Process. That s what we do. Without this, we can easily predict soaring, unintended costs and the work itself will slow to a crawl.

2 In addition to working with organizations on the front end of a merger or acquisition, we frequently work with many organizations that merged several years ago, but are still struggling with a dysfunctional, low trust culture or an US vs. THEM mentality. Ultimately, the desired outcome of a merger or acquisition is to achieve expected financial results, like increased growth, profitability, greater market share, just to name a few. Everyone understands the driver of these results are: a customer focused, highly engaged workforce, efficient execution of the right priorities, strong leadership, a culture of accountability for results, collaboration, not just cooperation; cultural unity; high commitment among key players and a group of committed people willing to give discretionary effort. We are sure about this fact, and most would agree: creating the right deal on paper is not enough. With such good intentions, the real question is why the failure rate of mergers and acquisitions is so high? What is the common bottleneck? The predictable death of a merger or acquisition boils down to speed and cost. Where there is tension, resistance, or outright conflict between teams, departments, or any other key stakeholder group, the speed at which the work gets done gets bogged down, and it s always at a high cost. We call this a trust tax a tangible cost to the organization. Here is where change activities are met with resistance and where the bottleneck begins: People react by behaving in ways that will undermine the new change and we call these Counterfeit Behaviors, the very thing that decreases speed and increases costs! Examples of counterfeit behaviors include: Suspicion of leader's motives Manipulation of information Focus on activities, not results Disguise or hide information Low accountability Blind loyalty Not listening to those closest to the work "Undiscussables" increase Double-talk Narrow decision making As Peter Drucker so succinctly points out: Culture eats strategy for breakfast.

3 How do you deliver on an effective and efficient merger or acquisition in this context, and without trust? Bottom line is, you can t. Consider some of the costs: Delay in achieving expected financial results Loosing your best people Fear about keeping jobs Large percentages of people quit but stay Politicizing the process of change Turf wars Employee disengagement Dividing into separate camps Withholding commitment Lethargic and bogged down execution People no longer focusing on real work and the customer, but rather, focusing internally on how this change is impacting me. There is a powerful economic case for trust with mergers and acquisitions!

4 The solution: Install The Speed of Trust Methodology Establish a new operating system of trust whereby all who are involved in the merger or acquisition learn and understand a new behavioral standard: new, high trust behavioral operating norms that they can hold each other accountable too. Creating a new set of values is not enough how leaders and teams behavioralize and practically live those values in the context of everyday work, is a vital connection to the success of a merger or acquisition. Our methodology weaves the language and behaviors of trust into the fabric of the merger or acquisition process, accelerating and leveraging the merger process. Our methodology in this area is groundbreaking. It fundamentally changes the trajectory of the change up front and has also proven to reverse years of dysfunction from a past merger even years earlier. Measure. Prepare. Learn new skills. Practice new language and behavior. After the work session: Apply, reinforce and integrate new language and behavior in the context of your real job, over time. Create a cultural cadence of accountability around new behavioral norms. Measure the business impact. Improve. Course correct. Renew learning and application. Increase trust: your merger works. Client Examples 1. Public company, 3 years following the acquisition of nine different organizations "We had nine different cultures, nine different sets of procedures and processes, and systems. I inherited, a Low trust organization; low trust with respect to customers, low trust with respect to shareholders, analysts, and low trust with respect to regulators in a highly regulated industry. And so the focus at that time became one of short term performance, quarter to quarter, year to year, and people just jockeying for position there was a great deal of turnover. There

5 were still lots of potential, lots of great assets, lots of really good people. But the threat of our best people leaving a lot of internal low trust. and so I described to them a company that people trust, to be individuals that others trust or that can be trusted by others in the company. So to build a company that regulators, and customers and that others trust resonated with most people. There was some who thought it was fluffy, and were a little, I d say, at best lukewarm about yet another attempt to try to change the culture. Now I talk about what is making us different and that is The Speed of Trust, and that they can count on every relationship they have with our company being one of high trust. And our people are behaving that way and that is what has changed and this has been the magic of how this has worked. Because people have been challenged and taught to focus on the components of high trust behavior and they ve built that into the way they talk with customers and to each other. About six months after we really got The Speed of Trust rolling, I began to get wonderful feedback from customers telling me that they were having fundamentally different experiences with our company than they had ever had before. I ve had wives of employees approach me at picnics and other gatherings, and thank me for having speed of trust be a part of our culture, because they said, it made their husbands different people at home. People are having such a different experience in our company relating to customers, vendors, suppliers, regulators and others, and with each other, The Speed of Trust has erased the differences in the old cultures and we adopted a whole new culture that is customer focused. And the whole new customer focused culture is The Speed of Trust." CEO, Public Company 2. Lenovo acquired IBM s personal computing division for 1.25 billion, transforming the China-based firm into the world s #3 PC maker (China s #1) Lenovo COO, Rory Reed recalls helping to integrate the two firms: "I used to work at IBM. But after moving to Lenovo I helped integrate my former employer's PC business into ours. It was a big challenge integrating a $10 billion business with Lenovo. It's the biggest challenge you could have. It took about three to four years to do it."

6 'The toughest part was melding the two cultures--the East and the West. People were concerned the two were too different. But once people had time to learn and understand each other, we discovered that we were a lot more alike than we were different. We shared a lot of the same desires, interests, as well as the same goals. Focusing on those similarities truly helped all of us come together and grow together." "The key turning point for us, though, was a 'Speed of Trust session' setup by our head of Human Resources and the Covey Group. It was a two-day session for the senior leadership about the speed of trust. We spent the time trying to truly understand each other's motivations and intentions. What we walked away with from that event was an understanding of just how much we were alike and how much we had the same goals. That was really a coming together and a real turning point in our team." Lenovo CEO, Yang Yuanqing When Lenovo acquired IBM PC, we quickly realized that our biggest challenges would not be in technology, supply chain or even organizational structure. Our biggest challenge was in building trust among our teams, with our customers and partners, and with key influencers around the world. Global businesses must view trust as a top strategic priority. A company can have an innovative spirit, great products, a strong strategy and an efficient business model. But only by creating, embracing and leveraging the concept of trust can a company truly thrive on the global landscape. Smart Trust delivers ideas that are thought provoking, tools that work, and a perspective that I think is essential for survival and success on the global stage."