Trust+Transparency+Traction→ Transform

trust, transparency, tractionI have sat through many Post Implementation Reviews (PIR’s) of transformation initiatives whether they be technology led, business model changes or Post-Merger Integrations and one of the most identified areas for improvement was communication. Have you ever wondered why this was the case? Over the years a lot of energy and capacity has gone into change management including internal change management protocols, communication support etc but the dial has hardly moved on the communication issue. It can’t be lack of channels, insufficient information or access. Are they listening? And if so why are they not hearing?

A number of years ago I hypothesised that this had 2 main elements, the first was the extent to which there was sufficient trust in the work environment and the second was the speed of learning. (See my blog on transform @ the speed of learning).  This is how I came to the model of Trust+Transparency+Traction→ Transform

Under conditions of uncertainty and stress that inevitably accompany a business transformation the establishment of trust is an important first step. Unfortunately most executive committees and transformation managers assume this already exists, underestimate its importance or worse ignore it.

Trust is a relatively well understood concept. You know when you have it but how do you get it? The approach taken with one person may increase the trust between us while the same action may have the opposite effect with another person. This becomes even more complicated when dealing will large groups of people.

“The Speed of Trust” by Stephen M.R. Covey provides a very effective model to develop corporate trust. Covey postulates that Trust is made up of the 4 cores of credibility (Integrity, Intent, Competence and Results). From my experience with large organisations one will be a key “core” that helps define the success of the other elements of the cores of credibility.

For example a major insurance business I worked with had a key core element of “Integrity”. If we had not demonstrated the “Integrity” credentials but led with “competence” messages it would have been interpreted as being smug. If we had led with “results” credentials those results may have been interpreted as manipulated or misleading. However once integrity was established then the interpretation of evidence that supported competence and results would be reinforcing the trust not detracting from it.

In contrast another client’s key core of credibility was “Results”. Had we led with “Integrity” it may have been interpreted as being weak or vulnerable and leading with “Competence” messages would have been followed by “I’ll determine how competent you are. Show me the results?!”

It is therefore critical to correctly identify an organisation’s key core of credibility and tailor the assignment and communication to demonstrating that attribute first. Without this you are seriously misfiring on your initiative.

Having identified the correct key core of credibility it is necessary to demonstrate that core through word and action.To do that effectively will require you to operate in an open and transparent manner. How else can others assess you and the assignment’s bone fides?  To do otherwise would undermine the attempt to establish trust.

There are situations where it is difficult to operate with complete transparency at all times e.g. when in early discussions of a possible merger. However, management will be judged by the reasonableness of their actions once it is in the open. Reasonableness will be defined by the level of trust that exists. It is therefore advisable to have a high level of trust in place before it is necessary to operate behind closed doors.

Let your “action to get traction” reflect the key core of credibility! In a takeover context, we were managing the reduction in management headcount across the combined organisation. That organisation’s key core of credibility was Integrity. To demonstrate our commitment to integrity we appointed the outgoing CEO as one of the candidate reviewers for the new management appointments. He was highly respected and was able to speak for managers of the acquired organisation. This was one of many actions taken to reflect the integrity of the system and building trust in the PMI process.

In summary during times of uncertainty communication effectiveness is determined by the level of trust. If the trust does not exist it is necessary to build that trust before people will listen to the other messages. The 4 cores of credibility is a very useful model to define the communication of trust which must be backed up by an environment of transparency and actions that reflect and evidence the key core of credibility.

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Trust+Transparency+Traction→ Transform

Protect Sales momentum in Post-Merger Integration!

Picture3Mergers and takeovers can be very disruptive experiences for all parties involved. There is typically an emphasis on generating the integration synergies and working as quickly as possible to return to “normal” operating conditions. This often means a reduction in headcount, brand and product changes and considerable process change which can disrupt customer relationships and disenfranchise employees.

Particular attention needs to be paid to the sales force during such times of uncertainty. A high performing sales force is driven by conditions of high confidence. That confidence is fragile and if damaged the sales force is vulnerable to taking on an introverted persona. This can manifest itself as:

  • dismissive statements that things are operating as normal or it is under control.
  • the sales numbers this month are just a blip.
  • the sales force feeling helpless until certainty in all things has been returned.
  • the competition have a compelling story about the uncertainty and the pain customers will experience and why those customers should switch providers now to avoid the pain.

This is the opportunity your competitors have been waiting for. Unfortunately most PMI plans fail to recognise this and fail to deal with it effectively leaving the organisation unnecessarily exposed.

Don’t be drawn into such a disempowering state! Be aware in advance that this could occur and act early to avoid it becoming a major problem. An effective sales force have the skills necessary to repel competitors if that high confidence condition can be returned. It is therefore a business imperative to achieve this goal.

The following is an effective approach to redressing the problem.

  1. Reframe the problem in a way it can be solved using the skillset of the sales force. Recognise this as a new form of customer objection that can be tactfully handled rather than some other more complex problem. Acknowledge this is a mission critical challenge.
  2. Facilitate a learning process to discover, resolve and re-energise the sales force. Involve customers, the sales force, marketing and management in the process to achieve full alignment. Urgency here is your friend.
  3. Build momentum through a structured implementation plan using the sales tools of collateral, sales meetings, roleplay, joint sales calls etc.
  4. Monitor actions and feedback closely and course correct appropriately while maintaining a learning posture and a transparent environment.

The approach looks deceptively simple. At the process level it is relatively straight forward if the organisation recognises the need early and commits appropriately skilled resources to address the challenge. The more difficult elements are: managing the mindset of the individuals to believe that they can make a difference, recognise and accept that a small personal risk will deliver a greater personal reward (not necessarily monetary) and creating and maintaining a true learning posture throughout the work.

Protect Sales momentum in Post-Merger Integration!

The smouldering issues in a PMI

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The due diligence phase of a business acquisition is designed to ensure that the acquiring party understands and agrees to what they are buying.

No matter how hard the due diligence team tries there will be things that are missed or underestimated. In the contract for sale, the seller often provides some warranties in order to close the deal. There is no deception here but rather the seller is demonstrating confidence in what they are selling.

Large organisations are complex and the people working on both sides of the deal have limited knowledge, limited access to the full resources of both organisations and limited time.  From experience the parties act in good faith with an adequate process under the circumstances but it is unlikely to be the complete solution.

It begs the question as to why some of these issues are not uncovered during the due diligence process? A number of things could be at play such as:

  • The individuals responsible for the due diligence, don’t know the issue exists.
  • The acquired organisation operate at a different performance standard to the buyer. As far as the seller is concerned it is business as usual and they are compliant with their own standard.
  • The issue is controlled by a particular process that is not formally recognised or documented and may  be broken during the integration process.
  • Down the chain there may be fear, ignorance or avoidance of the issue.
  • Those with the knowledge are unaware that the issue may be of interest to the Due Diligence team.
  • The acquiring organisation and its representatives don’t appreciate the consequences of the information provided during  due diligence.
  • A truncated sale process forces the acquiring party to prioritise due diligence activity not realising there is a smouldering issue in the de-prioritised area.
  • Due diligence fatigue and reaching a point of “just get the deal done”

For whatever reason, the bed has been made and the deal done. It is now up to the Integration Manager to make it work. An experienced integration manager would insist as part of the integration design phase that effort be made to uncover those smouldering issues. For all the reasons above the issues are still invisible and require special attention to make them visible.

Firstly it is critical to create an environment of trust where it is  safe to provide information without inappropriate ramifications. This is difficult enough to achieve under normal circumstances but it is doubly hard under M&A conditions. The best integration managers see this as a real opportunity to build and demonstrate trust and forge the desired business relationship with the acquired organisation. The leadership here may define the success or otherwise of the integration. Do you establish amnesty conditions or reinforce accountability? Wherever the response falls on the continuum, success is achieved if the outcome is fair and is seen to be fair under the circumstances.

The next thing is, to appropriately define the scope and materiality threshold. The goal here is to achieve a clear, common and agreed understanding of what is being sought. The more clearly and unambiguously the requirement is defined the better the quality of the outcome. Don’t fall into the trap of expecting people to know what you are looking for or leave the brief too vague in the hope that something turns up. From experience neither approach yields a good result. But, by far the worst situation is assuming that all has been identified during due diligence and ploughing on regardless of what is smouldering under the surface.

Finally, wrap a process around the objective, ideally managed as part of the integration design phase; since all the infrastructure to achieve the right outcome should already be in place. Having this information gathered early in the integration puts the acquiring organisation in the best possible position to call upon any seller’s contract warranties.

In summary, giving this issue early and sufficient attention as part of the Post-Merger Integration will help avoid some much bigger surprise later in the process. It is an early opportunity to build trust with the acquired organisation, able to deal with the issue before it gets worse  and offer the best hope of calling upon any seller warranties that may exist.

 

The smouldering issues in a PMI

The Missed Phase of Post-Merger Integration

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Despite well documented processes to execute a Post-Merger Integration (PMI), there is still serial under-performance against expectations of this transformation strategy. Some estimates are as high as 70% of mergers and acquisitions fail to meet their original business case. Various studies suggest that the strategic logic, financial assumptions, cultural fit, implementation execution etc. all play a role in that under-performance.

However, even if all these things are done well, there is still a critical phase not addressed in many  PMIs.

You need to have experienced a PMI first hand to understand how challenging an environment it really is:

  • The intense pressure to achieve the estimated synergy targets embedded in the deal whether they are reasonable or not.
  • The fast paced nature of analysis and decision making inherently means many suboptimal decisions are made.
  • The necessary breaking of many well-established operational processes and relationships and the establishment of new ones.
  • The dealing with cultural challenges of fierce competitors now expected to collaborate effectively.
  • The need to remove uncertainty quickly to reduce the anxiety within the combined organisation and move to a more normal operational footing.

By necessity it is an imperfect process and numerous things are left to be done. Unfortunately, many organisations declare victory once the financial synergies are achieved, move to a “Business as Usual (BaU)” footing and fail to reach optimum performance. However, BaU conditions are rarely conducive to completing the remaining activity.

It is important to recognise and agree there is unfinished business, agree the priorities of what to achieve next and how to achieve it, an ongoing sense of urgency, an effective process to execute and most importantly broad empowerment to act. This should be identified as the business optimisation or business improvement phase of the integration.

The tragedy is that by the time the Executive Committee recognise there is a problem the PMI infrastructure has been dismantled and implementation momentum is lost.

To improve your PMI performance consider the following:

  1. Define PMI success internally as “reaching optimal operating conditions.” It is important to go beyond the achievement of synergy targets.
  2. Design into the PMI process an optimisation/ operational improvement phase so the whole organisation understands this to be the end goal and will work towards it. Allow the design and execution of the early phases to be refined with this objective in mind.
  3. Celebrate success at each phase of the PMI to mark the milestone, allow closure and refresh for the next phase. This is important to manage change fatigue.
The Missed Phase of Post-Merger Integration