Organisational Inertia and M&A

Organisational Inertia and M&A

A recent article in the FT on Organisational Inertia highlights one of the greatest challenges of businesses trying to effect transformational change: the ability to lead through influence rather than authority. The article uses the struggle between Dominic Cummings and the UK Civil Service as its example, we have chosen M&A, as for many the changes to the businesses will be the catalyst to create the value required to achieve the return on investment.

For those who are directly responsible for change or its output, the consequences are not purely financial they are reputational also.

In the case of post-acquisition integration, it is the acquired business that either has to change, or at least align, to realise deal synergies. It is here where the pain of change is most keenly felt by those who do not directly benefit from the change. It’s the ‘what about me’ moment.

An acquiring company leadership will assume authority exists but will not want to get drawn into the weeds of the change. The integration lead who is in the weeds will not feel the comfort of authority. The integration lead will be alone and probably facing organised resistance to change. The ability to influence without authority is, as they say in the US ‘where the rubber meets the road’ in M&A.

How then do you act effectively? Gravitas, charm or fear are all tactics that do not last much beyond the first week – yes you should be personable, yes you should always be true to yourself, but charm alone is baseless, and you run the risk of looking less than credible. Fear or straight up bullying may be a choice for some, but does this really work in a modern business? Does it really bring people with you? I think not. My thesis is thus: transformational change can only succeed through effective use of influence; merely combining great planning plus authority is insufficient.

An added complication is that companies have lots of experience, tools and advice available to help with planning and governance of such initiatives. Unfortunately, great plans plus clear authority, while necessary, are insufficient to drive success. Indeed, an excessive focus on detailed planning and governance rules/authorities can actually lead to the collapse of a PMI transformation. ‘You cannot demand that a person or company change, and a more detailed demand is no more likely to succeed than a less detailed one.’

Leading change without authority requires a proven process that is defensible and supported by leadership with an underlying mantra that preplanning and preparation prevent **** poor performance. The clue in this statement is ‘pre’.
Design and plan your integration pre-deal. Yes, make sure it’s SMART but also make sure it is aligned to the deal rationale and make the process planning inclusive. Use professionals, use workshops and other tools to drive alignment and commitment and ensure a clearly defined communications plan is also created, agreed and executed to ensure constituency and clarity.

Having experienced professionals applying the most up-to-date methods, tools and templates will help ensure that this complex task does not end up being co-ordinated from the side of someone’s desk on evenings and weekends. In all of this detail, what should your leaders do? Where do they fit in? You can outsource the task but not the leadership, the organisation still has to ‘own’ the task.

Simply put, a leader’s role remains the same as ever: set a clear vision and direction; create the right environment and culture to allow change to happen; encourage inclusivity and collaboration; publicly support the change from the front and get in the fight. Fence sitting is not a luxury that can be afforded during change. An example is in project governance; leaders should encourage and structure a ‘fast and frugal’ set of indicators and decision criteria to guide their exercise of influence and enable correct thinking under pressure.

At BTD we make use of some of the concepts discussed by William Bridges (Managing Transitions, 2003): his four Ps (Purpose, Picture, Plan, Part) and translate them into four key questions that help bridge the gap between acquisition and integration:

• What are your measurable objectives and benefits of this deal?
• How and when will your business need to change to support these?
• What is your plan to get there, and who will be accountable for delivering it?
• Is your business and its leadership ready?

If you can answer these questions, develop your integration plan in collaboration with a broad set of stakeholders, and have leaders who will properly fulfill their role, then your integration manager and team will be able to sustainably lead change.

To quote the leader of our US business, Nick Palmer, “Judgement and leadership cannot be systematized, they can only be supported.”