From the Blogosphere
Five Keys to an Awesome M&A
M&As are one of the most powerful opportunities for a Phoenix to rise
Jul. 4, 2009 12:00 AM
In the interest of balance, today I'm waxing on about the awesome opportunities presented by M&As - and some of the lessons I've learned along the way to help things go a bit more smoothly.
M&As are one of the most powerful opportunities for a Phoenix to rise; stronger, brighter, ready to soar into a leadership. After all, you're bringing two companies together who presumably have complementary skill-sets, products, market knowledge and customer bases. What could be MORE exciting? Instead of investing time and dollars to build these assets - we have the opportunity to blend the best of the best and keep running!
But sometimes it's easy to forget that opportunity once the deal is complete. When the deal is signed and we roll up our sleeves as the true blending begins, it's easy to be overwhelmed by the day-to-day reality of these two completely unique business entities. To keep the power of the vision and opportunity alive - there are some key things I recommend to clients:
Define the strategy and vision upfront and for all to see. Sometimes execs introduce the coming event with high level glimpses of the strategy - not wanting to set the wrong expectations before the details are all ironed out. This leaves the door open for personal opinions and perspectives to take the lead - and assumptions to be made. It's human nature to apply our own predispositions to our analysis - and that's when ego and turf can take priority over following the agreed to vision. As early as you can, state the vision and the steps to get there clearly and concisely, and keep refining with all those involved on a regular and frequent basis. Just as feature creep can negatively impact product value, so can 'turf battles' dilute the power of your vision. Don't let your teams be distracted from the end goal as you move from the high level to the details.
Stay positive and passionate about the vision. But we are - we're excited! Of course you are - you see the value and opportunity. Yet somewhere in your organization are folks who don't share that perspective. We all know that. But we need to do something about it. The snide remarks at the water cooler or the condescending attitude in departmental meetings do more to undermine the success of an M&A than any other single action. These opinions need to be heard and settled once and for all - and then folks either need to get into the boat or go take another train. Dissension in the ranks is wasteful and detrimental to success. Nip it in the bud -visibly - and move on - swiftly.
Be thorough with your best-of-the-best planning. We technologists tend to get all excited about the products and solutions and innovation that we can bring together. But the best-of-the best goes far beyond the offerings we can deliver. Some other factors to consider include:
- Technology. Just a quick word here. If you haven't read my blogs ‘But It's Our Biggest Seller' and ‘What Exactly is Game Changing', you might want to check them out. The biggest seller today may not be the best-of-the-best for going forward. Make sure you look at ALL the technologies in play and map them to the plan for future markets and customers. Put resources on your best future opportunities, and not just on those 'best selling' legacy products that may not power the future you want or need.
- Customers. Customers are one of the biggest assets an M&A offers. Combining two diverse customer bases can positively impact your market presence. Take the time to thoroughly understand the customer opportunities - past, present and future. Too often we look at the biggest customers as the best going forward opportunity - when in fact other customers may hold the keys to that new market or emerging opportunity we‘ve been seeking. Make sure your executives charged with the blending have a clear vision of the future - and don't make short-term decisions that can blow your longer term opportunities.
Be sure and communicate with the customers - in more than an email and news announcements. I see so many companies send a press release and customer email and move on. They expect customers to be happy about the change - while they leave the cleanup to sales and customer support reps. Executives and leaders need to be involved with customer transitions - be present, be obvious and communicate, communicate, communicate.
Finally, be sure to thoroughly evaluate the teams who support those customers. Those teams may be the reason those customers are around...and will stay around. Personal contacts are often more important than product offerings when it comes to customer loyalty. Never forget that when blending a customer-facing team. For example:
- Sales and pre-sales relationships are complex and often quite personal. Before you start substituting players, make sure you understand the dynamics. Buying decisions are often made based on these relationships -when you change the rep you may lose the business.
- Service and support relationships can be even more valuable. These are the folks the customers trust to come to the rescue - and many times they are the keeper of the customer truth. Listen and learn that truth, take their inputs seriously and respect their expertise.
- Marketing relationships with customers can give you huge insights - when you pay attention. Too often we look at the folks who lead the User Groups or industry/special interest groups and see organizational overhead and duplication - when they may have critical customer information that can add value to our overall assessment and going forward planning.
- Expertise. Experts come in many forms, and all are valuable beyond measure. Too often we look at the technologists, the leaders, the innovators - and ignore some of the most valuable expertise we acquire. From the executive administrative assistant who knows the personal side of every customer CEOs (including their favorite lunches, their birthdays, their wives' and kids' names), to the telephone support rep who is on a first name basis with every customer in your key target market, to the product marketing manager who knows more about your next solution space than your whole company combined - pay attention to the expertise. Listen and learn.
- Don't overlook processes. One of my client's product definition process was the most streamlined I'd ever seen. Their merger partner recognized that fact - and instilled that same process into the new organization. It wasn't easy - the merging teams didn't respond well to change. But within six months everyone involved agreed it was the right thing to do and a big win for the business.
- Market perception. Sometimes the acquiring company is a leader and has the best overall brand and image. But often that's not the case. Especially in this market. Sometimes the acquiring companies are the young 'upstarts' acquiring critical expertise and market presence. Market perception takes time to develop with customers and the market at large. Think twice before you throw it away because of who acquired whom. Look carefully at how the market holds each of the entities. Play your cards so that you leverage the best options possible - which may mean anything from assuming the name of the acquired company to maintaining their expert position as a subsidiary to adopting everything about them. Perception rules - and besides, we all know it's easier and lower cost to leverage what's in place than to invest time and money to evolve people's beliefs.
Dig Deep. One of the biggest challenges with reinvention strategy is that we don't often dig deep enough to find the jewels hidden among the clutter. We get lost in the noise - the buzz about the biggest and brightest and best. The ‘knowns' come front and center and the ‘yet to be founds' often end up in the bottom of a pile - never to see the light of day.
The challenge is that in more companies than you'd expect - the true value, the crown jewels that will take you to the next level of success - may not be that obvious. At least not to the folks who live with them day in and day out.
- That technology sitting on the shelf - that was developed ten years ahead of its time - may be the key to reinvention and future growth.
- That relatively small market that's been a side business for a year now may be the next big opportunity -if it can get attention and resources from the crowd swarming to the status quo.
- Those five guys in the corner lab doing things no one really understands may be onto the next big innovation - and a perspective that will change a paradigm for good. Too bad they haven't shared their vision beyond technology. No one ‘gets' the opportunity so they may go the way of the woolly mammoth - when in fact they are creating the next game changer.
Take time to get away from the day-to-day perspectives and knowns. Dig deep within the organization, look at things from a fresh perspective, without the contamination of the plan. Sometimes its valuable to bring in objective outsiders to take a look with you - they don't have the beliefs (or maybe baggage) that employees and executives can collect along the way. That's one of the values a strategic consultant brings to the table - assuming they have the fundamental market and technical understanding to get up to speed quickly on your opportunity, your markets, your vision.
Instill teamwork immediately. Let all employees know that you expect them to work together toward your vision - and leave their egos at the door. I know - that's a hard thing to ask people to do. But business is business and there's no room for turf battles in an M&A. Business suffers as soon as they start.
Above all, executives must set the tone of an M&A event. That tone needs to go beyond the initial company meetings and announcements. It has to permeate each and every interaction from exec round tables to coffee in the kitchen. Leadership is often the difference between a successful or failed M&A.
Great Phoenix' rise from M&As. Open your eyes, check your past perceptions at the door and Throw Everything in the Fire. With the right blend of assets and attitude, you'll soar into opportunity.