Leading Integration
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Leading the Integration of an Acquisition

Leading the Integration of an Acquisition

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Leading Integration Presentation Transcript

  • 1. Leading Integration
    Karl Johnson
    (612) 214-4296
    karlj@umn.edu
    June 17, 2008
  • 2. 3 Needs of a Leader at the Defining Moment
    Leading Integration
  • 3. TYPICAL
    EMPHASIS
    SUCCESSFUL EMPHASIS
    THREE
    PHASES
    PRE-COMBINATION
    FINANCIAL
    STRATEGIC
    COMBINATION
    POLITICAL
    PLANNING
    DAMAGE CONTROL
    FLEXIBILITY
    POST-COMBINATION
    Successful Emphasis
  • 4. 3 Needs of a Leader at the Defining Moment
    Transition Team
  • 5. Transition Team
    The Transition Team Consists of:
    Formalized and centralized integration management through a designated leadership team
    Cross-functional teams organized for each acquisition as needed to plan, manage, and monitor integration activity
  • 6. Transition Team
    Define Composition of the Transition Team:
    Authority, ability to allocate resources in real-time as needed
    Engagement, cross-systems involvement
    Perspective, knowledge of “what’s working” from different domains
  • 7. Transition Team
    Designate a Transition Leader:
    Identify an individual who owns the transition effort, preferably a temporary but full-timeassignment
    High-potential leader
    Inclusive, flexible, approachable
  • 8. Transition Team
    First Step of the Transition Team:
    Craft a compelling vision for the integration supported by defined Critical Success Factors (CSFs)
    “Our vision for the new, integrated system is as follows….we’ll know we’ve succeeded when these CSFs…have been accomplished within this timeframe…”
  • 9. Transition Team
    Second Step of the Transition Team:
    Based on defined CSFs, determine the composition of cross-functional teams organized to address the CSFs
    High-potential leaders
    Max-mix from across multiple systems/functions
    Temporary and part-time assignment
  • 10. 3 Needs of a Leader at the Defining Moment
    Pre-Combination
  • 11. Pre-Combination
    TYPICAL
    EMPHASIS
    SUCCESSFUL EMPHASIS
    THREE
    PHASES
    PRE-COMBINATION
    FINANCIAL
    • Target Worth
    • 12. Price Premium to Pay
    • 13. Tax Implications
    • 14. Structure Transaction
    • 15. Combined Balance Sheet
    • 16. Project Cash Flows
    • 17. Return on Investment
    STRATEGIC
    • Clear Definition of Specific Synergies Sought
    • 18. Testing Assumptions Prior to Negotiations
    • 19. Technical and Operational Experts “Scouting” and Gauging “Fit”
    • 20. Financial Analysis
  • Pre-Combination
    Facilitated Senior Leadership Meetings
    Focus on identifying potential problems in the pre-combination phase that typically relate to strategy, core business, due diligence, estimated returns and costs
    Lead to a set of decisions regarding intentions, rationale, and criteria for integration 
    Clarify strategy of the lead company or both parties as appropriate
    Detail the business case supporting the deal
    Communicate critical success factors (CSFs) including their importance and appropriate usage
  • 21. Pre-Combination
    Senior Leaders Must Craft a Compelling Vision
    “In failed transformations, you often find plenty of plans, directives, and programs but no vision.”
    - John P. Kotter PhD, “Leading Change: Why Transformation Efforts Fail,” Harvard Business Review, 1995 and Best of HBR, 2007
  • 22. 3 Needs of a Leader at the Defining Moment
    Combination
  • 23. Combination
    TYPICAL
    EMPHASIS
    SUCCESSFUL EMPHASIS
    SECOND
    PHASE
    COMBINATION
    POLITICAL
    • Buyer Decides How to Put Two Organization Together
    • 24. Gaming
    • 25. Personal Empire Building
    • 26. Hiding Information
    • 27. Culture Clash
    PLANNING
    • Planning Emphasis
    • 28. Clarified Critical Success Factors
    • 29. Combination Options Discussed and Debated
    • 30. Process Managed
  • Combination
    Facilitated Transition Team Meetings
    Focus on identifying the desired value-add and critical success factors (CSFs) of the combination, discussing and debating combination options, and acknowledging culture clash and other affects of the combination on morale and performance
    Lead to implementation decisions
    Result in design of an appropriate transition structure  
  • 31. Combination
    Transition Team Work 
    Cements transition structure and cross-functional teams’ “rules of engagement”
    Spreads transition structure, communication, and management throughout the organization creating vertical and horizontal organizational alignment
    Provides a foundation for building organizational “change readiness” as needed to ease clash of cultures and promote cross-organization relations
  • 32. Post-Combination
  • 33. Post-Combination
    TYPICAL
    EMPHASIS
    SUCCESSFUL EMPHASIS
    THIRD
    PHASE
    DAMAGE CONTROL
    • Rush Implementation
    • 34. Stem Flow of Departing Talent
    • 35. Mediate Culture Clash
    • 36. Bolster Employee Morale
    • 37. Handhold Unhappy Customers
    FLEXIBILITY
    • Mid-course Corrections
    • 38. Strategy Understood
    • 39. Above-board Planning Process
    POST-COMBINATION
  • 40. Post-Combination
    Transition Team Meetings 
    Focus on the extent to which business goals of the combination are being achieved and on enhancing oversight via cross-functional relations
    Lead to meshing of policies and practices while building a culture by design
    Result in a tracking matrix to identify and measure the impact of the combination on productivity and organizational effectiveness
  • 41. Senior Leadership
    Regroups teams as needed to align policies and practices
    Reinforces the desired culture
    Captures lessons from this combination to better manage future ones
    Post-Combination