Leading Integration


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Leading the Integration of an Acquisition

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Leading Integration

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