M&A 2.0: Addressing "social aspects" of mergers and acquisitions

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This point of view discusses the social challenges of M&A and provides recommendations to creatively address these challenges by leveraging emerging Social Media concepts and tools during post-merger integration.

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M&A 2.0: Addressing "social aspects" of mergers and acquisitions

  1. 1. Point of ViewM&A 2.0Leveraging emerging technologies to address“social aspects” of mergers & acquisitionsAvinash JhangianiInnovator. Digital Strategist. Business Technologist.http://about.me/avi2012
  2. 2. PrefaceMergers and acquisitions have become a familiar part of today’s businesslandscape. The ability to rapidly yet effectively integrate is imperative togaining the strategic competitive advantage that companies sought forbefore closing the deal. However the integration of two companies notonly means amalgamation of their business processes and systems, italso means combining of two organization structures, cultures, andworking relationships. In order to create one company whose value isgreater than the sum of its parts, effective collaboration andcommunications are essential. These human capital or social aspects ofmergers and acquisitions are overlooked many-a-times, causingintegration delays and/or merger failures.This point of view discusses the social challenges of M&A and providesrecommendations to creatively address these challenges by leveragingemerging Social Media concepts and tools during post-mergerintegration.
  3. 3. The adverse impact caused by the social aspects of M&A quickly compound overtime if they are not addressed before core integration activities begin People • Loss of critical employees and social connections • Culture clash • Loss of productivity • Fear-uncertainty-doubt (FUD) Key social challenges in M&A integration Collaboration Communications • Poor interaction between • Inconsistent tone and employees of the merging content of key messages to organizations employees and customers • Top-down approach to • Lack of appropriate integration, esp. in areas feedback mechanisms to decision making and address concerns and risks sharing of best practices -3-
  4. 4. CIOs can leverage emerging Social Media technologies to address these issues,thereby effectively managing and accelerating integrationIssues Business M&A People Collaboration Communications Benefits  Identify, maintain, and  Manage interactions  Create an employee  Improve visibility over leverage existing working between LOBs, feedback loop to attainHow Social Media canaddress these issues integration activities relationships in the workstreams, partners, real-time, ground-level combined organization vendors, and other feedback about the  Enable effective  Define skills sets and ecosystem entities perceptions of the deal knowledge transfer locate SMEs to fit the job  Define target operating  Manage customer and  Analyze knowledge model community concerns and  Increase employee exchanges and  Decentralize decision misperceptions productivity information flows between making addressed proactively and organizational cross-functional teams  Capture best practices  Bridge the gap between efficiencies and facilitate learning leadership and staff  Enhance combined  Online Profiles  Collaboration platforms  CEO Blogs, Moderated NewCo brand equityEnabling Tools  Social Networks  Wikis consumer-facing blogs  Web-based communities   Podcasts  Promote workforce Social Tagging  Ratings  RSS stability and address external stakeholder concerns  Organization: rigidity of the organizational structure (hierarchical vs. flat collaboration Constraints model), existing knowledge management tools, operational alignment, cultural alignment  Retain key talent to (reclusive vs. eager to engage), and level of governance maintain business  Workforce: diversity, age, and geographical distribution continuity  Business: employee turnover, importance of knowledge retention, level of transparency with customers, level of regulation  Organizational alignment towards “Connections can help “Leverage wisdom “Be consistent, integration objectives combine cultures” of the crowds” accurate and timely” -4-
  5. 5. Companies that have used Social Media for merger and acquisitions have benefited insome very compelling ways • Collaborative decision making: Defining Target Operating Model and sharing decision documents in the Integration planning phase using employee-facing collaboration platform • External communications: Blogging to connect with customers and address questions and concerns about the merger at http://blog.wellsfargo.com/wachovia/ • Integration efficiencies: Drastically increasing its already-increasing efficiency in merger integration efforts by collaborating using Social Media tools like Wikis • Reduction in transaction costs: Closing acquisitions far more quickly is proof of an enterprise- scale reduction of transaction costs, thereby enabling Cisco to undertake more transactions and be more responsive and adaptive • Tracking integration interactions: Used social network analysis to map and measure the melding of information flows, work relationships, and knowledge exchanges to track where integration was happening and where it was not occurring. -5-
  6. 6. Following a structured approach similar to those used for other enterpriseapplications is the key to successful Social Media implementations Assess Plan Execute Manage and Grow Assess the current Develop a plan for Launch the Social Manage the Social environment and the using Social Media Media project and Media initiative and characteristics of to deliver value execute the plan develop a growth Social Media strategy Determine overall  Define scope, scale, and  Implement the  Analyze success of the business strategy goals of the project project plan initiative: understand Understand Social Media  Develop a detailed  Focus on the goals and where things went well and specific pain points that business case measures defined in the and also where not so it will address  Use business case to business case well and why Assess strategic alignment identify and manage  Take incremental stops  Understand where value risks, set goals and was truly created and with goals of Social Media define metrics and measure actual metrics against how to leverage it Analyze technical  Develop a project plan to environment assumptions in  Identify a growth strategy focus on the metrics and business case based on experience and Assess alignment and mitigate the risks from the business case  Make modifications maximum value creation readiness of organizational structure and human  Incorporate best practices where necessary based capital initiative for launching a successful on actual results Social Media initiative Social Media is more about people and less about technology. Developing a business case to assess its fit and value is essential. -6-
  7. 7. Developing a detailed business case is a key component of successfully leveragingSocial MediaTwo fundamental questions need to be addressed… What value is created by 1 this investment and how is it measured? What are the major project 2 decisions and how do they affect costs? -7-
  8. 8. It is important to define the quantitative and qualitative benefits along with costdrivers for a comprehensive business case for Social Media Determine area’s of the organization affected by the Social Social Media initiative Business Case Media Results: Strategy: Define Quantitative Benefits: Define Qualitative Benefits:  Identify components and  Clarify operational  Goals Quantitative Analysis: measures of the benefits improvements  Scope and  Determine variances and  Understand how to gauge  NPV Scale dependencies among improvements and  IRR  Support components determine indirect measures  Graphical Scenario Analysis Understand project steps that will affect the quantitative benefits and the operational improvements created by qualitative benefits Qualitative Analysis: Establish ownership of the operational changes  Areas of operational improvement Define cost drivers  Indirect measures for  Understand how costs are affected by project plan decisions assessing effects Determine direct Determine areas Analyze areas of Stakeholder buy-in, costs of of indirect costs future costs related ownership implementing related to changes to managing and responsibilities, and clear the initiative or operational growing the initiative plan for realizing and improvements measuring value -8-
  9. 9. The answers to key questions will help maximize business value from Social Media Category Questions and Considerations  Which of the M&A challenges (people, collaboration, communications) are you trying to address? Value  Are you planning to leverage Social Media in BAU mode?  Does Social Media align with your company strategy? Strategy  Will Social Media enhance your competitive advantage?  Are you already experiencing the adverse effects of not implementing Social Media?  What are the demographics of your combined workforce? Human  Has a part of your workforce already begun using Social Media for business purposes? Capital  What is the target state of the combined culture of NewCo?  Do you believe there may be value in exposing hidden or untapped networks within the combining organizations? Organizational  How much collaboration between employees does your current organizational structure allow? Structure  What changes to your organizational structure are necessary and how difficult will they be to implement?  What specific audience(s) are you trying to engage? Employees? Customers? Business partners? Audience  What are the risks associated with giving power to this audience?  What existing systems does your company have? Existing Systems  To what degree do you want your Social Media to be integrated with existing systems?  What technical requirements does your company have?  What external government regulations does your company and industry have to follow? Compliance  What are your internal compliance rules? Information-specific rules? Technology-specific rules? -9-
  10. 10. Thank you for your time!Need help?Contact Avinash Jhangiani if you need help with developinginnovative social, mobile, and web strategies for yourcompany.Profile: http://about.me/aviLinkedIn: http://linkedin.com/in/avijhangianiTwitter: http://twitter.com/goodthingBlog: http://youarenew.blogspot.com

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