The document provides a summary of common "half-truths" regarding mergers and acquisitions best practices. It discusses 10 commonly held beliefs and provides a more complete "whole truth" for each one. The document cautions against overconfidence in M&A best practices, noting significant variations and a lack of definitive outcomes. It emphasizes humility is needed when managing M&As, as maxims can be misconstrued if not fully understood in context.
The document discusses the importance of sustainability and transferability in building enterprise value for private companies. It states that value is a long-term measure of a company's ability to profitably continue operations and be sold. The most valuable private companies conduct themselves similarly to public companies by having transparent structures, succession plans, and minimizing risks. Ignoring sustainability and transferability could severely reduce a company's value if the owner suddenly left, as the business may not survive without the owner's leadership and vision.
This document provides a summary and analysis of the concepts of Business Process Reengineering (BPR). It explores the principles and assumptions behind reengineering, examines factors that contribute to its successes and failures, and presents alternatives. The document analyzes case studies and pays particular attention to the roles of leadership, change management, human aspects, customer focus, and information technology in successful BPR. It concludes by offering recommendations for effective reengineering.
This Thought Leadership Paper explores how Small and Large companies might work together more effectively by setting out what each side needs to understand about the other. It seeks to communicate what makes a successful collaboration
This document discusses the concept of "rightsizing" or determining the optimal size for key business metrics like revenue, number of customers, innovation initiatives, geographic markets, distribution channels, quality, pricing, promotions, and marketing communications. It argues against the conventional wisdom that "bigger is better", noting that relentlessly pursuing higher volumes can increase costs disproportionately. The document provides 10 questions that every CEO should ask to determine the right size for their business, including how much revenue and how many customers they should have, how much innovation to pursue, which global markets to operate in, and how to optimize their distribution channels, quality, pricing, promotions, and marketing.
This document discusses the need for mergers and acquisitions to go beyond risk avoidance and focus on creating transformational value. It notes that traditional merger integration focuses too much on avoiding failure through strict processes and checklists, rather than identifying new sources of value. The document advocates that mergers should pursue both "combinational" synergies through standard best practices, as well as "transformational" opportunities that create breakthrough value through flexibility. It provides recommendations for mergers to take an expanded view of value opportunities, look beyond standard integration approaches, and fully commit to targeted transformational efforts in order to achieve the highest levels of value creation.
This document discusses the characteristics of successful scale-up companies compared to typical startups. It finds that scale-ups are more likely to have:
1) Experienced leadership, with founders having prior corporate experience and academic degrees, rather than being university dropouts.
2) Functional depth, with founders having 10,000 hours of experience in their field to develop a distinctive capability.
3) Advanced intuition, as older founders in their forties have more experience to intuit market opportunities.
1. The document discusses various topics related to business acquisitions including the benefits and potential problems, the acquisition process, and conditions for a successful acquisition. It provides details on evaluating acquisitions as an expansion strategy, valuing deals, structuring and financing acquisitions, and integrating acquired companies.
2. It also discusses exit strategies that the owner of a peanut oil business, Mr. Jim B. "Nutty" Rockefeller, could consider for retiring to his ranch, including selling the firm, transferring ownership to family, merging with another company, liquidating assets, or taking the company public through an IPO. Developing an exit strategy allows for proper planning and prevention of losses.
3. In
Benjamin Gordon, Managing Director of BG Strategic Advisors (BGSA) and Cambridge Capital, provides expert advice on how logistics and supply chain companies must evolve to address the challenges of new technology, convergence of services, and consolidation.
The document discusses the importance of sustainability and transferability in building enterprise value for private companies. It states that value is a long-term measure of a company's ability to profitably continue operations and be sold. The most valuable private companies conduct themselves similarly to public companies by having transparent structures, succession plans, and minimizing risks. Ignoring sustainability and transferability could severely reduce a company's value if the owner suddenly left, as the business may not survive without the owner's leadership and vision.
This document provides a summary and analysis of the concepts of Business Process Reengineering (BPR). It explores the principles and assumptions behind reengineering, examines factors that contribute to its successes and failures, and presents alternatives. The document analyzes case studies and pays particular attention to the roles of leadership, change management, human aspects, customer focus, and information technology in successful BPR. It concludes by offering recommendations for effective reengineering.
This Thought Leadership Paper explores how Small and Large companies might work together more effectively by setting out what each side needs to understand about the other. It seeks to communicate what makes a successful collaboration
This document discusses the concept of "rightsizing" or determining the optimal size for key business metrics like revenue, number of customers, innovation initiatives, geographic markets, distribution channels, quality, pricing, promotions, and marketing communications. It argues against the conventional wisdom that "bigger is better", noting that relentlessly pursuing higher volumes can increase costs disproportionately. The document provides 10 questions that every CEO should ask to determine the right size for their business, including how much revenue and how many customers they should have, how much innovation to pursue, which global markets to operate in, and how to optimize their distribution channels, quality, pricing, promotions, and marketing.
This document discusses the need for mergers and acquisitions to go beyond risk avoidance and focus on creating transformational value. It notes that traditional merger integration focuses too much on avoiding failure through strict processes and checklists, rather than identifying new sources of value. The document advocates that mergers should pursue both "combinational" synergies through standard best practices, as well as "transformational" opportunities that create breakthrough value through flexibility. It provides recommendations for mergers to take an expanded view of value opportunities, look beyond standard integration approaches, and fully commit to targeted transformational efforts in order to achieve the highest levels of value creation.
This document discusses the characteristics of successful scale-up companies compared to typical startups. It finds that scale-ups are more likely to have:
1) Experienced leadership, with founders having prior corporate experience and academic degrees, rather than being university dropouts.
2) Functional depth, with founders having 10,000 hours of experience in their field to develop a distinctive capability.
3) Advanced intuition, as older founders in their forties have more experience to intuit market opportunities.
1. The document discusses various topics related to business acquisitions including the benefits and potential problems, the acquisition process, and conditions for a successful acquisition. It provides details on evaluating acquisitions as an expansion strategy, valuing deals, structuring and financing acquisitions, and integrating acquired companies.
2. It also discusses exit strategies that the owner of a peanut oil business, Mr. Jim B. "Nutty" Rockefeller, could consider for retiring to his ranch, including selling the firm, transferring ownership to family, merging with another company, liquidating assets, or taking the company public through an IPO. Developing an exit strategy allows for proper planning and prevention of losses.
3. In
Benjamin Gordon, Managing Director of BG Strategic Advisors (BGSA) and Cambridge Capital, provides expert advice on how logistics and supply chain companies must evolve to address the challenges of new technology, convergence of services, and consolidation.
The document discusses how revenue growth is the largest driver of shareholder return but many CEOs focus on cost cutting instead of growth initiatives. It outlines a 4-step process companies can follow to systematically accelerate revenue growth: 1) Define and focus resources on the core business, 2) Establish a common set of market facts and insights, 3) Select the most powerful growth initiatives to implement well, 4) Master the process of change management. The first step is using a "spider chart" to identify the core customers, products, channels and geographies that make up 80% of profits in order to focus on high-potential opportunities within the existing business.
The document discusses key issues companies should focus on when selling or divesting parts of their business. It emphasizes that sell-side M&A capabilities are just as important as buy-side capabilities but are often less developed. Specifically, it recommends focusing on three additional areas when separating businesses: human resources issues to maintain key employees, strategic analysis to understand if separation creates value, and global separation issues given increased international operations. Addressing these complex HR, strategic, and international components can help maximize value and improve the sell-side transaction process.
Growth is essential for businesses to survive and thrive over the long run. As businesses mature, owners face a choice between continuing to invest in growth or focusing on cash preservation, which can lead to decline. The top priority for building long-term value is maintaining a history of growth, especially in recent years. Entering a period of mass business owner retirements, growth will be critical to business survival and valuation.
The document outlines how large enterprises can adopt practices from lean startups to stay innovative and competitive. It discusses how Amgen created a new Advanced Device Technology team with a lean, startup-like approach to prioritize projects based on overall company value rather than individual product timelines. The team focuses on understanding Amgen's portfolio and delivery needs to develop technologies that drive company-wide value. The document argues that enterprises need to emulate lean startup qualities like flexibility, fast decision making, and a willingness to disrupt themselves in order to compete against newer, more agile competitors.
eToro startup & mgnt 2.0 course - Class 03 value systemsEstrella Demonte
The document discusses various frameworks for determining a company's objective value, including questions about what problems the company solves and what valuable companies have yet to be built. It then examines three criteria for great companies: they must create value, be durable/permanent, and capture some of the value they create. The document also discusses challenges in valuing high-growth tech companies, where most value is realized far in the future, and the importance of considering monopoly versus perfect competition when analyzing a company's ability to capture value.
Blue Ridge Partners is a management consulting firm that specializes in helping private equity portfolio companies accelerate revenue growth. They focus on revenue growth because it is the largest driver of value creation.
Blue Ridge has developed non-invasive assessment tools to help private equity firms and portfolio company management identify revenue growth opportunities early in the investment process. Their self-assessment tool involves the CEO and management team reflecting on growth-related questions without intensive data requests or interviews. This helps engage CEOs who often view revenue growth as their responsibility.
Blue Ridge also developed an assessment tool called "Indicators of Opportunity" that examines growth opportunities and implementation levers across nine areas. They help companies focus on high-impact, easy to implement changes to
Aligning Strategy & Sales. It's time to address the enormous cost of the Stra...Aneel Mitra
This document discusses the disconnect that often exists between corporate strategy and sales execution. It provides examples of how strategy is often formulated with little consideration of how it will be implemented through customer interactions. Meanwhile, sales teams tend to focus narrowly on internal metrics and operational issues rather than how their work aligns with strategic objectives. The document argues that addressing this gap between strategy and sales is critical for companies to realize the full potential of their strategies and improve financial performance.
Innovation would seem by default to require research and development. But R&D is increasingly under fire for being unpredictable at "delivering" business gains. Does making R&D predictable become a prerequisite for innovation's "creativity"?
the Summary of The End of Competitive AdvantageUswatun Hasanah
This document provides an overview of Rita McGrath's expertise and the types of talks she gives on strategy, innovation, complexity/uncertainty, and organizational leadership/change. Some of her most popular talks discuss the end of sustainable competitive advantage and the need for a new dynamic strategy playbook, lessons from companies that achieved consistent growth, and frameworks for effectively disengaging from declining businesses to free up resources. The document lists recent client engagements and publications and provides a detailed table of contents for her various speech topics.
The fittest win in the struggle for survival because they succeed in adapting themselves best to their environment. That's the law of evolution. In the case of present day organizations, the ones that are adaptable have a better shot at making it than the ones that are merely strong or profitable
Executing effective m&a, part 3 – post deal integrationDmitry Efremov
This white paper discusses critical considerations for successful M&A from pre- to post-deal. It finds that while due diligence focuses on identifying synergies, those projected synergies often fail to materialize post-deal due to lack of communication and integration planning. It recommends using a virtual data room both during due diligence and post-deal as it facilitates secure sharing of information to enhance integration between entities. When utilized effectively, a VDR can help address cultural clashes and ensure all parties have access to necessary information to make informed decisions and successfully capture projected value.
Building an innovation engine - foundations for growth: how to identify and b...John Pisciotta
The document discusses strategies for companies to identify and build disruptive new businesses that can drive significant growth. It outlines two main strategies:
1. Creating a new market as a base for disruption by targeting non-consumers and developing simple, affordable innovations that allow new types of customers to consume in new ways.
2. Disrupting an existing business model from the low end by targeting the least demanding customers in a market where existing products are over-serving them, and doing so with a disruptive business model allowing deep discounts.
The strategies are based on two sets of "litmus tests" innovations must pass to have success - tests related to targeting non-consumers, simplicity, and helping customers do
An overview of the challenges and options business owners in the graphic arts space are facing with the transformation taking place in today's industry.
The document discusses seven essential questions that CFOs should ask themselves to become more strategic. The questions include: how the company plans to grow, what constraints hold back growth and how to overcome them, what uncertainties exist and how to resolve them, areas of high spending with uncertain returns, whether growth goals are ambitious enough, what could disrupt the company, and what the company should stop doing. By asking and addressing these questions, CFOs can identify strategic opportunities, partner with other leaders to implement solutions, and help move the company forward in a pragmatic way.
Wise Pivot is a strategy fit for the digital age that can help companies pursue new growth opportunities. Read more on how to choose your pivot wisely.
Performance Persistence by Harvard Business Schoolchaganomics
Performance Persistence Harvard Business School on why serial entrepreneurs are often more successful in their pursuits. for an article at chaganomics.com
This document introduces folksonomies as a new way for users to collaboratively tag and classify content online. It discusses tools like Flickr and Delicious that allow users to tag photos and bookmarks, creating an emergent taxonomy. These folksonomies are seen as a less expensive alternative to formal classification systems created by professionals. However, folksonomies also face challenges around ambiguity, synonyms and spam that tools and social aspects may help address. The document suggests folksonomies could become another way for users to access information and be a complement to formal taxonomy.
Este documento resume la jurisprudencia de varios países europeos sobre el derecho a la educación de niños con autismo u otras discapacidades. Analiza decisiones del Tribunal Europeo de Derechos Humanos y del Comité Europeo de Derechos Sociales, así como jurisprudencia de Francia, Alemania, Italia, Reino Unido y Polonia. El objetivo es aumentar la conciencia sobre los procesos legales para proteger los derechos de las personas con discapacidad y garantizar su acceso a una educación efectiva e inclusiva.
1) Folksonomies, or user-generated tags, have advantages like being simple to use and distributing the cost of tagging over many users, but also have significant disadvantages like lack of structure, quality issues, and the "tyranny of the majority" where popular tags drown out others.
2) Improving folksonomies requires adding structure like facets, evolving quality over time through feedback mechanisms, and integrating them with formal taxonomies and ontologies.
3) For libraries, folksonomies are best used as a starting point and to support social functions, while more formal classification systems remain important for findability. The best approach integrates folksonomies, taxonom
The document discusses how revenue growth is the largest driver of shareholder return but many CEOs focus on cost cutting instead of growth initiatives. It outlines a 4-step process companies can follow to systematically accelerate revenue growth: 1) Define and focus resources on the core business, 2) Establish a common set of market facts and insights, 3) Select the most powerful growth initiatives to implement well, 4) Master the process of change management. The first step is using a "spider chart" to identify the core customers, products, channels and geographies that make up 80% of profits in order to focus on high-potential opportunities within the existing business.
The document discusses key issues companies should focus on when selling or divesting parts of their business. It emphasizes that sell-side M&A capabilities are just as important as buy-side capabilities but are often less developed. Specifically, it recommends focusing on three additional areas when separating businesses: human resources issues to maintain key employees, strategic analysis to understand if separation creates value, and global separation issues given increased international operations. Addressing these complex HR, strategic, and international components can help maximize value and improve the sell-side transaction process.
Growth is essential for businesses to survive and thrive over the long run. As businesses mature, owners face a choice between continuing to invest in growth or focusing on cash preservation, which can lead to decline. The top priority for building long-term value is maintaining a history of growth, especially in recent years. Entering a period of mass business owner retirements, growth will be critical to business survival and valuation.
The document outlines how large enterprises can adopt practices from lean startups to stay innovative and competitive. It discusses how Amgen created a new Advanced Device Technology team with a lean, startup-like approach to prioritize projects based on overall company value rather than individual product timelines. The team focuses on understanding Amgen's portfolio and delivery needs to develop technologies that drive company-wide value. The document argues that enterprises need to emulate lean startup qualities like flexibility, fast decision making, and a willingness to disrupt themselves in order to compete against newer, more agile competitors.
eToro startup & mgnt 2.0 course - Class 03 value systemsEstrella Demonte
The document discusses various frameworks for determining a company's objective value, including questions about what problems the company solves and what valuable companies have yet to be built. It then examines three criteria for great companies: they must create value, be durable/permanent, and capture some of the value they create. The document also discusses challenges in valuing high-growth tech companies, where most value is realized far in the future, and the importance of considering monopoly versus perfect competition when analyzing a company's ability to capture value.
Blue Ridge Partners is a management consulting firm that specializes in helping private equity portfolio companies accelerate revenue growth. They focus on revenue growth because it is the largest driver of value creation.
Blue Ridge has developed non-invasive assessment tools to help private equity firms and portfolio company management identify revenue growth opportunities early in the investment process. Their self-assessment tool involves the CEO and management team reflecting on growth-related questions without intensive data requests or interviews. This helps engage CEOs who often view revenue growth as their responsibility.
Blue Ridge also developed an assessment tool called "Indicators of Opportunity" that examines growth opportunities and implementation levers across nine areas. They help companies focus on high-impact, easy to implement changes to
Aligning Strategy & Sales. It's time to address the enormous cost of the Stra...Aneel Mitra
This document discusses the disconnect that often exists between corporate strategy and sales execution. It provides examples of how strategy is often formulated with little consideration of how it will be implemented through customer interactions. Meanwhile, sales teams tend to focus narrowly on internal metrics and operational issues rather than how their work aligns with strategic objectives. The document argues that addressing this gap between strategy and sales is critical for companies to realize the full potential of their strategies and improve financial performance.
Innovation would seem by default to require research and development. But R&D is increasingly under fire for being unpredictable at "delivering" business gains. Does making R&D predictable become a prerequisite for innovation's "creativity"?
the Summary of The End of Competitive AdvantageUswatun Hasanah
This document provides an overview of Rita McGrath's expertise and the types of talks she gives on strategy, innovation, complexity/uncertainty, and organizational leadership/change. Some of her most popular talks discuss the end of sustainable competitive advantage and the need for a new dynamic strategy playbook, lessons from companies that achieved consistent growth, and frameworks for effectively disengaging from declining businesses to free up resources. The document lists recent client engagements and publications and provides a detailed table of contents for her various speech topics.
The fittest win in the struggle for survival because they succeed in adapting themselves best to their environment. That's the law of evolution. In the case of present day organizations, the ones that are adaptable have a better shot at making it than the ones that are merely strong or profitable
Executing effective m&a, part 3 – post deal integrationDmitry Efremov
This white paper discusses critical considerations for successful M&A from pre- to post-deal. It finds that while due diligence focuses on identifying synergies, those projected synergies often fail to materialize post-deal due to lack of communication and integration planning. It recommends using a virtual data room both during due diligence and post-deal as it facilitates secure sharing of information to enhance integration between entities. When utilized effectively, a VDR can help address cultural clashes and ensure all parties have access to necessary information to make informed decisions and successfully capture projected value.
Building an innovation engine - foundations for growth: how to identify and b...John Pisciotta
The document discusses strategies for companies to identify and build disruptive new businesses that can drive significant growth. It outlines two main strategies:
1. Creating a new market as a base for disruption by targeting non-consumers and developing simple, affordable innovations that allow new types of customers to consume in new ways.
2. Disrupting an existing business model from the low end by targeting the least demanding customers in a market where existing products are over-serving them, and doing so with a disruptive business model allowing deep discounts.
The strategies are based on two sets of "litmus tests" innovations must pass to have success - tests related to targeting non-consumers, simplicity, and helping customers do
An overview of the challenges and options business owners in the graphic arts space are facing with the transformation taking place in today's industry.
The document discusses seven essential questions that CFOs should ask themselves to become more strategic. The questions include: how the company plans to grow, what constraints hold back growth and how to overcome them, what uncertainties exist and how to resolve them, areas of high spending with uncertain returns, whether growth goals are ambitious enough, what could disrupt the company, and what the company should stop doing. By asking and addressing these questions, CFOs can identify strategic opportunities, partner with other leaders to implement solutions, and help move the company forward in a pragmatic way.
Wise Pivot is a strategy fit for the digital age that can help companies pursue new growth opportunities. Read more on how to choose your pivot wisely.
Performance Persistence by Harvard Business Schoolchaganomics
Performance Persistence Harvard Business School on why serial entrepreneurs are often more successful in their pursuits. for an article at chaganomics.com
This document introduces folksonomies as a new way for users to collaboratively tag and classify content online. It discusses tools like Flickr and Delicious that allow users to tag photos and bookmarks, creating an emergent taxonomy. These folksonomies are seen as a less expensive alternative to formal classification systems created by professionals. However, folksonomies also face challenges around ambiguity, synonyms and spam that tools and social aspects may help address. The document suggests folksonomies could become another way for users to access information and be a complement to formal taxonomy.
Este documento resume la jurisprudencia de varios países europeos sobre el derecho a la educación de niños con autismo u otras discapacidades. Analiza decisiones del Tribunal Europeo de Derechos Humanos y del Comité Europeo de Derechos Sociales, así como jurisprudencia de Francia, Alemania, Italia, Reino Unido y Polonia. El objetivo es aumentar la conciencia sobre los procesos legales para proteger los derechos de las personas con discapacidad y garantizar su acceso a una educación efectiva e inclusiva.
1) Folksonomies, or user-generated tags, have advantages like being simple to use and distributing the cost of tagging over many users, but also have significant disadvantages like lack of structure, quality issues, and the "tyranny of the majority" where popular tags drown out others.
2) Improving folksonomies requires adding structure like facets, evolving quality over time through feedback mechanisms, and integrating them with formal taxonomies and ontologies.
3) For libraries, folksonomies are best used as a starting point and to support social functions, while more formal classification systems remain important for findability. The best approach integrates folksonomies, taxonom
Folksonomies refer to user-generated metadata for organizing and tagging digital content. They offer benefits like direct user input and emergent browsing paths but lack structure. Traditional metadata systems like Dewey Decimal and Library of Congress classifications optimize small, stable domains with experts, while folksonomies are better suited for large, open collections contributed to by general users. Both approaches have tradeoffs in scalability, consistency and reflecting user perspectives.
1. The document discusses tagging and folksonomies, which allow users to collaboratively add metadata tags to resources.
2. It notes debates around whether folksonomies support search and browsing as well as controlled vocabularies developed by professionals.
3. The document also examines challenges of tagging like findability, collection management, and accuracy, as well as benefits like increased re-findability and social interaction.
Benjamin Gordon in World Trade 100 - Finessing Convergence and ConsolidationBenjamin Gordon
Benjamin Gordon is interviewed in World Trade 100. Topics include mergers, acquisitions, investments, and deals in transportation, logistics, and supply chain.
This document discusses lessons from CEOs on making mergers and acquisitions successful. It notes that while M&As often failed in the 1970s, they have now become important strategies for growth. However, cultural differences can cause M&As to fall apart. When integrating acquired companies, priorities include addressing employee uncertainty, having open communication, and representing all shareholders rather than just the original company. Overall, the document emphasizes that every organization approaches restructuring differently based on their strategic goals and industry.
Managing Through Mergers And Acquisitions TranscriptTom Floyd
Guests discuss how coaching can assist managers and corporate executives guide their companies through mergers and acquisitions.
Topics discussed include how coaching can be used to help leaders create strong and effective work teams, bridge cultural differences, communicate with confidence, and ensure the retention of key employees.
Guests
* Emily Crawford, Kabachnick Group
* Tim Dorman, Korn Ferry International
Summary
Research shows in 2006, mergers and acquisitions totaled $310.7 billion dollars in the United States alone, examples including Google and YouTube, AT&T and BellSouth, and Alcatel and Lucent. But what role does professional coaching play as two organizations come together?
According to the Harvard Business Review there can be a variety of challenges during a merger, ranging from determining how to bring two radically different groups together to risks associated with not involving key influences, stakeholders, and top talent in the process.
Professional coaching experts discuss how coaching can help address these issues and more.
1) A strategic inflection point occurs when an industry undergoes a "10X" change that shifts the balance of competitive forces, requiring companies to change their strategies.
2) When a strategic inflection point happens, companies must experiment and tolerate chaos to identify new opportunities, while also bringing order through focused strategic actions and resource reallocation.
3) Successfully navigating a strategic inflection point requires an open debate between senior and middle management to identify the right strategic direction, followed by single-minded pursuit of the new strategic goal.
STRATEGY
58 BUSINESS STRATEGY REVIEW ISSUE 4 – 2010
STRATEGIC
ORCHESTRATION
Many companies seizing major
opportunities in emerging markets
are blazing a management path
also shared by companies such
as Apple, RyanAir and Nestlé.
Strategic orchestration allows
firms to get to market faster,
adapt to changing circumstances
and lower their invested capital,
thereby allowing them to pursue
less profitable opportunities such as
serving emerging market consumers.
Donald L Sull and Alejandro
Ruelas-Gossi tell how.
As the global economic crisis
recedes into the past, executives are
raising their heads from cost cutting
and looking for opportunities to
grow the top line. Unfortunately,
revenue growth is elusive. The
four horsemen of the new normal
— insecure employment, stagnant
wages, unsustainable credit and low
investment returns — cast a dark
shadow over consumers who cut
back on spending. At the same time,
governments are slashing investment
and public payrolls to reign in fiscal
deficits. Major savers, like China
and Germany, cannot shift from
exports to consumption fast enough
to offset declining demand elsewhere
in the world.
How, then, can executives grow
revenues despite tepid overall
demand? The standard answers
are corporate entrepreneurship and
innovation. To grow in stagnant
markets, managers need to spot novel
opportunities or envision breakthrough
products or services that will
differentiate them from competitors.
Unfortunately, established firms often
struggle to seize new opportunities,
losing out to more fleet-footed
start-ups. The failure of corporate
entrepreneurship is often blamed on
a lack of imagination. To stimulate
the necessary creativity, companies
send executives to workshops where
they use finger paints or pretend to be
jungle animals (real examples both) to
think more creatively.
These efforts to stimulate
creativity are misplaced. In most large
corporations, the primary impediment
to revenue growth is not a lack of
creativity, but an unhealthy addiction
to power. Pursuing new opportunities
often demands novel resources and
competencies not currently at a firm’s
disposal. In many cases, executives
reject out-of-hand any opportunity
that doesn’t leverage the firm’s
existing resources and competencies.
Like the proverbial boy with a
hammer, they reject any opportunity
that isn’t a nail. If internal champions
persist in pursuing the market gap,
they often draft detailed blueprints
to develop the necessary resources
in house. But senior executives
often turn down the proposal as too
expensive, time-consuming or risky.
There is an alternative, which we
call ‘strategic orchestration’, whereby
a firm pursues an opportunity —
not by controlling all the required
resources and competencies but by
assembling and managing a network
of partners. Strategic orchestration
allows firms to get to market faster,
adapt to changing circumstances and
.
Issue | McKinsey Quarterly 2013 Number 4
@McKQuarterly
Strategy to beat the odds
Examines how to make wise strategic choices, mobilize the C-suite to take advantage of big data, use social technologies to engage employees and transform organizations, and build vibrant communities with help from companies.
2013 q4 McKinsey quarterly - Strategy to beat the oddsAhmed Al Bilal
This document summarizes principles for companies to effectively implement social technologies internally and realize their full potential benefits. It recommends that companies: 1) Make social technologies central to work processes rather than extras; 2) Provide organizational support like training to foster adoption; 3) Experiment with social tools in a learning-focused way rather than top-down directives; 4) Track impact over time and evolve metrics as understanding improves. Case studies from MITRE, TD Bank, and Maersk Line illustrate applying these principles.
The document discusses how companies can successfully reinvent themselves by managing three hidden "S curves": the basis of competition curve, capabilities curve, and talent curve. High performers begin reinventing themselves well before their current business peaks by focusing on these curves through practices like edge-centric strategy, regular changes to top leadership, and maintaining surplus talent. They also stress employees to build strength for future challenges. Managing these curves early allows companies to jump to the next stage of growth through reinvention.
Canback - A Lightweight Note on Success in Mergers and AcquisitionTellusant, Inc.
This paper by our executive chairman, Staffan Canback, explains what works, and what does not work, when pursuing mergers or acquisitions. He says:
"I wrote "A Lightweight Note on Success in Mergers and Acquisitions" in 2004, in preparation for a potential multi-billion dollar acquisition of a consumer goods company.
Since then, I have tried to improve and update this short paper, but concluded that the original 2004 version is the best. The main text is less than two pages long and gives a quick introduction to M&A dynamics. The first three paragraphs quaintly reflect the time when it was written.
I have a few dozen M&A efforts under the belt as an advisor, ranging from $50 million to $10 billion in deal size. The paper captures my real-life experiences well.
At a fundamental level, not much has changed over the past 17 years. Some of the numbers mentioned have shifted a bit, but the logic and magnitudes remain the same. This is usually the case in economics and finance—the fundamentals remain constant over decades or centuries.
If executives follow the many pieces of advice embedded in the paper, success in M&A will be much more likely."
This document provides an overview of mergers and acquisitions (M&A) and common HR challenges. It discusses the basic concepts of M&A, including definitions of mergers and acquisitions. It also outlines reasons for M&A such as gaining synergies through reduced costs and expanded market access. Additionally, it describes the overall M&A process in five phases from pre-acquisition review to post-acquisition integration. HR challenges can arise during M&A from changes in company culture, leadership, and redundancy of roles which must be carefully managed.
Mergers & Acquisitions are often used as part of a
company's globalization strategy, for both intra-regional and international deals. However, substantial number of them fail. Read more to find out the challenges or visit us at: http://www.verityconsult.com
Enhancement in NDT inspection for operational effectiveness, efficiency and e...Innerspec Technologies
We intend to show that any change shall be linked, not only to improvement, but also to immediate cost reduction so that all management structure can conceive quick implementation as
part of its department strategy & enhancement in their budget cost.
For that, concepts such as effectiveness, efficiency and excellence must be approached. We will give clear saving cost ways which will follow the terminology.
In Financial terms and without a deep analysis, we can conrm cost savings above 30% from current prices are achieved.
Small Business Decision Analysis: A View from the TrenchesRobert Brown
Dr. Bush and I describe our experience applying the principles of decision analysis to small business, which typically do not have access to as many informed resources as larger organizations where decision analysis is more routinely applied.
Published in "Decision Analysis Today," newsletter of the INFORMS Decision Analysis Society, Volume 29, No. 1, April 2010, pg. 16.
Transcript: Alternatives for a Distressed Company in Apparel and RetailExpert Webcast
The discussion includes the process of bidding for, financing and acquiring distressed companies in the Apparel and Retail space is competitive and complex. The panel addressed the strategies and tips for success from the perspectives of an investment banker, a deal and bankruptcy lawyer, a turnaround executive, a lender and a tax accountant.
CEO Innovation Playbook Public Short - Idris Mootee Part OneIdris Mootee
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Deloitte On M&A
1. Letter from the PubLishers
The
OVeRcOnfidence
trap GeTTinG iT half-RiGhT wOn’T
wORk in The hiGh-sTakes
GaMe Of Ma inTeGRaTiOn
bY DWIGHT ALLEN PUNIT RENJEN
M
ergers and acquisitions are high-risk propositions un-
der the best of conditions. The challenge is even tougher
when the business climate is turbulent and uncertain. It
would be comforting to believe that MA best practices
have become so well-documented and widely understood that hard-
pressed executives can find the guidance they need by turning to re-
positories of prevailing wisdom on the subject.
It is true that the body of literature on MA transactions has ex-
panded in recent years, and there is a good deal of agreement on what
works and what doesn’t. Best-selling books such as Deals from Hell1
and Mastering the Merger2 boil down the secrets of MA success into
a few lessons. Others, such as The Art of Merger Integration,3 offer
more detailed prescriptions on how to develop and sustain a record of
consistent MA wins. It is tempting to conclude that companies can
Deloitte Review d e lO i T T e R e V i e w. c O M
2. t h e oV e r C o N f i D e N C e t r A P
PhOTO-illUsTRaTiOn: MaTT lenneRT d e lO i T T e R e V i e w. c O M Deloitte Review
3. t h e oV e r C o N f i D e N C e t r A P
heed this advice and learn to manage their way through the MA experience even in
unsettled times.
Despite a sagging bookshelf, however, it would be unwise to conclude that MA management
has become a well-developed science. The field remains a work in progress, with best practices
not yet defined precisely. Although books and papers on MA agree on certain precepts, closer
examination reveals significant variations and disparities. It isn’t clear that everyone is applying
the same theories, or that the numbers exist to make solid judgments about outcomes. And there
are plenty of differences in the way executives understand and implement particular MA ap-
proaches. We should be humble rather than haughty when it comes to the management of MA.
With respect to the imprecision in defining MA best practices, we want to highlight the
extent to which maxims about effective deal management can be misconstrued or twisted in
ways that miss important points. Truisms espoused by academics and advisors, or shared
among executives, can be less complete than they seem on the surface. When the margin for
error is narrow, that can lead to trouble. The following examples are drawn from the MA
literature and from our experience both in conducting and researching MA integration.
half TRUTh 1:
To GAIN GRoWTH, bUy A comPANy THAT’s A PRovEN WINNER.
Whole truth: If there’s upside left, a proven winner may be the right target, but
the better bet could be an ugly duckling with disruptive potential.
Big companies with a mature core business often try to excite investors by going after
a target with a strong record that portends further growth. The question often asked in
such cases is whether the target is as promising as other potential matches and whether
its bona fides hold up under careful scrutiny.
But sometimes the MA targets with the greatest growth potential are ugly duck-
lings that fit none of the conventional criteria for an attractive purchase. These are
companies working on new technologies and business models that could revolutionize
markets and destroy incumbents. That’s where truly exceptional growth comes from.
Yet a disruptive innovation doesn’t start off looking like a world-beater. To the con-
trary, in its early days a disruptor is typically a small firm with a fragile business model
serving a low-end market, offering products that are no match for those available from
industry leaders. McDonald’s, Sony, Toyota, and Wal-Mart began this way and they
didn’t look very formidable in their younger days. While the apparent best target may be
a company that has hit its stride (assuming it still has energy left for the next lap), there
are times when management needs to think further ahead and invest in a less obvious
choice that nevertheless represents more potential for value creation.
half TRUTh 2:
AcqUIsITIoNs ARE bETTER THAN LEssER foRms of oWNERsHIP.
Whole truth: Depending on the strategic objective, outright acquisition may
be overshooting.
An outright acquisition is typically cleaner and simpler than establishing a joint ven-
ture or buying a partial equity stake. But making an acquisition may entail more of a
commitment than a company wants or needs. In The Strategy Paradox,4 Michael Raynor
describes how Johnson Johnson Development Company (JJDC) invested in a small
life sciences company to give its parent company, Johnson Johnson, access to a new
sedation technology. A JJ division saw this technology as intriguing but not something
it or any other JJ division could pursue, given their existing mandates.
By buying 20 percent of the company, taking a seat on the board, and obtaining a right of
first refusal on commercialization rights to the new technology, JJDC created an option it could
exercise if the technology did well in clinical trials. Alternately, it could abandon the technology
at limited cost if it failed to pan out. Buying the small company would have tied JJ more tightly
to the success of the technology than was warranted, and would have committed capital JJDC
could use to take positions in other companies to create similar options in other areas.
Deloitte Review d e lO i T T e R e V i e w. c O M
4. t h e oV e r C o N f i D e N C e t r A P
“disruptive innovation doesn’t start off
looking like a world-beater.”
half TRUTh 3:
To sATIsfy INvEsToRs, AN mA TRANsAcTIoN mUsT UNLock bIG
vALUE GAINs qUIckLy.
Whole truth: The way to impress investors is to deliver on your promises, so resist
the impulse to promise more than you can deliver in a short time.
Over-reaching can be a problem when it comes to defining strategic objectives.
Achieving success on a wish list that ranges from services growth to better RD is very
ambitious and may require additional acquisitions. A long list looks great on paper, but
it can be murder to execute. Opening a complicated initiative spanning several fronts
not only jeopardizes the fulfillment of promises about synergies, it can interfere with
getting systems and processes ready to support the newly combined organization. That
can have an adverse impact on customers, revenues, margins, business momentum and
regulatory compliance.
half TRUTh 4:
mAkING THE RIGHT AcqUIsITIoN Is cRUcIAL To INcREAsING sHARE-
HoLDER vALUE.
Whole truth: It’s not only what you add that creates shareholder value, but what
you discard. Divesting businesses that can do better elsewhere is important, too.
Sometimes shedding businesses or assets can enhance your company’s value creation
potential. The fact that one or two of an acquired company’s products are a great fit with
yours doesn’t mean they all are. Keeping misaligned segments of the acquired company
can introduce a damaging drag. And even if there’s great synergy today, that won’t
necessarily continue indefinitely; changes in market and economic cycles can alter the
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5. t h e oV e r C o N f i D e N C e t r A P
calculation rapidly. Companies should examine their portfolio of businesses on a regu-
lar basis and question whether any would be worth more if owned by someone else. In
describing how Koch Industries has achieved an 18 percent compounded annual return
over several decades, Charles Koch notes that his firm bought 37 businesses - but it
also exited from 42.5 Emotions may get in the way of objective analysis, of course. The
“fiefdom phenomenon” often causes executives to resist selling pieces of the company for
which they’re responsible. And the person who championed an acquisition will quiver
when someone suggests it ought to be sold. Nevertheless, it’s wise to question whether
there really is value to be extracted or whether the business would be worth more under
different management.
half TRUTh 5:
focUsING oN THE DEAL’s sTRATEGIc PURPosE DURING INTEGRATIoN
ENsUREs THAT THE vIsIoN WILL comE TRUE.
Whole truth: You should translate the vision into an “end-state” definition that includes
the new company’s products, platforms, resources, locations and other attributes.
Top management needs to translate the acquisition strategy into a definition of how
the combined company should look and function to realize its vision. This means thinking
through the new entity’s products, platforms, resources, locations, suppliers, management
structure and organization. That in turn requires addressing issues such as the right bal-
ance between revenue growth and cost reduction and what degree of integration will occur.
Revenue growth is an attractive story to tell, but cost reduction is easier to plan and track.
How much integration is needed may vary by business unit or function and by time frame.
Defining the desired end state supplies the people running the integration process with a
more specific picture of the destination they’re supposed to be driving toward.
How does this look in practice? When two life sciences companies merged, the integra-
tion was guided by a detailed description of what senior management wanted the deal to
achieve. The new company’s structure and functioning were defined through a process
that included attention to the perspectives and expectations of customers, shareholders,
employees and other key constituencies. The merger resulted in substantial cost savings
but the care in defining the desired end-state ensured that initiatives designed to save
money didn’t interfere with other strategic objectives.
half TRUTh 6:
A DETAILED mAsTER PLAN Is EssENTIAL foR A sUccEssfUL INTEGRATIoN.
Whole truth: You need an overall plan, but don’t overestimate what you’re likely to achieve
by creating one or underestimate the need to augment and revise it as you go along.
A great plan won’t spare you from having to deal with questions that need to get
settled before the organization can function effectively, such as sensitive management
appointments or disagreements over fundamental values. If you don’t get those out of
the way, they may derail the new enterprise. Avoiding trouble early on doesn’t neces-
sarily mean you’re in the clear - it may burst out a while later. For example, the merger
of two high-tech companies was nearly undone when differences among senior lead-
ers festered and flared until the organization was rocked by confrontations, firings and
litigation. Many aspects of the integration were going fine, but that didn’t affect the
acrimony at the top.
Assuming you’re quick to resolve such issues, be certain you exert the requisite
degree of control as the process goes forward. A single one-year master plan may be
too high-level to achieve this and may incorporate invalid assumptions. Demand it-
erative one-month plans that each lead to some important and measurable outcomes.
Keep re-prioritizing as you learn more. And don’t overlook the importance of effective
project management. Install the mechanisms to comprehensively and ruthlessly man-
age execution. Otherwise your plans may not be properly carried out, no matter how
well-crafted they are.
Deloitte Review d e lO i T T e R e V i e w. c O M
6. t h e oV e r C o N f i D e N C e t r A P
“The level of intensity will fluctuate, and the nature
of the contribution will vary, but every major
group should be fully engaged from start to finish.”
half TRUTh 7:
REsPoNsIbILITy sHIfTs As THE mERGER cycLE PRocEEDs.
Whole truth: There will be some role changes over the cycle, but the whole team
should be on the field from start to finish.
The level of intensity will fluctuate, and the nature of the contribution will vary,
but every major group should be fully engaged from start to finish. Unlike a relay race,
getting a merger across the finish line requires continued effort by the whole team.
The odds of winning a blue ribbon decrease when people from certain business units
or functions contribute at the start of the deal but then let others grapple with the
complexities that arise in the later stages. Clearly, it’s dysfunctional if too many dif-
ferent players participate with little coordination. Making a merger work requires the
continuous application of multiple disciplines and perspectives. And everybody needs
skin in the game to ensure the ultimate success of the transaction; not only operating
divisions but corporate development, accounting, tax, and legal divisions should stay
on board for the duration of the merger.
half TRUTh 8:
DURING INTEGRATIoN, yoU sHoULD sTRIvE To RETAIN kEy mANAGERs
AND EmPLoyEEs.
Whole truth: You should re-enroll not only people inside the organization, but also
other key constituencies, including customers, suppliers and business partners.
It’s not just your executives and employees who need attention. The early days of
a merger present an enormous challenge with respect to retaining your most valuable
PhOTO: PeTe sTOne d e lO i T T e R e V i e w. c O M Deloitte Review
7. 10 t h e oV e r C o N f i D e N C e t r A P
cohorts - your customers, suppliers and business partners. You’re going to have to spend
a lot of time re-enrolling them by talking with or visiting them; by making absolutely
certain that previous commitments to them are met; by communicating your plans over
and over; and by being acutely sensitive and responsive to their concerns.
Sometimes simple things can get in the way. You may not have a good inventory of
all your important constituencies; some companies have never documented all of their
alliance partners, for example. What about the alliance partners of the company you’re
combining with? Given the likelihood of changes that come with any merger, it’s vital to
maintain the flow of communications with customers, suppliers and business partners.
Even telling them you have no news to share at a given juncture is better than letting
too much time pass with no update at all.
half TRUTh 9:
coNsTANT commUNIcATIoN kEEPs EmPLoyEEs INfoRmED AND
PREvENTs UNWANTED DEPARTUREs.
Whole truth: Beyond words pouring forth from the front office, you also need lead-
ers who model the desired values and behaviors of the merged organization, as well
as mechanisms that permit communication from the organization to the leaders.
Communication is vital, but not just communication in the form of words from man-
agement. In addition to issuing announcements, taping speeches and sending e-mail
updates, senior people should model values and behaviors consistent with the desired
post-merger organization. Those values and behaviors should be reflected in employee
goals and evaluations. Provision should be made for communication from employees to
management as well and there should be mechanisms for soliciting feedback and mea-
suring opinion. What if the retention plan doesn’t seem fair to employees or rumors are
drowning out the official pronouncements? Will top executives get the message in time?
half TRUTh 10:
To AcHIEvE PLANNED REvENUE syNERGIEs, sTART ImPLEmENTATIoN
EARLy AND PUsH HARD.
Whole truth: In the early stages, the challenge is to keep sales and customer
service from getting hurt by the turmoil. Focus on avoiding harm rather than
achieving big gains.
Early on, your aim should be to achieve cost synergies while avoiding actions that
reduce existing revenues. This is not to say attention to revenue synergies should be de-
ferred for a long time, particularly since they may be important to certain deals. But in
the early stages of an MA integration, there are many ways to impede revenue growth.
Simply keeping revenues on their original track is no small feat. With everything from
leadership to processes to systems in flux, it isn’t surprising that companies in the throes
of integration frequently implement new practices that jostle customer relationships
and tangle sales operations. The guiding principle should be the one articulated in the
physician’s Hippocratic Oath: “first, do no harm.”
half TRUTh 11:
PREcIsE TARGETs foR REDUcTIoN ARE vITAL foR cAPTURING syNERGy.
Whole truth: Being specific about reductions is important, but reductions from what? The
starting point from which the cost reductions will be measured should be clear as well.
Without a well-defined baseline for reference, confusion and credibility problems may
obscure good news when earlier headcount and costs can’t be clearly linked to synergy
claims. Keep in mind that synergy targets are frequently harder to hit than originally
thought. There should be formal, non-negotiable agreements between the CEO and se-
nior integration leaders as to what will be achieved by when, with all parties under-
standing what the targets mean in relation to the status quo ante.
Deloitte Review d e lO i T T e R e V i e w. c O M
8. t h e oV e r C o N f i D e N C e t r A P 11
half TRUTh 12:
DAy oNE sHoULD bE IssUE-fREE.
Whole truth: Issue-free doesn’t mean perfection. Focus on essentials and go with
solutions that are 70 percent perfect but 100 percent achievable.
Day One should be issue-free. But that doesn’t mean going flat out to have everything
just so. First, it’s important to focus on things that absolutely have to be in place on Day
One and leave the rest for later. Just getting the essentials done will usually be chal-
lenge enough. Second, there is such a thing as aiming too high and hitting Day One with
an unfinished masterpiece. Operate by the 70/100 rule: go with solutions that are 70 per-
cent perfect but can be 100 percent implemented in the time available. Third, before com-
mitting to have something ready by Day One, evaluate the trade-offs between speed and
risk. If rushing is unavoidable, how much is Day One readiness worth in terms of danger
of malfunction? Finally, accept that opening day may be much less smooth than it ap-
pears to customers. Working around things that remain under construction will have to
suffice for Day One. Not ideal, but don’t let the perfect be the enemy of the good.
half TRUTh 13:
DAy oNE mARks THE END of THE bEGINNING.
Whole truth: Day One is a crucial milestone but hardly the end of the line. Much
will remain to be done and integration efforts will need to be redoubled as Day
One fades into history.
Day One should be the focus of intensive effort, but when it arrives, the new com-
pany won’t have delivered on the vision that motivated the deal, nor will it be downhill
from here.
In the merger of two chemical companies, success depended upon the development of
new safety procedures which entailed a rigorous and extensive process extending well
beyond the inauguration of the new company. By maintaining discipline, management
avoided trouble with watchful regulators and, more importantly, saw to it that proper
safety standards were upheld.
After Day One there’s a temptation to heave a sigh of relief and return to daily busi-
ness, or shift to the next transaction. But Day One will find many elements of the com-
bination still unfinished (by design or otherwise), with significant effort yet to go. It may
well be time to energize the process by bringing in fresh people, but Day One should be
just a way-station on the integration timeline. The destination will still be months off,
and the energy level needs to stay up as Day One comes and goes.
a lOT TO leaRn
As the above examples show, an MA transaction involves multiple stages, many facets
and much complexity. The principles and practices for managing such an initiative effec-
tively are only partly codified and imperfectly understood. Even with respect to proven
techniques, it’s possible to lose something in translation and jeopardize a deal through
misapplication. Executives should resist the temptation to assume that their organiza-
tions possess the whole truth about MA management and approach each deal with the
wary conviction that we all have much to learn. DR
Punit Renjen is a principal with Deloitte Consulting LLP. He leads the firm’s Merger Acquisition
Integration Services practice and is also the global leader for the Strategy Operations practice.
Dwight Allen is a director with Deloitte Research specializing in MA studies.
Endnotes
1 Bruner, Robert, Deals from Hell: MA Lessons That Rise Above the Ashes. John Wiley Sons, Inc., 2005.
2 Harding, David and Rovit, Sam, Mastering the Merger: Four Critical Decisions That Make or Break the Deal. Harvard Business School Press, 2004.
3 Lajoux, Alexandra Reed, The Art of Merger Integration: A Guide to Merging Resources, Processes, and Responsibilities. McGraw Hill, 1998.
4 Raynor, Michael, The Strategy Paradox: Why Committing to Success Leads to Failure (and What to Do About It), Currency, 2007.
5 Koch, Charles, The Science of Success, Wiley, 2007.
d e lO i T T e R e V i e w. c O M Deloitte Review