Organizations around the world need not look far into the future to see the tsunami of business disruption heading their way. In fact, this wave of disruption is already beginning to hit, deeply transforming the way companies operate and engage with customers.
This disruption is reverberating through organizations in every industry. We can see examples of this everywhere: in the financial services sector, blockchain and AI are driving profound change; in health services, digital technologies are revolutionizing healthcare delivery systems. The Internet of Things is creating a connected web of products and componentry in the world of manufacturing and beyond. These technologies have the potential to radically alter the way that businesses function, and quickly: what is working today may very well not work tomorrow. In the face of such profound change, you can no longer rely on old strategies.
Executives must contend with this wave of disruption, appearing on the horizon in the form of technological change, shifting customer preferences, and an evolving regulatory landscape. Let’s face it: running an organization for competitive and profitable growth has always been a challenge. But how should executives respond and navigate these new complexities? What business and operational changes need to be made, and how can leaders anticipate future customer demands?
This is the existential plight currently facing executives. They have no choice but to confront these challenges and to ask themselves what it means, constantly reevaluating the place of their organizations in an ever-changing business landscape. As executives encounter these advancements in technology and increased market competition, they face an inescapable choice: disrupt yourself, or be disrupted.
To disrupt yourself, you have essentially two options: to transform from the inside, or to acquire the capabilities that you require to fully evolve. The first option carries significant risk, and requires momentous organic change in people, process, and technology. Considerable investment of time and resources is required to assemble a team, create the momentum, and build the internal capabilities necessary to bring about change. Cultural change is challenging to bring about, and resistance to change can hamper its implementation.
Transforming the essential elements of an organization internally and organically is a long, resource-intensive process that carries uncertain results. Therefore, many organizations are looking toward another more appealing option: acquiring the assets they need in order to remain competitive.
What this means is that organizations are using M&A not only to expand on what they are already doing, but to transform themselves, so they can thrive and prosper in the long term. This new strategy represents a very different kind of M&A, compared to deals of the past that looked purely for economies of scale and consolidation of costs.
But if organizations are using M&A to achieve different results, then they must also run the M&A process itself differently.
The M&A process must be more responsive to change, more innovative in style, and more streamlined in approach. At its core, the M&A process needs to be agile, so that those involved with execution are more adaptive and collaborative, maintaining a perennial focus on value. Unlike more traditional approaches, an Agile approach helps organizations deliver value even when the final destination remains clouded and open to discovery. It’s this level of agility and adaptability that fosters the continuous delivery of value, resulting in transformation.
The message is therefore simple: if M&A is used to transform an organization, the M&A process itself must also be transformed.
The traditional M&A approach follows a management paradigm that seeks certainty, standardization, and continuity. It pursues a transactional way of thinking and behaving that views M&A as a process that follows a set of industry norms associated with buying or selling a business — go to the market, make a deal, and close it. There is no inherent problem with this approach; in short, this is how transactions work. But if we rely on past playbooks to make decisions about the future, then we start to sow the seeds of failure. The efficacy of these playbooks in the past does not guarantee that they can meet the demands of the present, let alone the future. To put it more bluntly, if M&A is being used to achieve transformational goals — whether in existing operations, products or customer experience — the transactional approach will not deliver transformational results.
What makes the Agile approach so potent is the way it allows practitioners to adapt quickly to new challenges and opportunities, and to develop clarity and accountability. Furthermore, this level of operational discipline offered by Agile creates a powerful environment for innovation and learning.
The time to act is now. Adopting Agile M&A starts at the top, with leaders fully committed to new ways of working. It is about moving from the traditional playbook approach of the past to a new way of working that reflects the way the modern economy functions. Rather than see M&A as disparate teams working through rote pre- and post-deal steps, Agile transforms M&A into a holistic exercise involving one team, one process, working towards one set of goals. Above all, Agile is about a total focus on value.
Agile M&A is not an option — it is a business imperative. To understand why, organizations need to recognize that M&A is an inherently risky endeavor. There are some organizations that achieve consistent success in their dealmaking, with winning investments. Likewise there are organizations who rarely seem to get it right, with one failed deal after another. Then there is the silent majority: those who get it right sometimes, but not often enough — and these are the organizations that experience the gambling odds when they commit to M&A deals. When investing with such significant sums of money, however, the gambling approach must be replaced with a more rational, modern and coherent strategy that better aligns risks with rewards. Casino odds must give way to more acceptable levels of business risk.
Organizations looking to transform through M&A must see this as an urgent challenge. The very survival of organizations is at stake in this new disruptive economy. Agile M&A represents that much needed shift from playbooks of the past towards a more animated and enlightened approach that delivers value faster, with fewer headaches and with greater odds for success. Organizations are responding in our age of disruption by using M&A to transform what they do. Quite simply, it's cheaper, better and faster than the organic alternative. However, to be truly successful, the discipline of M&A itself must leave its legacy past and embrace the age of Agile.