Why Everything You've Been Told About Integration is Wrong
Listen to the discussion about this topic from the M&A Science Summit here.
When integration practices and past integrations are not closely examined and learned from, it can be easy to revert back to old ways and/or rely on standardized playbooks in the midst of the chaos of a deal.
Integration is a delicate art that must value people and culture, and more and more practitioners are realizing this, yet still making mistakes and falling victim to common, incorrect assumptions. Today, we examine six incorrect approaches to integration and attempt to learn from them.
Incorrect Assumptions and Practices Related to Integration That are Holding You Back
- The assumption of the challenge of cost over revenue, which comes from outside advisors; it is hard for outsiders to find revenue synergies - revenue synergies can take longer to yield, but the benefits are massive. Thinking about revenue synergies is a much more forward, transformational, long-term way of thinking.
- Another incorrect assumption related to integration is that integration comes from a functional perspective when in reality the benefits of integration really come between functions. By nature, M&A is cross functional; functions in general lead to silos and narrow thinking - neither of which have a place in M&A or the modern working world. For example, HR might need to work with Facilities to discuss new locations and layouts, while Product Development often has to collaborate with the Sales function.
- The way practitioners approach Day 1 is another area where integration has historically taken the wrong approach. Focusing on “taking control Day 1” is an idea many practitioners lead with; however, the problem here is you are leading with the notion of “taking control” on the basis of very limited information/knowledge; this approach should be replaced with the goal of achieving transparency Day 1. Specifically, you need to know what is going on and what people are working on so you can gather information, continue work, and address problems that arise (basically taking a more Agile approach).
- Integration has also often founded itself in the belief that people always dislike or struggle with change. While leaders must be thoughtful and consider the employee experience when it comes to change, people are inherently adept at adapting and changing. Think of what we are currently living through with COVID 19 - is there a more powerful or extraordinary example of how people can change and adapt (and do so fairly quickly)? Of course, people are able to adapt quite well when they trust their leaders and are supplied with clear information and directions.
- Integration is inherently linked with examination and cultivation of culture. However, when thinking about integration, we need to go broader than culture, we need to think about ecosystems and successful ecosystems: (1) have empathetic leaders who can communicate and engage on a deep emotional and psychological level (2) cultivate and appreciate having an open and honest environment (aka they are okay with the employee who challenges ideas and norms), (3) breakdown functions and barriers and (4) demonstrate the power of change through small visible signs of change (because, of course, the culture and its larger ecosystem drive change).
- In a similar vein, we also often fail when it comes to culture and integration because we tend to stop at the diagnostic level - culture goes much deeper than naming behaviors and grand values on a Powerpoint. Furthermore, we tend to believe culture is a workstream, when, in reality, it is owned by everyone. Of course, this begs the question, “if there is not a workstream for culture, who is accountable for it?” Again, everyone in the organization is responsible for culture, but it is important to select a few people deemed as authentic and key influencers, and then target culture building through these individuals (these are not always the people “at the top” - might be reception, or the company naysayer - these are people who have connections and information). Finally, we tend to believe changing culture is a silver bullet when, in fact, it is many small steps (i.e. changing titles or rearranging the floor plan). A specific small step to keep culture discussion alive and meaningful is to begin meetings with a check-in on culture and employee concerns across each workstream - better yet, make this part of the meeting agenda so it does not get overlooked.
Just as there is no single corporate culture or organizational structure, no two deals are alike. Taking into account best practices when working with new people and striving to create successful ecosystems takes time, but significantly helps to extract deal value and generate a positive employee experience. The importance of how deal practitioners treat people cannot be overemphasized...even in the current COVID landscape of working from home.