We are moving into an era of M&A Integration 2.0. The developments of technology and a shift in attitudes now gives companies considering major acquisitions the chance to remake their approach to acquisitions to make it more inclusive, collaborative, quicker, more coherent, all with a greater possibility of remarkable quantum leaps in value creation.
This edition of the Beyond the Deal blog looks at the improving climate for taking on significant acquisitions and in an extended interview with leaders from BrightArch, how their tool, OrganizationWeaver, enables migration of large numbers of staff to the new organization when two major companies combine.
The arrival of OrganizationWeaver on the scene is indicative of the coming of age of a new set of supporting integration tools that will forever change the world of large scale integrations in key ways. Of course, this in no way reduces the need for a sound, grounded and visionary corporate acquisition and integration strategy to guide the use of these tools, such as that outlined in Beyond the Deal. Otherwise companies get to go “where they may not want to go” faster.
Technology is the tool, not the master. Never forget that the greatest tool for acquisitions and integrations is your collective organizational brain. You are the guiding actor in this complex undertaking. Make sure you take advantage of the quicker cycle times, value enhancing capabilities and power of the emerging array of tools as we move into the Integration 2.0 era.
Finally, another dimension of Integration 2.0 is the availability of the wide array of social media to incorporate into the integration process. The opportunity here is to move from “business” processes to the more powerful and multi-dimensional world of “social” processes that have the potential to engage all of the stakeholders of the two combining companies as well as those participating financially, as suppliers, customers and community members in a wealth creating conversation in which all can become co-creators of the new organization. Sound risky, idealistic, impractical – not really! Look at the approach created by Beyond the Deal and Euan Semple and think about where you might want to experiment in moving in this more expanded direction.
Shift in the Winds: M&A’s Are Coming Back
Several announcements came out in July that indicate that major acquisitions are again on the table for leading companies.
One of these significant announcements came from Sandy Cutler, Eaton Corporation CEO, who told Reuters: “We are now seeing more attractive opportunities,” Cutler said in an interview. “Our hope is to deploy the capital at advantageous rates that makes it better than a buyback to our shareholders, but it remains to be seen whether we get the deals done….We’re willing to enter again. A year ago we weren’t, because we were worried about the economy.”
Eaton Corporation is a diversified power management company, with $12 billion annual revenues and 70,000 staff worldwide. As the recession began, Eaton decided to concentrate on preserving its capital and staff. With earnings rising Eaton and others are revisiting that strategic position.
Another source was the publication, Mergers and Acquisitions, which reported that the consensus of those speaking on the ‘Corporate Development Leadership’ panel at the July Argyle Executive Forum (www.Argyle Forum.com) was similar, saying that before the year closes out the M&A market will return.
Brian Cook, vice president of Honeywell International’s corporate development team, said he is aware of “a desire for folks to jump into the M&A market.” Scott Barnette, with Hitachi, said, “Chief executives were only temporarily distracted from promoting growth plans to boards over retrenching.” He added that “the industrials space, in particular, has regained its footing on the M&A front.”
Panel members agreed that deals they began discussing as far back as 2007 remain tabled, for the most part, over the past few years. Today, though many of these opportunities are being re-evaluated. This is largely due to increased confidence that comes from improving earnings reports.
We may be at the beginning of a shift beyond the defensive, consolidating acquisitions that dominated this past year and towards growth oriented acquisitions that allow firms to reach different levels of performance in an array of geographical arenas and types of activity.
We will soon see who has retained or developed not only their “deal” skills buy also who can bring their integration capabilities back into play in the updated, post-recession world. Will they employ standard operating procedures, or will they be experimenting with becoming customer-centric, with a lowering of firewalls and an increase in the use of social media and other forms of collaboration? Companies have become more nimble and global in their other processes. Will they be similarly adept and fluid in their integration approaches?
A Conversation on BrightArch‘s Human Capital Integration Tool: OrganizationWeaver
Retaining, attracting and selecting the people that have the right combination of skills, attitudes and talent to move a newly combining company forward is one of the central challenges when two sizable companies combine in a major acquisition.
OrganizationWeaver, by BrightArch, incorporates both advanced technology as well as a much more participatory outlook on working through the complex people issues when two large organizations combine. Tor Kielland, CEO of BrightArch and Nick Peters, Chief Marketing Officer, spoke with me about what OrganizationWeaver is and how it works.
This conversation is part of the Beyond the Deal’s ongoing exploration of tools that are becoming available to make M&A integrations build value, be more effective, efficient, and collaborative, as well as reduce financial costs and lower organizational stresses. These are approaches with characteristics that are compatible with the overall Beyond the Deal approach.
1. What is OrganizationWeaver and how does it give combining companies major advantages beyond normal integration practices?
OrganizationWeaver is the efficient way to design and staff combining organizations transparently. Normal workforce integration practices tend to take too long, are susceptible to political wrangling, and leave employees frustrated. OrganizationWeaver can cut the typical human capital integration time in half and significantly reduce on-going personnel problems. We think this is a considerable advantage for combining companies, and can set the foundation for meeting strategic goals.
2. How does OrganizationWeaver support the framing/achieving of strategic goals in the newly combining company?
Strategic goals are just words until people throughout the company have defined roles and want to achieve the goals. OrganizationWeaver helps define the roles and structures so that the right people can settle into the right jobs. One of the most intriguing aspects of OrganizationWeaver is that it manages to accomplish this in a way that gives all stakeholders a reason to be engaged in the process. It gives management an efficient way to work through the details of every division, unit, and position. It gives employees a chance to take charge of their personal goals and match them to the strategic goals. And finally, it provides a strict decision-making framework to fill every position with the best person. Engaging an entire organization to achieve strategic goals quickly is a monumental task, but OrganizationWeaver makes getting the right people in place much easier from beginning to end.
3. How do the elements of OrganizationWeaver work together to rapidly accelerate an integration of large companies and yield a higher quality outcome at the same time?
OrganizationWeaver consists of three modules that work together:
- The Organization Design module imports and standardizes key data about the combining companies into one central database. With data all in one place, multiple team members can simultaneously rearrange organizational structures (or build entirely new ones). This saves considerable time when it comes to understanding what the companies look like today, and how they should look in the future. In addition, requirements and descriptions for each position can be defined using templates. Further, this ensures that each position is fully defined before moving on to the next step.
- The Employee Preferences module is an intranet application for employees to voice their job priorities and capabilities. Thanks to work completed during the Organization Design phase, employees can browse through the entire new organization and communicate where they think they can add the most value. Engaging employees doesn’t have to just mean top-down communication anymore. With OrganizationWeaver, management can listen to, and act upon, the preferences of every employee. This substantially increases the quality of the new organization and gives employees a reason to stay.
- The Staffing module is where company needs get matched with employee preferences. All of the data from the Organization Design module and the Employee Preferences module are brought together so that the project members can objectively review, rate, and rank each person on relevant positions.
4. What does a company need to do to become ready to use OrganizationWeaver to best advantage?
At a bare minimum, the integration project needs to have a separate workstream for handling the development of the new organization. That workstream needs a core group in charge who understands the importance of putting people first.
Ideally, there will also be people within the company (or trusted advisors) who understand the core capabilities of OrganizationWeaver and how it fundamentally changes the human capital integration process including how it can alter timelines, projections, and project staffing.
5. What kinds of experiences have companies that used OrganizationWeaver had?
OrganizationWeaver was used in an organization that reallocates thousands of employees every year. They said that OrganizationWeaver “quickly became our most important working tool for staffing and implies considerable savings for us”.
Key participants in the reorganization of a 10,000 person Scandinavian energy company that employed OrganizationWeaver to staff people quickly and efficiently, commented that:
- “There were no information leaks. We were held continuously updated, so that no-one could spin any fear scenarios.”
- “We were challenged to think through our own career. [..] Nothing is more exciting than this.”
- “The process has been tidy and sound. We have been asked for input all the way.”
6. How would companies adopting OrganizationWeaver reflect a change in the way of thinking?
There has recently been a large push within corporations to incorporate more social interactions and have flatter organizations. When employees have the tools to speak for themselves, there is less need for the top-down approach of traditional hierarchical structures. When a company adopts OrganizationWeaver, they are acting on this new way of thinking. They’re saying that bottom-up information is valuable, manageable, and provides a real competitive advantage.
Any final thoughts?
OrganizationWeaver brings together some of the best ideas about how to overcome the imbedded problems of human capital integration. We incorporated technical “best practices” (e.g., data-handling, security, process, and user-interface) with business “best practices” (e.g., efficiency, transparency, meritocracy, etc.). The result is something much more than buzz-words and promises for the future. OrganizationWeaver is real. It’s robust. And it provides concrete value over the short and long-term.
Turn your “business” processes into powerful “social” processes: Learn how to set up and implement a social media strategy for integrations:
Progressive Practices, partnering with Euan Semple, a leading practitioner in social media, offer a strategic approach of social media across the range of action areas involved in integrations. Click on this link to Social Media Strategy to Transform Integrations PowerPoint presentation to get a strong picture of a strategic approach and how you can start developing this capability in your organization now. See how you can develop and implement an effective social media strategy in your firm. Contact Jay Chatzkel or Euan Semple to make arrangements and for further information.
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