Download the Case for iTP

iTP, the Innovation for Travel Performance forum began in 2010 to assist Global Travel Managers to lead their organizations through changes related to the economic crisis that began the year before.

In 2018, we asked our members to evaluate the value to them of participating in iTP. They say they get more out of iTP Conferences than any other Travel industry forum. They cite unbiased insights and ideas from peers – information they cannot get from their TMCs or by attending sponsored events.  Our intimate settings for small group discussions provide focused insight and practice detail that they cannot get from large industry conferences. At the same time, the annual quantitative benchmarking shows members how their programs compare with others on many dimensions and assists them in pinpointing improvement opportunities.

The results are summarized in a short Powerpoint document that you may access by entering your information below.

The Best Start is a Quick Start… But How?

Quick Starts are critical for integration success

In the high stakes environment of final negotiation and closing, there's not much oxygen left for early integration planning, the kind most advisors would say are so important to deal success. Yet important questions generally come pretty soon after a deal is announced. Having the right answers and being consistent in your leadership greatly improves your ability to get full value from an acquisition.

Getting critical integration steps started isn’t just a question of getting your team to do it. There’s a business to run – two businesses actually. Customers need to be sold and served. Employees need to keep focused on their objectives. Then, there are questions about what the deal means – to employees, customers and shareholders. Getting agreement on the right answers requires collaboration and discussion. So, while the value of a fast start is apparent, the time it seemingly demands is hard to come by.

Quick Start was designed specifically to create the foundation for a successful integration while also preparing leaders to communicate clearly and confidently about the transaction. It is our methodology for rapidly answering the critical decisions that attend any acquisition or merger. It engages leaders on both sides in addressing eight areas of concern for employees, customers and shareholders. The approach can be tailored to any situation, but is characterized by urgency and focus, both of which are required to develop a comprehensive plan with full leadership and organizational support.

Click below to download a 4-page PDF describing Quick Start in more detail.

Webinar: Getting Culture Fit Right in Post-M&A Integration

For many years, culture clashes have been blamed for the frequent failure of acquisitions to deliver their promised value.  We believe that culture is one of the keys to unlocking lasting M&A success. Leaders and dealmakers need strategies for minimizing risk and maximizing upside potential by dealing effectively with culture.

Last week, we had the pleasure of co-presenting a webinar on this very topic with JP Laqueur from Brand Foundations.  More than 100 people registered and we spent an hour discussing culture’s impact on M&A success and how it can be used to de-risk deals and maximize upside.

We showed how culture plays a critical but often-overlooked role at every stage of the M&A process, from due diligence to planning to integration.  We then reviewed two simple but effective tools for building and harnessing the power of an integrated post-merger culture:

  1. CultureTalk: An employee survey tool that quantifies an organization’s cultural character or archetype, identifying potential areas of conflict or connection when bringing two or more groups together.
  2. Purpose-Way-Impact: A messaging and communications framework that provides a more concise and inspiring way to convey the rationale for a deal and create alignment among all stakeholders.

We even conducted a “living case study,” applying both tools to the current Amazon-Whole Foods integration to show where those two cultures are likely to clash and highlight how leaders could create a shared narrative around common ground.

The presentation was followed by a robust Q&A, and we know the subject struck a chord with participants as we continue to receive incredibly positive feedback, including:

“Excellent job on the webinar!  Loved the examples… really brought your points to light.” 

“Some great ideas emerged for me. Specifically, a way of helping (my F50 client) thru an internal merger of two departments.”

“Excellent webinar today on mergers and the need to consider culture compatibility. Thank you.”

“Great webinar! I now have good context of how you are using tools like Culture Talk, etc. to guide successful M&A.”

Thanks to everyone who joined in! If you missed the webinar, request a link to the full recording here.

 

Do Compatible Values Predict M&A Success?

In many M&A deals, the similarity in values is an early sign to would-be acquirers of cultural compatibility. Culture differences are often cited as the third rail of M&A integration success, so having some comfort on that front is reassuring, to be sure.

Just last week, United Technologies’ Chairman and Chief Executive Officer Greg Hayes was quoted as saying, “UTC and Rockwell Collins share cultures of mutual trust and respect, accountability and teamwork that will allow us to work together to achieve our common goals.” While it remains to be seen if this is true, there are many situations where common values did not spare acquirers from significant cultural challenges. We have certainly worked with numerous organizations where a similarity in values was associated with conflicting models of leadership and, as a consequence, meaningful differences in company culture.

What does this tell us about values and culture? There are at least three possibilities. A common situation is that apparently similar value statements are associated with very different expected behaviors in the two companies. For instance, the common value of “treating people with respect” may lead people in one company to defer to the opinions of a recognized expert, while in another company the same value supports lively and open debate about decisions before consensus is reached. This is the challenge of alternative meanings.

A second possibility is that the values are aspirational. In this case, the leaders believe the values are important, and may even determine success, but the organization is not yet living up to them. This is a challenge of leadership execution.

Another possibility is that the value statements do not align with the vision of enterprise, but rather they are branding statements, intended to attract without driving any particular behavior. This is the challenge of “feel good” values.

So, caveat emptor is an appropriate caution. Are your values similar to those of your acquisition target? And are any of the challenges above at play to make the cultural picture more complicated?

Our solution is to take advantage of due diligence to dig into the values statements and understand better how the company translates them into action. Ask these questions of the CEO and several other leaders as part of due diligence. The picture you develop of the target organization will be a better reflection of the true culture of the place than the value statements alone might provide. Here are some suggestions for questions to make sure you have a good understanding of how the values operate in the potential acquisition.

  • Tell me about the value statements on your website. How were they developed? Who was involved? How long have they been around?
  • How do the values relate to your vision, your aspiration for where you want the company to be in 5 or 10 years?
  • When you say, “insert value statement here,” what specific behaviors are you expecting to see? (Do this for each value statement)
  • Give me a few examples of how the values have guided action or decisions at the executive level? (…at middle manager levels?)
  • Tell me about some occasions when people did not live up to a value. Describe the situation, the value at play, and how the organization responded.
  • What role do values have in hiring decisions? How does this work in practice? Can you give an example where values played a role in hiring someone that might not otherwise have been hired? (… or played a role in deciding not to hire someone.)
  • Are the values weighted significantly in employee recognition and in determining rewards? Describe how this works in practice.

Most companies won’t call off a deal due to differences in values or culture, and you probably won’t either. These differences need not scuttle a deal, nor do they portend a poor integration. Instead, the contrasts you see when probing at this level should open up early avenues for discussing culture, culture differences, and how to address them, before you close the deal.

Telling Stories: The Antidote to Culture Clash in M&A

Speaking about culture in the context of an acquisition, people are often on the defensive. Employees in the acquiring company generally believe their culture is good, or at least that it need not be changed to accommodate an acquisition. Those in the target company are fearful about the impact of impending changes that might challenge their long-held cultural norms and values. On both sides, people tend to defend the culture they know, and conversations about culture tend to be unproductive.

Defensive discussions about culture are often conducted with the tone of an imperative that makes them hard to question. As one CEO recently told me, “We are controlling. We have to be controlling because our industry is so regulated. We could be in a lot of trouble if our people do something wrong.” Statements like this above are hard to challenge, particularly when coming from the CEO. Instead of creating more understanding, for example by asking the “five whys,” those who hear statements such as this tend to accept them at face value.

Ironically, this company had just bought another, one that was also in a highly regulated business. But this one operated with a completely different culture, one defined in part by collaborative problem solving. In that organization the CEO and leadership team had granted considerable autonomy to those closest to the work to devise solutions to client related issues. Each organization believed its culture to be essential to its success. It took many months for the initial prejudices and fears about the cultural differences in these two companies to lessen. Meanwhile, a lot of energy was consumed in struggles over culture, especially in the upper management ranks. In general, uncertainty around culture induces a drag on progress during post-merger integration, just when it is especially likely to come with a high cost.

We believe there is a simple solution to this problem, but first let’s look at the relationship between culture and performance

 

Organizational Culture

Culture is, in the words of one of its foremost scholars, Edgar Schein1,

“A pattern of shared basic assumptions learned by a group as it solved its problems of external adaptation and internal integration, which has worked well enough to be considered valid and, therefore to be taught to new members as the correct way to perceive, think and feel in relation to those problems.”

The culture we experience in an organization is a snapshot at a point in time along a journey that leaders and employees are experiencing together. It is the result of learning from what worked and what did not as the company developed and prospered.

It follows that culture is directly linked to the organization’s performance. Most strategic acquisition targets today are superior performers, and the culture they exhibit delivers this performance. So understanding this linkage is essential for acquirers, lest they inadvertently destroy what made the target company a good acquisition in the first place.

Misunderstandings around culture are often blamed for M&A failures, but we believe that the issue lies elsewhere, in the realm of conversation and communication. We believe that the solution to culture clashes isn’t defensive talk that reinforces the status quo in each organization. What we need instead is to tell stories that get to the deeper assumptions and beliefs that drive behavior and results. That brings us back to how we speak about culture.

 

Telling Stories

There are many opportunities throughout the life cycle of a deal to tell stories about culture. Telling carefully selected stories from an organization’s past helps to describe not only the different dimensions of culture – behavior norms, assumptions, and the like – but also the logic or pattern of events that led to the norm or assumption being widely held. Here are several ways to use stories to explain the relevance of one’s own culture:

Acquiring firm leaders ought to begin by making obvious the connection between their own existing culture and its consequent impact on performance. In addition to the practical value of this exercise, it makes the leaders more open to exploring the culture-performance link in every potential acquisition candidate.

Then, during due diligence, selected interviews should focus on understanding the same mechanisms in the target company. If an acquisition agreement is signed, leaders of both companies can come together to reveal more of the underlying beliefs and assumptions that are expressed in each company, sharing with each other the specific historical experiences that led to these beliefs becoming dominant.

Later still, integration planning should include discussions about the appropriateness of the current cultures to the mission, vision and strategy of the combined company. This might lead to a determination to shift the culture in some ways over time to better support the strategy.

Meanwhile, the development of a common set of values and expected underlying behaviors represents another opportunity for meaningful discussions about culture and its impact. After deal closing, these discussions can be expanded to all employees as one part of the integration effort.

Exchanging stories will strengthen the ties between people, reducing resistance to change and greatly improving the odds of generating growth synergies that are otherwise hard to realize in an acquisition. Doing any of these well can have a tremendous impact on acquisition success. Doing many of them is the kind of commitment that sets the most successful acquirers apart.

 

Summary

The key to avoiding the negative drag of cultural uncertainty is to discuss the topic early, openly, purposefully, telling and listening to stories of the culture creation journey. Once exposed to the stories, the underlying reasons for observed behavior in the other organization, individual anxiety falls, mutual understanding increases, and the integration process moves forward with more collaboration and greater respect.

 

 

1Schein, Edgar H., Organizational Culture and Leadership, 4th Edition, 2010, p. 22.

 

The Missing Intent in M&A

Culture, as we often hear, is the bogeyman of failed post-merger integrations (PMIs). Cultural incompatibility frequently is cited as the cause of deal failure – recall Daimler Chrysler, AOL Time Warner and others. These were unwound with great loss of shareholder value after cultural differences could not be reconciled. Because of their size and audacity, we remember them.

But unwinding of a big deal is not the main outcome of cultural differences for merging companies. Contrary to what we usually hear in the press, M&A deals, on average, perform about as well as other types of investment, and many ultimately deliver what was forecast. Escaping notice in much of this analysis, however, is the missing performance upside associated with underestimating the positive potential of cultural alignment.

Intentional leaders, such as Andrew Taylor of Enterprise Rent-A-Car, take an intentional approach to cultural assimilation that he calls Deliberate Integration.

Read the article here.

Build a First Quartile Integration Capability

Before we started Acquisition Solutions in 2014 to focus exclusively on merger integration, I wrote an article on building an internal acquisition integration capability. It came to mind recently as a number of people have called to discuss establishing just this kind of capability in conjunction with an acquisition that was on the horizon.

The dynamic of combining two or more companies calls for capabilities that are not usually found in any of the usual process improvement or change management approaches. What is missing from these frameworks, and what is essential to successfully integrating an acquisition, are elements that successfully engage employees.

Click here to read the three ways to improve M&A outcomes.

How Strategic is Your Deal?

The stock market is quick to judge the strategic value of a deal, sometimes for better and sometimes for worse. If the strategic intent makes logical sense to observers, and adds value to the corporation, the buyer may well be rewarded by the market.

Download this short newsletter called “How Strategic is Your Deal?” by clicking on the text link below:

Strategy Newsletter April 2016 Strategy Newsletter April 2016 COVER-page-001

Integrating a Merger or Acquisition: Executive Committee Discussion Topics

Most senior teams understand that M&A transactions present huge demands and require a different kind of leadership than their day-to-day experience usually entails. In particular, balancing “hard” and “soft” leadership issues requires some objective assessment in light of the impact of the combination on both organizations. Here’s a balanced list of discussion topics for the Executive team to get the process off to a good start. Depending on scope and size of the deal, this could be covered in a single meeting or in a series of meetings.

 

Acquisition Strategy

  • Are we sure that a strategy of growing through acquisition will deliver value to shareholders? What risks do we see in accomplishing this?
  • How will the currently proposed deal deliver value?
  • What will be different in one year if we are successful?
  • In what ways will our organization be challenged to deliver on the promise of this deal?

 

Operational Integration

  • What plans will we make before deal closing?
  • When will we make these plans?
  • Who should we involve in the planning process?
  • Which integration elements should move most quickly, and why?
  • Do we have the people and senior leaders to make this acquisition a success?
  • In which areas should we proceed more slowly, and why?

 

Cultural Intentionality

  • What words or phrases do our people use to define our culture?
  • How does our culture drive superior performance?
  • What might we choose to improve about the culture?
  • What do we know about the target culture and how that has driven their performance?
  • What common culture of performance should we strive for during integration?
  • Which of their people are key to the value we want to deliver? What is our plan to retain target organization staff?

 

Leadership

  • What have we learned about acquisition success from previous experience?
  • Have we included the potential benefits and challenges of acquisitions in our strategic planning process?
  • How will we incorporate the target’s leaders into our organization?
  • What messages are important to deliver about the acquisition?
  • What are our plans for communicating with key stakeholder groups?