Platt Perspective on Business and Technology

Intentional management 19: building bridges to create and sustain value in mergers and acquisitions

Posted in HR and personnel, strategy and planning by Timothy Platt on May 6, 2015

This is my 19th installment in a series in which I discuss how management activity and responsibilities can be parsed and distributed through a business organization, so as to better meet operational and strategic goals and as a planned intentional process (see Business Strategy and Operations – 3, postings 472 and loosely following for Parts 1-18.)

I began explicitly discussing acquisitions and mergers in the context of this series in Part 18 and before even noting how I will continue its discussion here, I find myself sharing an old adage that I have found of real value that is particularly relevant: “the devil is (nota bene, or at least can be) in the details.” Broad brushstroke notes about management in acquisition and merger contexts, as offered in Part 18 can only go so far in offering value. Making management work in those change-driven contexts is all in the details.

I offered in Part 18, a briefly sketched scenario of a larger Company A acquiring a smaller Company B that could bring it a competitive strength-defining source of value that it could not otherwise cost-effectively obtain or develop on its own. And I focused there on the challenge of integrating this new business acquisition into the larger acquiring company’s systems and ways – but without crushing the sources of value that the smaller acquired company was brought in for, as I have seen happen for real businesses as they merge through acquisition processes.

I then followed that scenario sketch in that same series installment; with some very briefly stated comments on business mergers where the companies involved can be seen more as equals in their coming together. The devil, as I acknowledge, can be in the details and for both of these scenarios. And that fact has to be effectively addressed if either acquisitions or mergers are to work, and certainly when the businesses that enter into them start out pursuing differing business models and according to differing and potentially conflicting corporate cultures.

My goal for this posting is to at least begin to focus on one area of detail that arises in these complex progressions of strategic and operational joining. I ended Part 18 by stating that I would follow that posting here with a discussion of tools that would facilitate the conversations and the information exchanges needed to make any such business combining more likely to succeed, noting that this is “definitely a place where a well-designed version 2.0 interactive intranet could offer real value.” And I followed that by citing two reference postings from this blog that offer book and other reference material recommendations in them:

Connecting an Organization Together, Version 2.0 and
Creating Value from Constructive Conflict 2: thinking through the creative commons as a practical, effective business resource.

My goal in those postings was to explore at least in selective outline, something as to how modern intranets can be used to build constructive bridges in businesses in general. My goal for this posting is to at least begin a discussion as to how modern intranets can more specifically bring value in the contexts of mergers and acquisitions. And as my focus here in this series is on management systems, I will specifically address how intranets can be used to better manage business organizations as they combine and enter into these types of fundamental change, and with a focus on building management systems and the lines of oversight and supervision they create, that will work best for the newly combined and enlarged business entities that result.

I begin this with the fundamentals, and with a brief set of core points that I developed and discussed in my two above-cited background reference postings:

• It can become difficult to the point of being effective impossibility for employees and managers in general, to consistently find the right people within their own organization with the right skills and experience needed in order to address new emerging problems
• And certainly as those organizations grow out in headcount and become more geographically dispersed and when most of the people in those businesses routinely only meet with and interact with others in their own work teams, their own departments – and in their own local areas of those departments, and with people there who share their own basic areas of expertise and responsibility.
• Scale and complexity of organization in and of themselves make it progressively harder and harder to find the people in-house from across its collective range of skills and experience held, that would be needed in order to address new, novel and innovatively disruptive new challenges and opportunities. And this challenge of organizational scale and complexity begins to actively take hold as soon as the overall headcount of a business significantly surpasses Dunbar’s number and an average employee can only really know a progressively smaller and smaller proportion of the overall workforce of the business they work for.

This is why so many businesses bring in outside consultants, and even when it turns out they actually had the people and skills in house for this work already – a detail that I have seen play out many times as a consultant where it was easier to go outside of the business to find someone with the necessary skills than it would have been to find the right people in-house for this work and to vet them for being able to do it.

• If this problem can arise within a single business organization that has simply scaled up in headcount and in organizational and structural complexity, with the development of table of organization-based silos and with the proliferation of geographically dispersed physical plant and office space,
• It is certain to arise when completely separate systems are brought together through acquisitions or mergers, and suddenly have to be able to meaningfully connect and function as a single tightly organized intercommunicating system.

I wrote in Part 18 of the need to preserve the value that an acquiring larger business (there Company A) brings in, when buying out a smaller business that could bring it significant sources of value (there Company B.) And I wrote of the value of allowing for differences between acquiring and acquired businesses, and certainly for areas like corporate culture in this, and the value of allowing the newly combined business to more organically merge – instead of having a Company A of this simply force change and conformity on its newly acquired Company B employees and managers. And I wrote about the need to focus on inputs and outputs, here for Company B, and on allowing them to operate in ways that have led to their success and certainly as long as they as a business group, can meet their overall business performance goals. Making any of this work, on a day-to-day and week and month to week and month basis is all about information and communications. And that is where connecting and combining business intranets and other communications and information sharing resources become crucial for long-term success.

I am going to at least begin to dig into some of the details of this in a next series installment, where I will:

• Look into the issues of the shared larger information commons,
• And of facilitating people from what has been one side of an acquisition, or from one side of a merger in finding people with needed skills and experience
• And from both the other side of this business joining, and from their own side of this as well.
• And I will discuss that from a human resources availability perspective and from a management perspective, and in terms of developing what amounts to an in-house consultant placement capability for matching personnel and their skills, with needs they can effectively address, but without causing avoidable harm to the business processes and task completion efforts that these personnel would normally be focusing on in their more day-to-day work.
• And with that, I will introduce and at least begin to discuss contextual management.

Meanwhile, you can find this and related postings at Business Strategy and Operations – 3 and also at Page 1 and Page 2 of that directory. Also see HR and Personnel and HR and Personnel – 2.

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