KingChapman Blog

Executives Seduced by Types of Synergies in Mergers and Acquisitions

Posted by Bob Chapman on May 17, 2017 12:04:25 PM

Executives approach a possible transaction with the steely resolve to be disciplined in negotiations. Accountants, investment bankers and lawyers are hired to assist internal resources in this process. Then somewhere along the line, this self-imposed discipline breaks down and the prices and terms which are accepted are much less attractive than planned.

I had the pleasure of collaborating with the head of M&A practice for a premiere New York law firm. His firm specializes in mergers and acquisitions and is involved in many of the largest transactions. I asked my colleague to explain the phenomenon in which executive teams start off with a disciplined approach to price and terms, only to see that discipline erode towards the end of negotiations. My friend laughed, and then gave a colorful explanation. He said that what happens at the start of the process is that the executives give instructions to advisors that they must get the deal done on the executives’ terms. With that mandate, the lawyers begin hard negotiations with the other side. Then somewhere along the way, the instruction changes to “win the deal”. While it is seldom said “Win the deal at all costs”, that is essentially the message.

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Topics: mergers & acquisitions

Avoiding Blame, Excuses and Scapegoating in Leadership Accountability

Posted by Bob Chapman on May 10, 2017 4:03:14 PM

Leading in a complex world requires continued development of leadership attributes and tools.

An excellent example of this is when accountability is created in the context of leadership, rather than management. Leaders use accountability to empower, while managers use it to control. This is entirely consistent with the differences in management and leadership.

In many organizations creating leadership accountability this is easier said than done, since there is such strong presence of management orientation and little leadership orientation. John Kotter once wrote, “Most U.S. corporations today are overmanaged and underled”. In companies which are 'overmanaged', accountability will be designed to produce consistency, control and order. In contrast, accountability in leadership context is designed to align, communicate, engage, motivate and inspire.

Leadership accountability is a primary tool of executives to successfully achieve strategic growth. Executing growth strategies involves implementing substantial change, which in turn requires leadership. While leadership accountability provides a powerful leverage for growth, it can lose its power if the executives and senior managers fall into common organizational traps. These traps can in ensnarl even the most committed, experienced and intelligent executive.

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Topics: Leadership Accountability

‘The Jolt Factor’ Effect on Organizations in M&A Integrations

Posted by Larry Hoelscher on May 2, 2017 11:42:07 AM

Having been a part of many integrations of mergers and acquisitions with different clients, we have observed numerous issues that predictably arise. These issues affect the integration project leaders, the integration teams and ultimately a broader group of employees. While there was great effort in the pursuit of an M&A deal, some of the effects of these efforts on everyone else in the organization often go unnoticed.

The Chase Begins

There are predictable dynamics that will happen as the “chase begins”. As an example, rarely do the M&A integrations go as scheduled. Rather, there is a continual speeding up and then slowing down of the process. A visual analogy to this phenomenon is what happens when a train with a heavy load of cars begins to move. There is often lurching back and forth.

This phenomenon of speeding up and slowing down is due to several factors:

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Topics: Leadership Accountability

Change Leadership: Why is Change So Hard, Even When You Want to?

Posted by Larry Hoelscher on Mar 28, 2017 8:02:00 AM


Quite a few years ago, I was hitting golf balls with my 5-iron, when Kelly, my golf instructor, asked “Larry, what do you want to get out of your lesson today?” I told him of my frustration of hitting a short 150 yard slice (ugly) and I want to hit a 175 yard shot with a slight draw (beautiful!). 
After hitting a few balls, Kelly showed me a “strong grip” – which is not about how firm to hold the club, but rather the location of the hands on the club.

I tried hitting the ball using this new grip, and I swear, I could hardly get the club face on the ball. After a number of tries, I turned and looked at Kelly and said in frustration, “Kelly, I can’t hit the ball this way. It just feels too strange. Let me go back to my old grip and show me something else!”

I will never forget the look on Kelly’s face. He said, “But Larry, it is SUPPOSED TO FEEL STRANGE! If it doesn’t feel strange, then there is no change, and if you don’t change, you will never hit a 5-iron 175 yards with a slight draw!”

What a lesson! Yes, I can still hit that shot, but that’s really not the point. The biggest lesson for me was, how change can be so difficult, even when I wanted to result of the change! Here I was, a relatively inexperienced golfer, wanting to become a much better golfer, and yet, making the change was so challenging.

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Topics: Organizational Culture, Leadership Accountability

Leadership Team Development When 'Not a Strategic Bone in the Body'

Posted by Bob Chapman on Mar 21, 2017 8:07:00 AM

This colorful phrase came from a CEO. I don’t know if he invented it or borrowed it from someone else. I worked with this new CEO to create new strategies for several of the large businesses in his portfolio. This CEO had been promoted up from one of the business units and had little experience with the other larger business units. These businesses were in the down part of the cycle, which created a challenging period for his company. Our challenge was to learn as much as we could, as quickly as possible to support the business unit executives in dramatically improving their businesses. We spent endless hours in strategic review sessions as well as a lot of time on the airplane moving between locations. Often at the end of a grueling day of leadership team development and business review, we would pile onto the plane to reflect on the day. It was at this time the assessment “not a strategic bone in the body” could be used when describing the management team.

It’s wasn't that these executives were not intelligent - they were. Nor was it that they didn't know their businesses - they did. Unfortunately though, all they knew was the operational side of the business. For quite some time there had been a lack of organizational accountability for strategic thinking. Consequently, these executives did not recognize that operations and strategy were different. They were “out of balance”, in that they were strong on operations and weak on strategy. The lack of balance between operations and strategy was an issue for the previous CEO, which was part of the reason my client was hired to replace him. This body was in definite need of leadership team development, particularly in the area of strategic thinking.

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Topics: Organizational Culture, Strategic Execution

Leadership Commitment to Charters Key to Transformational Change

Posted by Bob Chapman on Mar 14, 2017 8:08:00 AM

There is an ever-increasing demand today for transformational leaders. The rapid evolution of disruptive business models and technologies combined with intense global competition is producing this demand. The need for transformational change leaders who can use breakthrough designs to create sustainable growth strategies and execute transformational change is much larger than the supply. This has created a “gap” inside many organizations which requires leadership commitment to fill. Boards of Directors and executives are looking for ways to develop transformational change leaders within their companies like never before.

We at KingChapman have demonstrated methods for rapidly developing transformational leaders at many levels of an organization. We find that the best approach to developing these leaders combines creating and leading a Breakthrough Project in their organization with active participation in courses on Transformational Leadership. The act of creating the Charter for the Breakthrough Project is often the pivotal moment, both in forming the project and in participation in the leadership course.

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Topics: Leading Breakthroughs

Show Leadership Accountability in Strategic Execution Initiatives

Posted by Bob Chapman on Mar 7, 2017 9:00:00 AM

 One might think that the leadership in strategic execution is obvious and straight forward. For example, the role of leaders is to guide the organization in executing its strategies and achieving expected results. This seems so obvious. My mom often used the phrase, “It’s as obvious as the nose on your face” to describe things such as this. While this role of leaders seems evident, in practice it often does not work out that way. The research on the effectiveness of strategic execution initiatives finds that more than half do not deliver the results. In fact, some estimate the failure rate to be between 66% and 85%.

How come? Clearly, leadership is not getting the job done.

Donald Sull gives a common explanation used by leaders in this situation, “We had a good strategy, but lousy execution”. Sull calls this a “cop-out”, and goes on to assert that the problems begin with the strategies which were likely too complicated and not designed with execution in mind. I strongly agree with Don Sull on this point. Further, I assert that the dynamic begins with leadership accountability.

Let’s look at some examples.

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Topics: Leadership Accountability, Strategic Execution

10 'Easy Pieces' for Strategic Execution Initiatives

Posted by Bob Chapman on Feb 23, 2017 9:10:00 AM

I was looking on line for design ideas for my home and came across an interesting site called Gardenista. They call themselves a 'Sourcebook for Cultivated Living'. On their site, they have some great resources from 'Garden Design 101' to finding a firm that can help you execute your dream. In addition, they have a great section called '10 Easy Pieces', which catalogs the best product choices for your garden and outdoor spaces from perrenial plants to patio furniture. If you're a gardener, it is worth a visit.

While looking at the site, I wondered what would be the 'Ten Easy Pieces' equivalent strategic execution initiatives? It may seem like a stretch to go from gardening to strategy, but the leap is shorter than you may think. Both involve thought, planning, expertise, significant time and people investments, and the right conditions.

Just as the garden site did not capture the entire story, this post will not either. It might, however, be a catalyst for some interesting ideas.

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Topics: Organizational Culture

Leadership Development Should Focus On Experiments

Posted by Dr. Robert Hausmann on Feb 21, 2017 10:18:00 AM


This article was previously published in Harvard Business Review on April 12, 2016. It was co-authored by Ron Ashkenas, Partner Emeritus at Schaffer Consulting.

 

Leadership development represents a huge and growing investment for most organizations. Industry research, for example, shows that companies spent more than $24 billion on leadership and management training worldwide in 2013, an increase of 15% from 2012.

The question is whether companies will get a worthwhile return on this investment. In past years leadership development has always been treated as a discretionary expense or even a luxury, and therefore something that could be pared down or eliminated in hard economic times. Underlying this notion was the lack of tangible results that could be attributed to management training. Without real results, leadership development becomes at best a leap of faith, and at worst a waste of time and money.

A number of companies are starting to address this issue by reversing the traditional leadership development “equation,” which essentially posits that if you give leaders the right skills and experiences, they will change their behaviors and produce better results. Reversing this means that companies start at the end — with results. In other words, leadership development begins with a real business challenge that leaders need to solve, instead of with a hypothetical case study or simulation. In order to succeed, they have to act, reach outside of their comfort zone, and adapt their approach.

Over the past couple of years, we have collaborated with the leadership development team at Cargill, one of the world’s largest global agricultural processing and distribution companies, to apply these ideas in a program for high-potential managers called “Leading in a Complex World.” Here’s how it worked:

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Lack of Leadership Commitment to Culture Stunts Growth

Posted by Bob Chapman on Jan 31, 2017 8:01:00 AM

If you are a North American, you may be unfamiliar with the term parapet. The expression ‘put your head over the parapet’ is used to describe being brave enough to state an opinion that might upset someone. I learned a different version of this expression while conducting interviews about changing the organizational culture in a UK-based multinational company. The phase was: ‘Do not raise your head above the parapet’.

This reference to a parapet - a low protective wall at the edge of a balcony, roof, or bridge - is relevant because it alludes to how a company's culture can either provide support and encouragement for growth, or hold it back. For this company, the perception of the employees was that the leadership commitment to culture was holding them back.

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Topics: Organizational Culture