Seventy percent (70%) of change efforts fail to deliver the expected results, according to Changing Change Management in the July 2015 issue of McKinsey Quarterly. The low success rate is attributed in part to the limited scope of most change management techniques, which focus on control and minimizing distractions. Change management is appropriate for small, contained changes such as updating the software in an accounting department. It is not appropriate for change efforts as complicated as post-acquisition integrations, in which case change leadership techniques are required. John Kotter describes the differences in change management and change leadership as:
Change management, which is the term most everyone uses, refers to a set of basic tools or structures intended to keep any change effort under control. The goal is often to minimize the distractions and impacts of the change. Change leadership, on the other hand, concerns the driving forces, visions and processes that fuel large-scale transformation.
Post-acquisition integration is a complicated form of strategic execution that requires breakthrough designs and unique organizational accountability during implementation. We think that organizing the integration as a series of well-orchestrated breakthrough projects is the optimal means of:
- Accelerating employee engagement
- Aligning product and service offering to capture additional customers and geographies
- Developing additional leadership capabilities
- Establishing new levels of organizational accountability
- Achieving the expected financial results and value capture
The cornerstone for creating Breakthrough Projects is the Charter. The Charter provides authorization and direction for the project and the people involved. The essence of a Breakthrough Project is that it is a commitment to accomplish what is possible, but not predictable given the current circumstances. Accomplishing the Breakthroughs will demonstrate that the people in the organization as capable of accomplishing more than they, and others, previously thought they could. The accomplishments achieved by the Breakthrough Project lay the foundation for transforming the organizational culture during the midst of post-acquisition integration.
A Compelling Future is Essential
While creation of a compelling future was hopefully the basis for the acquisition, it is wise to assume that the ability to comprehend or “see” that future quickly dissipates in all the chaos surrounding closing to the transaction. A Charter for Breakthrough Projects provides a new means of seeing that future. The context for writing the Charter is from the future. The Charter authorizes and creates a project which will provide, at least in part, the path from the present to the future.
Give Them a Bigger Problem
Creating a Charter for a Breakthrough Project during post-acquisition integration also has a particularly therapeutic effect. Anxiety and uncertainty are normal during an integration, since employees from both sides are unsure of what will transpire. Creating a Charter which requires Breakthroughs serves to give this group of employees and these parts of the organizations a “bigger problem to solve”. This is one of the change leadership techniques we discovered long ago. During times of transformation, assigning a group of employees a bigger problem to solve serves to enable and engage them in a powerful way. In a typical change management approach, the focus would be on providing reassurance and attempting to control their anxiety. In change leadership, we seek to deploy their anxiety and energy in addressing big challenges which if addressed will make major contribution to the newly combined organizations.
Identify the Outcomes to be Achieved
Charters are written from perspective of a future which is completely successful. That includes success in the improved offerings to customers, organizational integration, transformed organization culture, and value capture at or beyond the expected levels. Success in acquisitions requires creating clarity of outcomes which cut across functional lines. These outcomes should be thought of as a tapestry which involves all of the organization. These outcomes identify areas that are important for the long run, such as expanding the customer base not shrinking it, expanding geographies, innovating in product and service lines, and increasing market share in areas which are growing and have higher value rather than those which are shrinking.
Most acquisitions fail to achieve the expected financial results and value capture, but it doesn’t have to be that way. If a post-acquisition integration is approached as strategic execution with key actions framed as Breakthrough Projects, the rate of success dramatically increases from the predicted 30% rate.
To learn more about how to plan breakthrough projects, download our white paper, "7 Elements for Chartering a Breakthrough Project".
In it you will learn:
- what a 'Breakthrough Project' is and why it's critical to organizational transformation
- why creating a 'charter' is a critical step in the process
- the critical roles that key people must play in the project to enhance success