It goes without saying, the business landscape has changed greatly over the last two decades, but integration strategy, planning, and execution remain in the 1990s because they are all too linear in a world that is constantly changing. Further complicating this situation are the many contradicting shifts that have occurred.
Consider, for instance, how brick and mortar companies are buying into e-commerce and digital companies, while at the same time, you have a powerhouse such as Amazon entering the brick and mortar space with its Whole Foods acquisition. The takeaway here is value creation has shifted. Consequently, value creation must be malleable and generated even during times of uncertainty, thus affecting integration practices.
With the above premise in mind, there are a couple of major challenges currently facing integration and a few trends practitioners must be cognizant of:
Additionally, three other industry trends are of note as companies work to improve integration practices in this ever-changing landscape:
While mature companies understand integration diligence needs to happen earlier and they need to operate in a more Agile way, deals can still fail. The following are four areas where modern businesses tend to make mistakes that hurt their deals:
So with these challenges and trends in mind, who should be on your dream integration team? First we must acknowledge here that the skills of integration players have changed; we no longer look to process people for integration, but rather we look for people who understand value creation - from value protection, to value capture, to value creation.
Additionally, you need players who are knowledgeable of the business, operationally strong, and possess strong IMO and project management skills. Obviously, it is hard to get all of these skills in one player; therefore, you want to take a cohort of individuals with these skills and put them through integration training. Ultimately, you should end up with players who are product experts, specialized in pricing and branding, and sales and marketing.
Of course, you’ll also want to round out your team with Human Resources, although not necessarily the operation side of HR, rather the organizational development side of HR. It should be noted not all of these players will need to be full time members of the team.
To say change management is paramount is beyond obvious. More and more companies are taking notice of the importance of change management, which is great, but change management needs to go beyond what we like to call the “touchy feely stuff” - change curves, HR presentations, etc.
First, you must size the change - get into the specifics of what exactly is changing - is it location, is it systems or processes, is it reporting relationships? Where is this change taking place? Is it in a business unit? Is it in a function? Is it in a geography? The magnitude of change needs to be measured with specificity so that you can design the right change interventions into your approach and plan for human capital, productivity, and deal value.
Change should be looked at not as an IMO lead process, but rather as an IMO governed process, which is facilitated by HR and led by the parties of the business unit; this is a shift from how change management has previously been run - usually it has been run by HR or the IMO unit.
One of the most pressing challenges related to change management is culture. While it takes years of gradual, well-planned changes to transform and create culture, the right first step can support long-term sustainable shifts. Best practices prove that you should not initially look at changing culture (culture is not inherently right or wrong), rather you should isolate the top three behaviors that need to change in both organizations, and both executives need to combine forces and align these behaviors.
Integration will continue to evolve; going forward we expect the following three things to happen:
The question, then, becomes how do you develop the capability to execute under uncertainty and preserve and create value for deals? Companies must take a step back and see where their integration processes are with respect to what they’re buying; they must also truly understand what type of acquirer they are and what their goals are.