Are You as a CxO The Real Culprit?

Digital Impacts on Business

In a recent article in the Sloan Management Review, it was mentioned that 87% of executives think that Digital will affect their market place. Yet out of the 75% who thought that their enterprises are adequately prepared, only around 10% saw it as a potential threat to their business.

This is only one symptom of the many aspects of CxO behaviour which are affecting the success of organisations which want to adopt a digital business model. Overall, there is often a lack of realisation that the CxOs themselves are inadvertently sabotaging their organisations' efforts.

Executive Behaviour Can be a Problem

In many cases, in the same manner that many executives don't understand what it means to be a project sponsor, CxOs have failed to actually engage with the issue. They don't seem to think that they should spend the time to get involved in deep market analysis and identify real game changing opportunities. They just want to automate yesterday with some sexier technology.

Additionally, they don't get the need for acting as a joined up team or building a positive culture which supports experimentation and innovation. In fact, many executive teams don't seem to understand that innovation means doing something that no one else has done before, so there are bound to be a few issues along the way as a product team discovers what works and what does not.

David Snowdon provided a great framework with the Cynefin model to explain what is involved with emerging practice and chaotic conditions.

This is why the DAF (Digital Adoption Framework) places significant emphasis on cultural change as promoted in The Way of DAU. Culture is a known inhibitor to strategy implementation, as witnessed by the well known quote that Culture Eats Strategy for Breakfast. Culture change starts with the C-Suite and ripples down. So any CxO looking for digital success, should be asking whether he or she needs to reach out work with C-suite peers to build a better team. Otherwise, failure beckons.

Executives Need To Learn How to Promote Innovation

On another tack however, a research based article on innovation and executive behaviour published in the Harvard Business Review, outlines some personal behaviour characteristics of entrepreneurial CEOs and other top executives: 

• associating, 
• questioning, 
• observing, 
• experimenting, 
• networking.

Their observation was that CEOs in successfully innovative companies take more ownership of innovation, look outwards and provide leadership to the innovation process and get personally involved.

MAD Chickens

Does Your Business Fail To Act Boldly with Acquisitions?

Many of us have been involved in someway with Mergers, Acquisitions and Disposals (MA&D or sometimes know as M&A). We all know that there is a low success rate with acquisitions, as more deals result in destruction in value for the acquiring party than those which increase value. Indeed, I often think of the vintage 60s film "It's a Mad, Mad, Mad, Mad World" as an allegory for a badly executed acquisition.

Historically businesses have tended to treat acquisitions one-dimensionally, with some just regarding them as legal deals and others as a financial transaction. Only recently have management teams begun to take a multi-disciplinary view to MA&D deals, but still they seem to have a blind spot around managing change or the importance of IT integration.

Overcoming Obstacles To Change

There's a critically important phase during the first 6 months or so of a completed transaction where the conditions for success are established or not. During this point it is essential to sow the seeds for successful cultural integration. That is we need to establish the emotional connection between the people within the acquired company and the acquiring company (note even in mergers and join ventures there is normally a dominant partner, so I am assuming acquisition in all instances for simplicity). We also need to establish management control, demonstrate to customers that we are integrating and going to offer something more, and to ensure business continuity. I call these the Cs (culture, continuity, customer interface and control).

IT is essential to this in a number of distinct but important ways, but often management teams fail to invest soon enough in all the Cs. Excuses often proferred are "it's a people based business and we don't want to scare talented people away and lose the value of the business" and "part of the price is performance related over the next N years, so we must not do anything which distorts the picture of performance". This tends to build failure in from the start.

Human Reactions to Change

If you have been through an acquisition yourself, you will know that most employees fall into one of three camps:

The Curious - who want to explore the new business and identify opportunities. These are the natural change agents and entrepreneurs within a business and usually the people you want to keep and encourage as they will create new value in the future.

The Troops - who although they may be wary of change are happy enough to follow where they are led, if only someone would show them the way. They are also the people you want to keep as they know how the business operate and deliver its value.

The Deniers - who want to defend how things used to be, defy change and block progress. Often they will willfully act to preserve their independence or even try to take over the acquirer from within. They may be the people who have destroyed value in the past (which could be the reason that the business was up for sale in the first instance). You may actually need to lose these people to assure future success of the merged new entity.

What IT Can Do To Encourage Cultural Change

Modern change management practices have shifted from trying to convert Deniers to encouraging the Curious and enabling the Troops. In this vein, then IT should be at least doing the following during the first few months of an acquisition:

(A) Ensuring that all essential service contracts and licences re reassigned or replaced; 

(B) Re-branding against the new identity in all systems and outward facing Web sites;

(C) Putting everyone onto the same connectivity infrastructure: e-mail, intranet, collaboration tools, mobile working toolsets;

(D) Ensuring that everyone belongs to the same security and access control systems: e.g. integrated active directory, security passes which work at each site where people work;

(E) Merging HR systems and payrolls, so that everyone is performance managed and paid in the same way;

(F) Establishing basic common controls for high level performance reporting;

(G) Then, launching a project (or programme) to integrate essential ERP processes.

This will not only ensure continuity of the acquired business, but enable the curious to explore and remove excuses for inaction which often prevents successful integration. It will also remove many of the subliminal "them and us" barriers which separate members of the previous historical organisations. Once this happens, then it is possible to pursue new opportunities where the combined capabilities of the 2 former businesses can be multiplied to deliver new value.