It's strategy Jim, but not as we know it ...

A friend of mine who was a leading light in the development of Information Strategy and Architecture practices in the 80s and 90s, retired a few years ago. The key driver being his disillusionment with organisations who said that there was no time for developing strategy.

In the time since then, Enterprise Architecture has enjoyed a considerable re-birth and growth, everything has gone digital and organisations have started to publish strategies which read more like marketing guff expounding bland benefits, than anything which informs the reader or directs action.

A couple of things have brought this to mind recently. the first was that I picked up a copy of Richard Rumelt's "Good Strategy Bad Strategy", in which he emphasises the need for a situation diagnosis of what is needed to succeed, proposing an integrated and coherent policy which addresses this, and a small set of supporting actions. This is a great read and worth while for anyone interested in Business Strategy.

Yesterday, I went to very stimulating talk about post merger integration by Henry McNeill at the British Computer Society. Afterwards as we huddled around the wine and sandwiches, several key themes came out:

• Many companies are still not aligning acquisition activity with business strategy;
• There was violent agreement that clarity of the aims, target state and value proposition of an acquisition is imperative for successful integration;
• Participation of IT from due diligence onwards, provides an ideal opportunity for IT to show how it can help the business articulate and deliver against a strategy for the exploitation of the newly acquired business. Sadly, many organisations are still bringing IT in on Day 1 after deal completion and missing opportunities to mitigate risks and address early integration opportunities quickly. Some still take years to work out what to do with them.

This brings me to the point of today's commentary. My experience has been that almost all business strategies are usually incomplete and fail to unify the senior management of the business. IT needs a coherent exposition of Strategy which identifies the "game changing" opportunities or risks in the business market place to be able to prioritise its investments, define what common capabilities are needed and to support effective innovation. Working with business leaders at C suite and direct report level to "elicit the real business strategy that they work to" and agree the opportunities is valuable to the business as a whole. It's often a great way to get everyone to understand each others problems and can help unify purpose.  However, its got to be continuous to support the ever shifting business environment as businesses go Digital and Agile. Strategy has to take a Fail Early, Refactor and Learn approach to continuously calibrate its diagnosis, unifying policy and action plan. There's a role for the CIO in this.

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.