In reality, integration plans are constantly changed in order to take advantage of unforeseen opportunities or problems.  Synergies which rely on people changing their behavior and ways of working often prove to be much harder than expected to realise in practice.  And the challenge for leaders tackling M&As is that most of the synergies they need to bank in order for the deal to add value for shareholders rely not on financial engineering, or restructuring, or even on a sexy new combined name for the merged entity.  No, they rely on people.

Marty Linsky and Ron Heifetz observe that leaders are often expected to know the answer, and therefore end up behaving as if they do, so as not to disappoint their people.  In M&As this is particularly prevalent because people really want to believe that everything is going according to a grand plan, even when there is no evidence of its existence.  The medium to long term benefits of merging intangible assets (which rely on people usually) come from emergent processes which allow people to push the boundaries, working together in new ways, contributing their ideas and insights, and gradually bringing their discretionary energy to bear at work.

So what?  Well, if you are thinking about acquiring, merging or even selling, and if your intuition tells you that there might be valuable benefits in corporate brands, reputation, new streams of revenue, new management competencies, business processes, unique skills, customerrelationships, or management resources, then you are in the game of harnessing people’s intellects, emotions and imaginations.  This is not easy to pull off.

The top tips are:

• Remember what my grandma always used to say, “there’s none so funny as folk”
• Allow time for things to iterate, and for new ways of working to emerge, but within a planned overall strategy
• Be honest about what you know and what you don’t know– accept that leaders don’t know all the answers
• Get people from all sides involved early on together so that the emergent process can proceed as quickly and fruitfully as possible.

And lastly, don’t underestimate the long-term benefits of thesesynergies, because they will dwarf anything you get from cost cutting.

Ten years ago, the most common organisational complaint was about ineffective internal communication. The knee-jerk response from managers was often to introduce more communication products and more channels, filling people’s inboxes with newsletters and senior manager’s blogs. Unsurprisingly, communication ratings didn’t improve as a result – because, as we found, what people were really asking for was more (and better quality) face to face, two-way communication and dialogue – essentially, more and better engagement. Today, this is better understood, and measures of engagement get closer to true organisational concerns.

Now, we find ourselves listening more often to clients concerned about organisational reporting of low levels of empowerment. This raises difficult issues of power and control. As one senior manager bluntly put it, ‘If people think we’re going to devolve budgets to teams under the current financial pressures, they’ll have to think again.’ On the other hand, senior managers worry that even exploring issues of empowerment risks unacceptably raising people’s expectations. But employees are generally reasonable, and power over business-critical budgets isn’t what they’re typically after. Addressing legitimate business concerns about low levels of empowerment can be
a much less fraught business than many managers think.

Investigating issues of empowerment reveals two broad areas
for action:

1)      The right systems and processes that help people to do their jobs effectively
and don’t get in the way or generate wasted work

2)      The right behaviour at all levels, a culture in which everyone is treated with
consideration and respect, and their contribution is visibly valued.

Most organisations have made more progress on the first than the second. But requiring common courtesy and listening skills in every meeting– especially those where people are on the spot, such as taking a paper to the Board – can make an immediate shift to reported levels of empowerment. Workshops with actors are often a good way to do this – light-touch and fun, but with a powerful and memorable impact.

Onora O’Neill’s Reith lectures (2002) on a ‘Question of Trust’ gave a powerful critique of the accountability systems being put in place to govern much of professional life (doctors, police, teachers). Those systems, far from rebuilding trust created an environment of detailed control and prescription and went to undermine trust and proper professional practice. Admittedly Baroness O’Neill was delivering her lectures at the zenith of the Tony Blair’s delivery henchmen’s bid to manage everything from 10 Downing Street, with performance dashboards for targets government had set top down – what was happening to crime in local areas; what the teenage pregnancy rates were in Doncaster; and whether the Government’s targets on drug production in Afghanistan were being met.

And I’ve long felt that the way the many organisations seek to motivate their people is based on some naive premises, or simply the crude motivational psychology of ‘if… then..’.

All this has come together for me in a book by Daniel H Pink ‘Drive’. * This is based round the often overlooked theories of intrinsic motivation. In short, we’re motivated to do things because of our desire to them and because of the satisfaction we get from doing them. All the more so in intellectual or creative jobs, where traditional ‘carrot and stick’ approaches just don’t work. Of course, people need to be paid enough to support their life adequately (Maslow), but rarely in creative jobs is reward a major motivator. Key elements of what Pink calls ‘Type I’ system (as opposed to Type X) are autonomy , mastery, and purpose. In Type I systems we are rewarded for what we achieve; we are motivated as much by the satisfaction of doing the job with control over how we do it, with our skill in doing it, and in the knowledge that the job has some overall worthwhile purpose.

Carrots and sticks do have a place. In routine jobs people will work a bit harder to produce a bit more if they get paid for that extra production. That use to be called piece work. But the world of work is rapidly relegating routine work to automated solutions. And the world’s stronger economies are driving value through creative and intellectual jobs.

*Daniel H Pink, ‘Drive, the surprising truth about what motivates us’ (Canongate, 2010)

This is the answer I came up with:

• Being spat out. If leaders don’t like what we have to offer, they are in the driving seat and they can simply reject it by disagreeing with it or devaluing it. That’s why we work so hard to tailor leadership work to the real needs of the business, and make sure we work with real business challenges, not just set-piece leadership material.

• Not having impact. By impact, we mean getting through to leaders, getting under their skin so that they personally choose to make the effort to do something differently. I’ve heard Harvard residential leadership courses described as, “Great networking, but not really relevant to my role here.” That’s not having impact.

• Cynics, perhaps surprisingly, don’t bother us. They are sometimes just looking for something to engage them, and their energy can quite suddenly turn around to become a positive driving force. One of my best moments running a leadership course was hearing a cynic say, “I’ve never before seen a good reason to change my default style. Now, I see a reason to make that effort.”

So that’s what keeps us awake at night … and the challenge that makes us want to go to work in the morning.

• You can send a positive signal in response to even the most negative or clumsily-phrased message. I once saw a Chief Executive turn the mood of 500 people around just by the way he listened to and acknowledged the fierce anger of a junior employee when she attacked him in an open meeting about the downsizing he was leading.

• Don’t take it personally – however personal it is. Remind yourself that learning can be extracted from almost any experience, and you can put this one to good use.

• Re-frame if necessary. Look for a meaningful or useful message in what’s being said (however buried) and play it back: “What I’m taking from this is…”

• Say thank you for taking the trouble to talk. It’s not easy to say difficult things (much easier to talk behind your back), so make it easier for them, not harder, and acknowledge the courage and effort it took, even if you didn’t enjoy it.

• ‘Moving from being a regional player to being a global player’
• ‘Moving from being a set of disconnected businesses to being one firm’
• ‘Moving from a series of different technologies in different boxes to making the best use of all technologies across the company’

So next time you’re confronted with a complex strategy document, just ask what are the three or four things that are going to be different in the future from how they are today.

(And if anyone wants your theoretical source for this, point them to Ockham’s razor from the 14th century philosopher William of Ockham’s dictum that in complex things, keep to the simplest explanation)

Twenty senior risk professionals from the banking industry took part in the study.  They placed much less emphasis than external experts (who have predominantly reported before)  on economic and market factors, such as low interest rates or the growth in securitisation, and much more on human and social aspects of the crisis within the institutions and the regulatory machinery. Instead, they saw inappropriate risk cultures, poor risk communication and an over-reliance on mechanistic (model-driven) approaches to risk assessment and control.

Nevertheless, the official investigation into the financial crisis commissioned by the Government and chaired by Sir John Vickers of the Independent Commission on Banking is expected to concentrate on structural reforms and capital requirements for banks when it releases its final report on 12 September.

Ashby says that financial institutions, especially those whose failure would cause excessive market turbulence or economy-wide disruption, should promote the principles of so-called high reliability organisations (that is to say those that have succeeded in avoiding catastrophes in an environment where normal accidents can be expected due to risk factors and complexity).

Wyke and Sutcliffe (ii) studied such organisations and concluded that they all have a culture of collective mindfulness which is characterised by a preoccupation with failure, reluctance to simplify interpretations, sensitivity to operations, commitment to resilience, and deference to expertise.

Eastern wisdom helps to illustrate the concept of mindfulness.  Niskar (iii)  gives a great example. Imagine going to the cinema.  When we are watching the screen, we are absorbed in the momentum of the story, our thoughts and emotions manipulated by the images we are seeing. But if just for a moment we were to turn around and look toward the back of the cinema at the projector, we would see how these images are being produced. We would recognise that what we are lost in is nothing more than flickering beams of light. Although we might be able to turn back and lose ourselves once again in the film, its power over us would be diminished. The illusion-maker has been seen. Similarly, in a culture of collective mindfulness, we look deeply into our own movie-making process. We see the mechanics of how our collective story of the world gets created, and how we project that story onto everything we see, hear, taste, smell, think, and do.

The challenge in becoming a high-reliability organisation is to build a culture in which everyone is mindful.  Leadership builds cultures.  Structural reforms and capital requirements, though important, are just not enough.

i.Simon Ashby, Associate Professor in financial services at Plymouth Business School: Picking up the pieces: Risk Management in a Post Crisis World
ii.Weick, K. E., & Sutcliffe, K. M. (2001). Managing the unexpected.
San Francisco: Jossey-Bass.
iii.Niskar, W. (1998). Buddha’s nature: Evolution as a practical
guide to enlightenment. New York: Bantam Books

I’ve been working recently with two companies which really do go that extra mile and see customer service as major competitive advantage. They’re both in very different markets – one high end luxury consumer brand, the other a commodity supplier, essentially business-to-business. Both are in ‘challenger’ market positions, with some much bigger and more powerful brands ahead of them.

For the luxury brand, personal service is at the heart of their brand promise. For them the trick is not just about teaching their staff customer service by rote. It is about enabling their staff to gain a deep understanding of individual customers and to respond to those in a personal, authentic and empathetic way. The latter requires so much more than the plastic smiling ‘have a good day’ style of customer service.

For the commodity supplier, customer service is about creating relationships in the round with their customers (who in turn sell to consumers). So having market research about consumers is valuable if it helps the customer; investing in marketing direct to consumers is valuable if it helps the customer; ditto the basics of supplying the goods in full, on time and to quality which may mean sophisticated modelling and building in of flexibility in the supply chain around customer demands.

For both these companies, their route to customer service is something rather more than a one off brand slogan. It requires a whole company culture of service, responding to customer (and internally to colleague) needs. It requires being on the front foot, anticipating customer needs, always looking ahead. And it requires leadership that walks that talk every moment.

1 Harvard Business Review 2008, ‘Putting the Service-Profit chain to work’ by James L. Heskett, Thomas O. Jones, Gary W. Loveman, W. Earl Sasser, Jr., and Leonard A. Schlesinger

Steve Jobs, CEO of Apple puts it like this: “There’s an old Wayne Gretzky quote that I love. ‘I skate to where the puck is going to be, not where it has been.’ And we’ve always tried to do that at Apple.”
We know that the quickest way to shift gears is through a shift in leadership behaviour.  In most cases, people think about leaders as individuals.  Heifetz and Linsky, however, point out that leaders tend to be people who are placed in positions of authority, and who are expected to exercise that authority in a particular way (explaining visions, giving answers, giving direction, providing resources etc).  They argue that the real work of leadership is in fact not about meeting such expectations, but about people helping others to make progress on the most difficult adaptive challenges facing the business.

They prefer to talk about leadership rather than leaders – a process rather than a role.  It is worth thinking about this distinction if you are running leadership development activities in your company, or indeed if you are taking part in them.  Leadership of this kind will certainly get you to where the puck is going, not where it has been.

About six years ago, when they were a very confident, growing business, I helped them to develop a very distinctive set of values: five key attributes that employees felt defined who they were, as well as setting a clear aspiration about how they behave and act. For six years, these values have been used to underpin their strategy, shape ways of working, key policies and inform the way they make important decisions. Other companies admired them as a strong values-driven organisation.

Unfortunately, the business is now experiencing much choppier waters and tough decisions have had to be made to cut costs i.e. people. I was saddened to hear that the way those decisions have been made and communicated have fallen way short of the expectations set by the values. It made me realise that a business (or government) needs to make clear its commitment to its values or principles of policy even more loudly and explicitly in tough times. This is just the moment when employees and customers (or citizens) need to know that there is a path and it is being followed. That helps to reduce the sense of confusion, gives coherence and credibility to a way forward and builds confidence in the leadership.