Cha-Cha-Cha-Changes – Turn and Face the Strange

The great musical philosopher, David Bowie, once said: “Cha-Cha-Cha-Changes. Turn and Face the strange.”

Truer words have rarely been spoken. Change can certainly be painful and strange. It is often human nature to avoid it vs. turning and facing it head-on. So, when does it make sense to drive change and when might it be more prudent to “slow your roll?”

"The world hates change, yet it is the only thing that has brought progress" - Charles Kettering

It’s no secret that many dislike change. In some cases the dislike is so strong that an instinct of resistance or fear manifests itself. We have all likely seen this in organizations. Resistance can be very debilitating and wreak havoc within a company. Those adverse to change can be huge disruptors that run amuck and can undermine everything the organization is trying to accomplish.

For those of us in the deal world we are all too familiar with change and how human nature can be a huge stumbling block. By definition, deals are all about change. Sure, sometimes the change is negligible but other times it is monumental. In every deal there is some level of change which likely means a person or persons is feeling uncomfortable.

“Status quo, you know, is Latin for ‘the mess we’re in’.” - Ronald Reagan

But, is there a time when change is just too much? Where one more domino falling could do irreparable damage? I propose to you that the answer to that question is YES!

Status quo can result in complete business inertia which is usually the beginning of the end. Kodak, once a shining star of American industrialism and the advancement of cutting edge technology is a lesson we can all learn from. They dominated the market for decades until the digital era. Kodak stubbornly stayed committed to a dying industry/technology – hard copy photos. It was only once they were on the brink of total collapse that they reinvented themselves and embraced digital. However, the damage was done and they have never been the bell weather they once were. Can you imagine if they would had the vision to be the first mover in digital photography and storage? They’d still be a goliath. They certainly made a mess out of things and have been paying for it ever since.

“I’m not interested in preserving the status quo; I want to overthrow it.” – Niccolo Machiavelli

Now, don’t get me wrong. I am all for change. I think it is healthy, keeps everyone honest and pushes people and organizations in new/better directions. However, there is a difference between implementing change that is needed or warranted vs. not seeing the forest through the trees and recognizing the downstream implications. This is very true in the landscape of deals too.

Unfortunately, I (and my teams) have learned the hard way that sometimes change is just too much in some deals and to proceed with caution. Say it with me, “Proceed with caution.” There are multiple factors to consider when contemplating significant change in a recently acquired organization.

One to consider is how do the two cultures align? Is one a large corporate-type organization while the other is smaller, more nimble and entrepreneurial? Is one of the two a true meritocracy with accessible C-Suite executives vs. a more traditional corporate environment? Do you get the sense that folks are apprehensive to join the acquiring company? It is not uncommon for those that work for a smaller shop are doing so in an effort to avoid corporate politics and oversight. You need to strongly consider how much change the target can handle at the beginning. Does it behoove your organization to take it’s time and involve the target leadership in key decision making after close? P.S. This is a rhetorical question…

Is the target in line with of the business that your organization is competent in? If so, then moving quickly into integration may be the right decision. The more similar two organization are the less likely that huge derailers will present themselves. If this isn’t the case and the two organizations operate very differently than this is where the target business starts to feel queasy. The last thing anyone wants to do is spoil the “secret sauce” of success by mucking things up with corporate protocols and heavy-handiness.

An acquisition is already a disruptive enough event and folks are distracted. By reducing the number of upfront changes to systems, processes, rewards and values an acquirer can reduce the water cooler chatter and get folks focused back on business as usual. If the acquired employees hear that nothing/not much is going to change immediately they are much more likely to refocus on their job. This not a guarantee of no disruption but it certainly helps. Sometimes the key to rolling out significant change is to do it slowly and bring the new workforce along. Start with the less disruptive components and help employees understand why the change is needed. Most expect some level of change in any deal.

Additionally, how does your organization size up against your target? Are the Total Reward offerings similar? Are there any glaring issues or things that might feel like a take-away such as free lunch, dogs at work or a beer tap? You’d be surprised how many times the “little” things can wreak havoc.

If you think I am kidding about ancillary benefits causing issues here is a little story for you. I once ran a deal that, on the surface, seemed like it was going to be a breeze from the people integration standpoint. Our overall benefits package was richer, many folks were now going to be bonus eligible and no one was losing their job. Piece of cake, right? Nope!

One day, I received a call from the head of Corporate Development. He said, “Scott, we have a big problem. Our C Suite has received complaints that people are not happy with our benefits offering.”?I was completely dumbfounded. I quickly dove-in trying to get to the bottom of it. After hours of digging around, I finally found the culprit – pet insurance. Yes, you heard me right, pet insurance. And, to top it off, it was only one person who raised it as an issue. Never mind that everyone was coming out way ahead on base comp, bonus opportunity and benefits. This person was upset that a $30/month ancillary benefit was not being offered.

Here is how it got to my CEO. The employee went to their manager and complained that they were losing their pet insurance. Then, in a weekly target leadership team meeting the target CEO asked for any feedback on the recently rolled out benefits package. The manager’s manager relayed the message that she had heard from her employee that the benefits were subpar. Based upon this exchange, the CEO’s take away heard was that people were upset with the benefits. A week or so later the two CEOs (acquired and target) sat down for an update and the target CEO was asked how the integration was going. The target CEO said great except that people are not happy with the overall benefits package which wasn’t as rich as the one they’d be leaving behind. This irked the acquiring CEO who immediately picked-up the phone to the head of Corporate Development and asked for an immediate understanding of where we were falling short. Within minutes, the Head of Corporate Development was on the phone with me asking why are benefits were subpar. You cannot make this up. A deal that should have gone off without a hitch had been derailed by a single standard poodle.

“You ain't nothin' but a hound dog. Cryin' all the time. You ain't nothin' but a hound dog. Cryin' all the time” – Elvis Presley

Until next week - Stay strong, stay focused, stay sane and stay the course…________________________________________________________________