Review of "Five Frogs on a Log"

5/5 stars. This is a great book on managing change in an organization, although it's centered around M&A. I mark up all of my books with highlights, underlines and asterisks to call attention to nuggets of wisdom. This book I marked up extensively.

Authors

Authored by partners and managing directors of PricewaterhouseCoopers’ global mergers and acquisitions consulting business. However, there is great value of the ideas for executing corporate change and capturing shareholders value. 

Key quotes

• Acquiring is easy. Owning is hard
• Increasingly , the companies that win are those that learn faster, act quicker and adapt sooner. They compress time by making and executing early, informed decisions about economic value creation, ruthless prioritization and focused resource allocation
• Navigating a major transition is a race against time. Executives quickly discover that they are late even before they get started. Everything be- comes a priority. Years of deployment decisions must be made in days. There are hundreds of questions and only a handful of vague answers. Nobody is doing his or her job effectively. Customers are being neglected. Productivity is plummeting. Chaos is spreading like wildfire. 
• This is not the time to call up the latest management fad. It’s the time for a financially driven, solidly pragmatic, results-oriented approach to accelerating change—an approach that is focused on creating economic value and stakeholder opportunity. 

The Seven Deadly Sins in Implementing Transitions in Mergers, Acquisitions, and Gut Wrenching Change 

1. Sin 1 : Obsessive list making: List driven transitions are prolonged transitions. They dilute resources, undercapitalize efforts and suboptimize results. Use value drivers instead (pareto principle) - see ch 5
2. Sin 2: Content free communication. Communication is a stabilizer - it keeps people focused and energized rather than confused and perplexed (see ch 6, 7)
3. Sin 3: Creating a planning circus. Use small, fast paced tranistion teams (ch 8)
4. Sin 4: Barnyard Behavior: Complex roles and interrelationships are not clarified by org charts. (see ch 9, ch 10)
5. Sin 5: Preaching vision and values: You cannot merge two cultures by waving a banner proclaiming vision and values.  See Ch 11
6. Sin 6: Putting turtles on fence posts. Managers jockey for position early. Executive turtles increase the moron ration.  First rate people hire first rate people. Second rate people hire third rate people. Third rate people hire morons (see ch 11)
7. Sin 7: rewarding the wrong behaviors. Meaningful progress rarely occurs in acquisitions until executive compensation is sorted out. Don't lose sight of the real objective: to focus and energize behavior (see ch 12)

There is no value in a prolonged transition.

Value Driver Analysis

This is the real core of the book and can be applied to M&A transition, but also just about any change activity in a business.  Value Driver analysis is a rigorous and disciplined, financially driven approach to focus leadership on the 20% of the activities that drive 80% of the value with best chance of success and shortest time frame. The 3 big steps are:

1. Get all key leadership & managers to provide information that identifies:

• What actions in their areas of responsibility should be taken to increase revenue or decrease cost.
• For each action, what's your estimate of the quantitative impact , time frame and underlying assumptions. Use this to estimate shareholder value for each action (e.g. free cash flow)
• Risk: Assess the probability of success of each action (interdependencies, obstacles, resources needed)

2. Rank the value drivers based on financial impact and probability of success

3. Concentrate resources on the top 20%. Rinse. Repeat

• Aggressively manage communications. No secrets, surprises, hype
• Use small, fast-paced transition teams to go fast, don't suck. Few teams, small teams, well managed. CEO must stay engaged!
• Establish role clarity (think accountability chart, not org chart)
• Everyone has a number
• Establish leaders and role models that support the desired culture
• Link incentives directly to creation of shareholder value - what gets rewarded gets done.