Why Mergers, Acquisitions, and Culture Transformations Fail

Leaders, Bosses and Bastards

Leaders, Bosses & Bastards: Episode Title

What does it take for two very different, large organizations, with very different company cultures, to come together under the same overarching vision? Mickey interviews Bob Johnson, the Chief Executive Officer of Conversant, about all the conversational ins-and-outs that are involved in mergers, acquisitions and major organizational changes.

Highlights

• As a leader, don’t assume that because you know where the organization is headed that everyone alongside you does as well.

• Smoothly navigating organizational change requires transparent and genuine conversation, showing your people what is happening and what decisions made it happen the way it is.

• Rather than just issue demands and later let employees know whether they met your undisclosed standards, be open about the needs of the company and offer the necessary tools to achieve those aims.

• To ensure you’re legacy is that of a leader rather than a bastard, follow up each interaction with the question: “What is the story people will tell about the conversation they just had with me?”

• Openly focus on what changes your leadership needs to make to benefit the company, and people will naturally begin to ask themselves that question about their own contribution.

• Rather than viewing organizational obstacles as mechanical or process problems to be fixed, approach them as human challenges that require specific conversations to be had.

Navigating Organizational Changes

0:51 Mickey: We have with us the CEO of Conversant, Bob Johnson. Today we want to talk about mergers, acquisitions and other big, tumultuous organizational changes. What makes you someone we should listen to about that?

1:12 Bob Johnson: Well, I’m just a fascinating person, is one reason. But probably the more valid reason is, having been involved as far back as the Hewlett Packard and Compaq merger, I have a lot of experience directly in what is involved when we have two big organizations that have very different cultures and are coming together around what they think is the same aspiration.

1:52 Bob: Since then, I’ve been involved in a number of organizations that are going through mergers or acquisitions, or often just having to evolve and significantly disrupt their business model so they can, in some cases, survive, and in other cases, make a bigger difference.

2:22 Mickey: You were a senior executive with big accountabilities during the merger of Hewlett Packard and Compaq some years ago (Sept. 3, 2001). What were the biggest lessons that you’ve taken to all of these other companies you’ve supported since then?

2:42 Bob: Among the lessons is to be careful what your assumptions are going in—by that I mean:

“I assume people see the benefit of two big companies coming together. I assume people will work hard to make this come together as quickly as possible. I assume that they will understand and act upon what we tell them.”

3:10 Bob: What I tell them is they’re merging because there’s a change they want to happen in their culture to have better business results and make a greater impact.

While those words sound good, people have a real need to be in dialogue about understanding what they mean.

3:36 Bob: There are a series of conversations that are important that tend to be overlooked, causing rework and slowness later on. Are you involved in a dialogue so they sufficiently understand the purpose of the merger? Then they get to state what their purpose is inside of it as well.

What is that intersection of where we’re going with this and what people are together on?

4:02 Bob: Given this change we’re trying to make, let’s be clear what that is and let’s look at our existing culture, behaviors and organization. There are some things we want to conserve, to honor and respect and bring forward. And there are some things we really know we need to change.

4:22 Bob: Change is going to involve our capability building and questioning models we’ve been operating under. Those are examples of phases that sometimes don’t get the attention they need and later on require a lot of work to go back and do better.

Listen, Rather than Assume

3:37 Mickey: You were talking about assumptions and one of the biggest assumptions people have is, “Because I understand the reason we’re making a big change, you should be able to understand.”

4:49 Mickey: We frequently see senior leaders who have been involved in months (in some cases, a couple years) of conversations that lead to a major organizational acquisition or merger or divestiture.

These leaders have become so intimately familiar with the change themselves that they forget it took then that long to get that familiar.

5:21 Mickey: They talk to other people about it, and as soon as they understand their own voice in their own head, they think they just made the point they want to make and assume everyone else just got it.

5:39 Bob: In one of the mergers, the leader was very clear on why it was important. I was part of a group she pulled together of 80 global leaders to launch this work. Someone raised their hand and said, “I still don’t completely understand what or why we’re doing this.” The leader just blew up and said, “I’ve distributed those plans. You have a very compelling slide deck that describes the path we’re on. I would have assumed you’d read this, and you obviously haven’t. That tells me you aren’t the leaders to do this.” And she left the meeting.

6:35 Bob: She eventually came back, acknowledging that we hadn’t had the sufficient conversations and that we were the people she wanted to be on this journey with. She realized she needed to listen and make sure it was clear.

Leaders Respect, Bastards Demand

6:49 Mickey: You can think of it in terms of leaders, bosses and bastards.

We say that a genuine, powerful leader is orchestrating the contribution of others, and they’re doing it in a way that people know they’re respected and cared for.

7:19 Mickey: The bosses just leave people instructions. The person you were talking about sounded like that. The bastards don’t even do that.

Bastards just issue demands and let you know later whether you met undisclosed standards.

7:57 Bob: Bastards. There are plenty of them and they don’t know it. They would be stunned to think that people thought that of them, because it’s so obvious to them what’s happening.

In some cases they just don’t engage. And then they wonder a year later why more progress isn’t made.

8:35 Mickey: And why some of their best and brightest decided to go somewhere else. You made an important point: people who are occurring as bastards are not that in their own minds. It really has to do with extraordinary insensitivity.

9:04 Mickey: On a particular merger, one leader from one side held a meeting with leaders from the two companies. He said, “Let’s get something very, very clear. This keeps getting written about as a ‘merger’. I want it to be clear: this is an acquisition. We have paid $X billion dollars for this company. We’re in charge of what happens next.”

9:45 Mickey: The toxic gossip and the number of people who began to polish resumes that came out of that meeting were extraordinary. That guy definitely occurred to people as a bastard.

Writing the Stories We Want to Be a Part Of

10:08 Mickey: So much of the breakdown is people don’t do the patient and time-consuming work to understand who all of the different groups of people are who are crucial to the success of this combination.

What are each of those groups’ distinct purposes, worries and circumstances? How do we engage them in conversation to clarify the reason for doing this that is actually sensitive to all of those purposes, concerns and circumstances?

10:46 Bob: Every organization has a story that is in continual motion and continually sharing. The story based on what you shared, is what’s the story about that leader who acted like a bastard?

11:19 Bob: Or do you create a story that has hope and aspiration in it? This is where I think we get in and really make a difference: creating the kinds of conversations you want with different people in the organization, who you know are highly connected to other people, that will generate a positive story.

There’s still a lot of work to do, but do we have a good story from the beginning that people feel they want to be a part of?

11:54 Mickey: I love that as a way for really effective leaders to think about how to manage this kind of seismic change. You get a microcosm of that system together and ask, “What is the story that this merger or acquisition is a central moment in?”

12:30 Mickey: Having a positive story is exciting to people, because then the purpose becomes meaningful. Things become clear, in a way that people can share it, because it’s a story not a Powerpoint deck.

12:46 Mickey: Each senior leader in these organizations could ask him or herself after every meeting or significant interaction:

“What story do I think people are telling about the conversation they just had with me? And how does that story fit with the story we say we’re writing for this change in organization?”

13:07 Bob: Leaders can take that analogy and think about, “What is the next chapter we want to write? What will it take for that story to be complete, whole, and inspire people to move into the next phase?”

Self-Change Leads the Organizational Change

13:27 Bob: The other caution is you might have done a really good job to start, but you let it go. People are always looking for that indicator of where they won’t be allowed to be involved and they’ll get dominated. You have to be vigilant to avoid that.

13:47 Mickey: Be responsible for your assumptions and turn them into clear, open conversation. We spoke about that conversation being sensitive to the purposes, concerns and circumstances of the people you actually need to pull this off. It’s startling how often leaders are not sensitive to that.

14:06 Mickey: A word that gets used so much that it has become trivialized is “authenticity.”

How open, transparent, genuine and human are the people responsible for this major organization change happening?

14:29 Mickey: How often are the leaders in an open, genuine conversation with other people? How do we make this something human that we are in together, rather than some formal set of manuals about how things are supposed to be?

14:47 Mickey: At another company we’re supporting and doing significant work, they’re expanding globally at a rate where their underlying processes have to evolve in huge, dramatic and rapid ways. The current processes cannot support the level of growth they’re having globally.

15:09 Mickey: The CEO has been there for the ride for over 10 years—very successful, very well thought of.

He shared his concerns with people that the changes they were going through were not just the underlying processes of the company. They had to be changes in how he led.

15:35 Mickey: He was confronting that as an important question that he asked people to talk to him about. He said, “I want to know what you think this company needs from me in the new era that it didn’t need before? And what did it need in the past that it doesn’t need now?” He got extraordinary input.

16:06 Mickey: What happened after that is that people began to ask those questions about themselves: “As the company changes, what changes in me in order to make that successful?”

Having someone that senior orchestrate development instead of asking for it from other people—that’s a leader.

16:27 Mickey: That’s someone really eliciting the interest, connection, contribution of others that really inspirits this kind of change.

16:37 Bob: I was in a conversation this morning with the top leader of an organization, who acknowledged that his leadership needs to shift for the organization to be able to have the impact they want. He asked a group of people to give him feedback, such as, “What is the unique contribution that this person and only this person can make?”

17:12 Bob: Part of the conversation from the group that was helping him was they came to the understanding that this change was not just about him as a leader. “This is about us as well.”

17:25 Bob: “However we answer the leadership at the top, what does that say about our leadership and how we engage the rest of our organization?”

17:39 Mickey: That does fit with our definition of leader, contrasted with boss or bastard. The boss would tell other people what they need to do that’s different.

The leaders actually demonstrate that the changes in our enterprise call for me to evolve my own leadership. That naturally attracts other people in the same conversation.

Make It Easy for People to See The New Direction

18:03 Mickey: It’s amazing to me in how many of these major organizational changes, people do not communicate enough about what is happening, why it’s happening and what criteria we used to decide what to say no and yes to.

18:33 Mickey: I’ve heard some people say, “We don’t have time for all of that.” And yet they end up having time for the disappointing execution and the failed meeting that people walk away from with stories that are not helpful to the future of the enterprise. They come with false cause like, “We don’t have the right people.”

18:55 Mickey: But they just didn’t manage to stay in an open, complete conversation so people could see where we’re going and what we’re doing.

19:05 Mickey: As I was driving in this morning, I was on a four-lane road and in a hurry. I was trying to make sure I was in the right lane for moving most quickly. I noticed that I wanted to change lanes because there was a big truck ahead and I couldn’t see what was in front of me. I had to keep myself from changing lanes. It turned out that the truck lane was much faster than the others, but everything in me wanted to move just because I couldn’t see.

That’s what happens to people in these big companies; if they can’t see what we’re doing, why we’re doing it, and why we made these choices, then people end up making up all sorts of fearful stories.

19:54 Mickey: Investing in clear, chronic communication, being the source of information versus the subject of worried gossip is a crucial part of change.

20:10 Bob: If you take it back to the leaders, bosses and bastards, I’ve just come out of an experience from the last couple months with a person I’d say is a bastard (“I’m the smartest one here. Just do what I said. Make sure people do what I say and we’ll get where we want to go”).

A year and a half later, they’re nowhere near where they need to go. The question he was unwilling to confront was “Why is that the case?”

20:44 Bob: How is happened is that he didn’t engage people. There was no element of co-creation. There was no transparency of the “why” they were making changes and the facts that contributed to them.

21:04 Bob: If you want to shift it, it requires your leadership and your stewardship of dialogue in the organization to shift the story they have about you, the lack of trust they have for you and their willingness to step into something they’ve clearly stepped out of. That’s a huge disruption.

21:22 Mickey: While it took him a year and a half to be open to having that conversation, that shows up on the P&L, the balance sheet and the cash flow.

21:32 Bob: It’s almost like, “What would be an effective transition for you from bastard to leader, and are you interested?”

21:42 Mickey: And what could that mean to the commercial success of the enterprise? Or, if it was not a for-profit, what could that mean for the mission success of the enterprise?

Depending on the speed at which people own that something is not working well, what does my conduct have to do with that?

22:07 Mickey: Answering and asking that question is an act of leadership. For him, that the lag time was so long. In your future work with him, I hope he’ll work on reducing the time lag between when things are not going as planned and what his personal role might be in that.

22:29 Bob: In this case, he has been confronted with that and open to accepting it. One of the results of being a bastard is a year and a half of no progress. A leader really opens that up as transparent, invites people in and is interested in their point of view. What’s the possible result of being a leader?

23:03 Bob: In this case, setting a six month timeline of new ways to engage the organization in the hopes and dreams you have for yourself as a leader and them. And he’s in it. But it takes a shift.

23:16 Bob: As you can imagine, people are like, “Is this real?”

Engaging Humans, Not Just Fixing Mechanics

23:40 Mickey: You relate to these really large organizational challenges as more human challenges than they are mechanical or process challenges—because the mechanics and the processes are invented and led by human beings.

24:02 Mickey: Most people do financial due diligence and all of this work on making plans that people are just supposed to follow.

You actually relate to it more like engaging human beings early in conversation.

24:17 Mickey: You help solve challenges rather than just follow instructions and have them participate in what they’re doing and why they’re doing it. This approach fuels change so well, it’s shocking how many companies don’t do this.

24:50 Bob: Words matter. You’re a champion of that. The distinction inside of what you just described is: leaders who say, “I want you to follow me,” versus leaders who say, “I want you to join me.”

25:10 Bob: Following has a certain set of behaviors. Joining has a set of conversations, invitations and co-creations that need to occur.

I know between the impact of being a followed leader versus a joined leader, joined leading gets you a lot further down the road, a lot faster, with better results and greater fulfillment.

25:25 Mickey: That’s a beautiful example of getting more done with less time, money and stress.