Leading as Influencers in Mergers and Acquisitions
Implementing a project when in a role other than leader presents a series of challenges, and yet, it is critical for organizations to leverage the skills of a broad range of people (not all in formal leadership roles) to successfully implement complex change. This post, co-authored by a team of successful Corporate Development mergers and acquisitions (M&A) leaders, is the first in a series that looks at the mindset of a high-influence leader during M&A. The primary thought leader on the competency model is Mike Morrow-Fox.
The series will focus on the influencers – leaders or team members – that create the highest probability of success in complex transactions. This is important because often, the person in the highest leadership role will function best when paired with an individual who demonstrates the mindsets described in these articles. An example is the partnership between George Bush and Colon Powell: Powell demonstrated the mindset described by the six characteristics below. While he was a very senior leader, he also influenced others more senior to him in how they behaved and the decisions they made.
It is the role of influence we are writing about, achieved, in part, by seven critical characteristics of the leader’s mindset. Mindset impacts how leaders behave in every situation. Very few leaders, however, consistently demonstrate these characteristics. Our research shows that 1-5% of US leaders can – so this list is more aspirational than it is a shopping list.
- Professionally humble – Cares about getting it right ahead of being right
- Dogmatically committed to right action – Is unstoppable and unflappable when on a mission
- A 360-degree thinker – Has a “balcony view” of the business; is able to step back and observe the overall organization and the interconnected impacts
- Intellectually versatile – Has developed interests, expertise, and curiosity beyond the job and organization
- Highly authentic and reflective – Is not constrained by personal appearance but is highly focused on personal behavior
- Able to inspire followership – Has a special ability to connect with people at all levels of the organization to create a shared vision
- Innately Collaborative – Welcomes collaboration in a quest for novel solutions that serve the highest outcome for all involved
In this series, we will explore these competencies related to M&A and connect them to specific examples of how they drove success, and how an organization struggled when they were not present.
One real-world example involves a recently closed transaction that left participants of the acquired institution feeling angry. Their dissatisfaction stems from the failure of the seller’s leadership team to attend to agreements they had with employees when financial difficulties threatened to close the firm. The organization operated with a shared governance model, where decisions were made jointly by the leadership team and staff representatives. The leadership team did not address the financial issues head on, nor did they involve staff representatives when deciding to sell the organization. Their inability to tackle the problem turned an otherwise reasonable transaction into a distressed sale that precluded the leadership team from performing any reverse diligence or negotiating details that would have put their employees on solid footing in the new organization. Though the acquiring firm appeared to be similar, it operated very differently on a day-to-day basis in ways that were material to the seller’s employees.
The situation degraded shortly after the announcement – which came out of the blue to people who should have known what was happening. Not only was the governance model not honored, the leaders’ actions caused many employees to face job loss and others to lose hard-earned “rank” when transitioning to the new organization.
Their sense of betrayal caused significant disruption beyond what would have been expected for a transaction of this type. The seller’s leadership team, who saw the move as strategic genius rather than a distressed sale resulting from poor financial decisions and lack of management wherewithal, was referred to as the “happy Smurf village.” Staff disengaged almost completely at the expense of their customers, and the acquiring organization had to scramble to stabilize the situation and prevent the value from further eroding.
The leadership team’s primary failure was their ability to be 360-degree thinkers. The three specific mindsets and skills associated with this trait are:
- Innately understands the systems, constraints, perceptions, near-term, long-term, and secondary impacts of business strategy and decisions, and how to transform them to achieve amazing results
- Balances competing commitments of multiple constituents on a regular basis
- Thinks in terms of systems, dialogues, and transformations when focusing on constraints and perceptions – considers the organizational context when making recommendations
The happy Smurf village/leadership team did not take the overall system into account because its members did not have a complete understanding of it. They did not comprehend the near-term consequences of their decisions, so could not – and did not – consider the long-term and secondary impacts of their decision to sell. Additionally, they did not attend to significant business issues with the urgency required. They did not aggressively cut costs when initially facing financial challenges, nor did they seek out an acquirer while they still had bargaining strength.
Their lack of understanding has had a heavy impact on integration, and the probability of either organization garnering the value it expected is very low. If success is measured based on ROI, the failure of the leadership team to employ solid 360-degree leadership has not only had a financial impact on the value realized, it has also affected many families who count on these institutions for their livelihoods. Having a leader on the team who effectively demonstrated 360-degree thinking and could talk the leadership team through the necessary steps to either stop the financial hemorrhaging or strategically position the organization for sale could have changed the entire transaction for the better.
We will continue to explore the six characteristics of leadership mindset in the next blog post.
We are conducting research to quantify specific characteristics of successful M&A leaders using the DEV:Q assessment. If you are interested in participating, check back as we will provide the link in the next few weeks.
To become a more innovative leader, you can begin by taking our free leadership assessments and then enrolling in our online leadership development program.
Check out the companion interview and past episodes of Innovating Leadership, Co-creating Our Future, via iTunes, TuneIn, Stitcher, Spotify, Amazon Music, Audible, iHeartRADIO, and NPR One. Stay up-to-date on new shows airing by following the Innovative Leadership Institute LinkedIn.
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Photo credit: www.flickr.com simon chirgwin
