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A Simple Tool to Help M&A Integration – Randomised Coffee Trials

By Darko Lovric & Michael Soto, originally published on LinkedIn.

 

M&A activity is one of the most consequential bets a leader can make in shaping the future of mature organizations. The required commitment of time, resources and reputation for such an undertaking invite careful deliberation and analysis, usually leading to a strong internal and external rationale. And yet, most M&A activity falls far short of its intent (with most surveys claiming between 70% and 90% failure rate), often with serious consequences for both the organization and its leadership.

While biases and short-term interests can create various types of overconfidence, it would be surprising if that were the whole story. Most likely, many M&A decisions that are strategically sound falter at the point of execution.

Merger Integration

Post-merger integration (PMI) is by now a recognized necessity in ensuring that the value of the M&A transaction is realized. PMI typically involves standard change management tools (e.g., executive sponsorship, integration teams, strategic communication, leadership alignment). While these tools can undoubtedly be effective, they mostly proceed in a top-down and centralized fashion, focusing on organizational structures and resource allocation that will shape the key commitments and organizational choices for the foreseeable future.

While the top-down approaches are necessary, we should also acknowledge that they do not engage most people in the combined organization beyond an occasional town hall, email or restructuring decision. For most employees, PMI efforts thus endanger passivity and a mode of waiting (and often foreboding), overlooking the important dimension of building trust and engagement across the organizations and creating a community.

As a consequence, individuals from each organization often continue to think in terms of their separate tribes, creating an in-group out-group dynamic that can persist for decades to come. Top-down decision making often exacerbates this dynamic, creating a set of “winners” and “losers”, which naturally implies sides. Ongoing references to the legacy organization are divisive and will interfere with establishing and achieving shared goals, adding complexity to existing power dynamics and silos.

Our hypothesis is that this is a significant miss, making the goals of integration that much harder to achieve while simultaneously failing to surface new options for learning and cooperation that could lead to significant value creation. In order for an organization to start thinking as a single entity, more attention has to be given to facilitating bottom-up, cross-silo (sideways and diagonal) communications that are the foundation of any community.

We propose adopting ‘Randomised Coffee Trials’ (RCTs) to achieve the desired scale of impact across both organizations while maintaining the depth of relationship building that can only occur one-on-one. The idea is remarkably simple and thus dangerously easy to disregard in its potential impact. In RCTs, employees are paired on a fixed frequency (e.g. weekly or monthly) to grab a coffee with a new colleague from the other organization. Depending upon the particular case, multiple RCTs can be undertaken within defined interest areas or communities of practice.

What is important about these meetings is that they are not transactional, and instead are open-ended allowing both individuals to explore and get to know each other; by their very nature RCTs foster the sharing, connection, openness and exploration that is the foundation for a deeper connection and relationship. These short, iterative sessions thus allow a multiplicity of ties to be formed across the divide, which serve to weave the respective networks of each organization together.

Alex “Sandy” Pentland’s work at the MIT Media Lab has illustrated the role networks play within organizations, helping to visualize relationships and communication patterns. Using sociometric badges worn by employees, Pentland’s research group has collected quantifiable data of each individual’s workplace communication patterns – who they have spoken to, for how long and when – throughout the entire work day for weeks at a time. Pentland and his team have found “patterns of communication to be the most important predictor of a team’s success.”(1) Among the five characteristics that the most successful teams have in common are that the “members connect directly with one another – not just with the team leader” and that the “members periodically break, go exploring outside the team, and bring the information back.” These are precisely the behaviors that RCTs promote within companies.

Where in-person meetings are not possible (as is likely the case when merging large organizations), video conferencing is a viable option as well. While technology mediated communication has made it possible to exchange information, this alone does not result in building relationships. Ben Waber (2), Pentland’s collaborator researching sociometric badges, highlights how these “tools are [generally] used in a completely intentional way, so telecommuters can set up meetings and calls only with those people whom they absolutely need to communicate” … “because they can’t bump into people in the hallway or be roped into lunch with coworkers, they can’t be randomly ‘interrupted’.” Indeed, many current efforts at office space design, as well as various retreats and team-building exercises are explicitly (and expensively) designed to foster just such casual collisions and open-ended interactions.

If an organization is reluctant to engage all of their employees in such a process, RCTs could easily be restricted to a connect-the-connectors approach, selecting the existing opinion leaders in their organizations to engage with each other. Research on organizational networks suggests that focusing on a handful of key players can enhance the effectiveness of an entire network (3). Employing Organizational Network Analysis to identify these immensely significant opinion leaders can help bound the RCTs only to such employees while still reaping significant rewards.

By bringing individuals together one-on-one, the “tribe” identity from the original organization fades into the background. Employees learn about each other’s experiences and motivations, which then shape subsequent action. The “other” legacy organization ceases to be an impersonal entity which it is easy to generalize about, and instead a series of familiar faces emerge. And, more importantly, such powerful connections can also surface a number of opportunities for value creation.

Using RCTs promises to be a low-cost, high-leverage addition to the PMI toolbox. We’d love to explore these issues further and invite both comments as well as suggestions to collaborate and test these ideas in real-life PMI situations.

 

1. Pentland, Alex Sandy. “The New Science of Building Great Teams”, Harvard Business Review, April 2012
2. Waber, Ben. People Analytics: How Social Sensing Technology Will Transform Business and What It Tells Us about the Future of Work. FT Press, 2013
3. Cross, R., Prusak, Laurence. ”“The People Who Make Organizations Go—or Stop”, Harvard Business Review, June 2002 issue

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