Coming out on the other side

Business leaders building resilience and growth after challenges

Doug Fulton is a VP of Marketing at Uponor, a company involved in delivering water infrastructure in municipalities, commercial construction and residences. I asked him about how his business was doing. While he may be working from home, he and his team are definitely working. Business is being impacted, but things have to get done to position Uponor for the other side.

Doug said that it is like racing under a yellow flag, a simile I have shared with many since. It makes me wonder what it will be like when we see the green flag again, or whether it will actually be lemon-lime, then chartreuse, then maybe PMS 374.

I’ve talked to lots of people who, like me, are considering the consequences of what we are experiencing. We can all act as amateur economists, and I will venture there in a moment. But something I’ve been thinking about is whether the new behaviors we’ve adapted as we’re cooped up in our homes might stay with us in a future “normal state.”

Eventually, we will overcome our current dread of cozying up to a bar and rubbing elbows with a stranger as we down an IPA or a rainbow roll. That’s because we will sorely miss being around others. But some things that we are getting used to might just stick, because we find they are better than the way we behaved in the past. Here are 7 guesses at changes that will be with us after this crisis ends:

1. Retail has changed forever. We are not meandering through the aisles of grocery stores or C-stores, picking up impulse items. We go with a mission and a list. And we stick to it. Thirty percent of Americans have shopped for groceries online for the first time in the past few weeks. We are climbing down Maslow’s ladder. And we might find we like the results. This might have a profound impact on winners and losers in the green flag consumer economy.
2. Teleworking is here to stay. There are some bumps in the road as people have gotten used to this. But we like how Zoom conferences work. And a tidal wave of 5G is close behind, making cell telecommunication much better. Being out the office will not be such a big deal. I suspect business travel will never be what it was before. The face-to-face of a video conference will suffice for a lot of the meetings we’ve spent a couple thousand dollars on.
3. We may be witnessing the death of command and control. This could be a bit of a stretch. But remote working and videoconferencing makes decentralized decision-making really easy. And the autonomy of decentralization is hard to give up. Just consider whether your VP of sales on the other coast has always followed your direction! Even if you try to revert to form and centralize decision rights, you may just find that you are at a competitive disadvantage.
4. A hiring frenzy and a bidding war for talent will break out. It’s simplistic and wrong to think that employees will just return to whence they came. Many more Boomers will bolt from the corporate scene, either for retirement or for entrepreneurial pursuits dreamed up while sheltered in place and funded by near-zero interest loans. Filling the vacuum becomes the corporate prime directive, and it will be expensive. Companies will hire high-priced leaders without ever meeting them face-to-face (as many have started right now), with a lot of missteps.
5. We will worry about supply chain security. True story: I received a LinkedIn message that asked if I were interested in purchasing 3-ply medical masks, 4-ply medical masks, disposable masks, infared thermometers and swab kits. The sender is an area sales manager for a medical supply manufacturer in Hubei, China, right around the corner of COVID-19’s origin. Now, if I were a hospital administrator, I would be a little leary about PPE from Wuhan Province. Just as organizations have learned to secure their data, they will develop contingencies and redundancies for the flow of goods. Great logistics people have become much more valuable.
6. Economic whack-a-mole. National Geographic has published curves of deaths by city during the 1918 Spanish Flu epidemic. In New Orleans, Denver, St Louis, Birmingham and others, a relaxation of restrictions led to a second spike in deaths. Eager to restart the economy, some places will go back to work, only to shut down quickly again. Even today, factory workers in critical industries are afraid to go to work and afraid not to go to work. Even with robust demand from consumer and industrial sectors, local healthcare concerns will mean a rebound will come in starts and stops.
7. A fiscal crisis will emerge. Remember when politicians worried about the national debt? In recent years, this has been replaced by concerns about the legacy of climate change we will leave our children. Well, budget hawks will return with a vengeance, as we consider the consequences of a $2T stimulus package and others to follow, including a big infrastructure plan I foresee in 2021. The tax base will be reduced by a drop in the number of employees, marginal tax rates will rise and hard decisions will be made on government expenditures. Some new programs may emerge but only through the elimination of sacred cows.

Our lives have already been disrupted over hundreds of thousands of reported COVID-19 cases. We know the situation will get worse. Much worse. And we must do all that we can to buy time for equipment, treatments and vaccines to come to the rescue. It will take a long time, and during that time our habits and our circumstances will permanently change.

But we will find ourselves on the other side of this. That other side will be different, in some ways seemingly inevitable and in others unexpected. Over the next weeks and months, I will revisit this list. And I welcome your take on what our light at the end of the tunnel might look like, as you make plans for your business.

Leadership strategies for successful corporate mergers and business alignment

I remember the morning my CEO made the announcement to the headquarters team that we were acquiring a competitor, but that the acquired company’s management would run the combined business. “Well,” he said, “We are all about to be made redundant.” That was not very accurate. His position (and mine) as part of the leadership team would be eliminated. Not so for the rank and file.

Thus began a bizarre 10-month period or retention bonuses, integration meetings and depositions with the FTC. All’s well that ends well. In this case, the combined business is still healthy today, despite the rocky start. (Maybe this is because our CEO was not involved in the integration!) That’s not how things usually go. Over 70% of mergers and acquisitions don’t attain the intended results.

There are two broad areas that lead mergers to fail, numbers and people. First, the numbers… Careers are seldom furthered by telling a CEO that the acquisition they’re contemplating is a bad idea. M&A people sell deals internally. They are incentivized to do deals, not for the deals to prove successful. And there is seldom a consequence to overstating the synergies. After all, how often is the deal maker asked to become an operator in the Newco? So, the numbers are often biased towards unreasonable outcomes that lead towards unsatisfactory results after the businesses are integrated.

Beyond a rosy bias on the benefits of an acquisition, there are numerous issues involving how employees react to mergers. Companies focus on the deal, not on integrating the team tasked with delivering the plan. Consider the following:

It’s a coin flip whether or not an executive succeeds in a new role. How about when every executive has a new role and new connections?
If you plan on keeping (some of) the acquired team’s leadership on board, what is their motivation to remain?
Culture is a messy thing. Combining two cultures with little forethought can be a disaster.
There is usually a winner and a loser in a merger. That has a big impact on integration. The zero-sum perspective can lead to false assumptions on who fills positions in the combined enterprise.

Let me suggest four uncommon actions that can help acquisitions work well:

1. Get the M&A leader to own the results of the deal they propose.
Give them significant responsibility in the new entity. When I was on the leadership team of the international division of a large food company, we had an acquisition in Australia and New Zealand. The lead dealmaker ran the combined business for a two-year period. The results after the acquisition were not stellar, until the head of sales succeeded the deal guy as President. But subsequent acquisitions had a very good track record, in part because the M&A group added a note of caution consistent with the possibility that they would be asked to run the target of their recommendation.
2. Get the CHRO involved during due diligence and beyond.
They can conduct a culture assessment of the two organizations, understanding how work processes, communications preferences, folklore, decision-making and valued behaviors might align or clash and determining appropriate action. These are the parts of corporate culture that count more than whether jeans are allowed on Friday or what value statements say. The process of integrating culture requires an open look at what each organization does well, to understand what is needed for success and to involve the new leadership team of the merged entity.

They can develop a communications plan. Communications need to start early and continue frequently, saying what is known and being transparent by fessing up to what remains unknown. Very early on, contingency communications should be developed, in case the deal is leaked. This would not address the specific deal, but it would be general about the company’s M&A strategies. It’s important to get ahead of gossip that can keep people from the important work that needs to get done. And, after the deal is announced, integration milestones should be provided with regular reports issued on how you do against them

They can project the needs of the new organization and determine who, if anybody, in-house can address those needs. They can use an objective approach to determine who will be the leaders of the merged entity. This often involves reviewing the business objectives of the acquisition and identifying the competencies required to deliver them. They can determine who needs to be retained, what that might take and, as importantly, who needs to go quickly.

They can assign an HR resource to the integration team and get their Learning & Development people involved. Having HR closely involved throughout integration keeps the process on track. Capabilities among the broad Newco leadership cohort can be built through a series of workshops, where priorities, metrics, expectations, decision rights and values are debated, and where trust-building exercises are enacted. And with people in new roles interacting with new colleagues, Newco leaders should have access to coaches or mentors to help them succeed.
3. Consider the brand before you close the deal.
If you need to change the name of the acquired business, have you built that into the price? If you are leaving the acquired brand alone, how does that impact your legacy enterprise?

I recently spoke to the owner of a marketing agency that has a niche in M&A branding. He told me that almost all of his clients come to him after the purchase is done. The acquiring company loads its balance sheet up with goodwill (the premium paid beyond the book value of assets for intangibles like brand), and it underestimates what it will take to keep the new brand on an even keel. A couple years later, the P&L takes a hit as goodwill impairment must be recognized.
4. Get beyond a winner/loser perspective. It only perpetuates unhealthy tribalism. Think of a merger as a marriage. Ideally, there is not a winner and a loser, just two parties that are better off together. Envision the end result of successful merger. There is only one team.

When building that team, where do the best leaders come from? Is there anybody inside the organization who can handle the scale of the combined businesses, or do you have to go outside the combined employee base to find the right leader?
5. Build or buy integration expertise.
Those organizations most adept at acquisitions use a playbook for integration that can be used from one deal to the next because they utilize an insight: the same issues tend to present themselves at the same time.

A good way to get beyond tribalism is to bring in a merger integration specialist as an interim leader. Have them run a core integration team that is roughly balanced between the two entities. The integration leader is a neutral honest broker who is an expert in facilitating the merger process. This role might be even more important if you don’t do mergers often enough to have developed your own integration playbook. Maybe this resource resides in one of the merging businesses; maybe you need to invest in a consultant to play this role.

We think that mergers result in cost reductions, as some people are viewed as redundant. We think that the personnel answers are currently residing in one of the two organizations about to be merged. These are bad assumptions. You might find that new positions are created, and there is nobody internally to fill them. Or that the scale of some responsibilities is too great for an incumbent. If current employees don’t fit the needs of the new organization, don’t be afraid to go outside.

It is easy to get seduced by the promise of an acquisition, to concentrate on the potential for value creation and to gloss over the risk, especially the people issues that get in the way of success. But the risk is real, in your culture, in your dealmakers, and among the people who will live with the new reality. By providing the M&A team with consequences, getting HR involved in integration activities and focusing on the future organization rather than the legacy components, a merger has a much better chance of succeeding.

Professional executive meeting with new boss discussing goals and leadership alignment

The courtship of a C-suite executive for a position in a company is a prolonged ordeal. Three to six months is pretty common. Even without the usual starts and stops in the process, the executive meets a variety of people — potential peers, perhaps senior direct reports, and board members. In my last placement as a Chief Marketing Officer, I met with the CEO at least three times before receiving an offer, including extensive one-on-one sessions in his office and over dinner.

Once an offer is accepted, you move from “engagement” to “marriage.” The selling stops on both sides, and both you and the organization live with the realities that you face. And the most important reality you face is found in the relationship you have with your new boss, the CEO. Very early on in your tenure, the two of you need to establish how you will work together.

What, then, should get covered in an early meeting with the boss? A search of literature provides a dizzying array of options. Try “9 Questions to Ask Your New Boss,” “15 Ways to Impress Your Boss on Day 1” or “15 Ways to Make Your One-on-Ones Worth Your While.” There are 39 tactics to try in only three articles! I canvassed my LinkedIn network for a more manageable list of topics for this initial conversation. Because, who can find time to impress a CEO 15 ways on Day 1, much less remember 15 ways to impress? At a senior level and having just accepted a position, impressing the boss, even an intimidating one, is less important than establishing a good working relationship.

So, with help from my friends, here are five things to remember in the first meeting(s) with the CEO as your boss.

1. Communications.
Amy Breidenbach Green noted the importance of understanding the CEO’s preferred communications style and methods. Do they prefer email, text or face-to-face? How often can you expect to connect with them? If you really have to get an important message for them, how should you send the Bat Signal? Is there a way to immediately short-cut their assistant if necessary? How do they respond to calls at night or over weekends? How/when do they typically provide feedback to their reports, and how can you provide feedback to them? How do they prefer to hear bad news? OK, it is becoming easier to see how there are a lot of questions to ask Day 1!
2. Scope of Responsibilities.
Bob Foht used what he called “DO – TELL – ASK” when he spoke to the owners of GearGrid, after joining the company as CEO. To establish the extent of his responsibilities, he sought clarification on what he could just do without reporting it, what actions should he tell the owners about after the fact and what steps required that he ask permission before taking. In essence this is a simplified RACI.

DO – TELL -ASK is where potential disconnects can arise between your expectations of autonomy and the CEO’s need to keep on top of the business. It’s likely that nobody has asked this of the CEO before, so the “rules” are being made up on the fly. Consider this a starting point in your relationship; over time, things in the ASK pile might move to TELL. Much of the literature on early interactions with bosses suggest asking about management style. I agree how important understanding management style can be. But asking about scope of responsibilities and communications can address the same thing in a more granular way.
3. Understanding the Priorities of the Moment.
You, no doubt, are familiar with the corporate vision and other public statements of strategic objectives. By the time you sit down with the CEO, you are probably up to speed on corporate priorities. But what is important may deviate from what is urgent, and urgency might win out, in the moment you join the leadership team. These urgent matters are not often talked about with outsiders, so you might come on board completely ignorant of what is taking the leadership team’s energy and time. Are there crises that are taking the C-suite’s attention away from your direct responsibilities? What priorities have been dropped to create capacity to handle a crisis? Are there problems within your area of responsibility that need immediate attention? Are there looming issues on the CEOs mind that you, too, can be thinking about?
4. The CEO’s Expectations of You.
Somehow, even indirectly, the urgent issues raised will impact you. What does the CEO want from you? Should you be patient that they cannot spend time with you, while they address other issues? Can you collaborate with a colleague and produce what Michael Watkins calls a “quick win?” Do they believe you have experience in a similar situation, which can put you in the role of advisor?

The same questions stand for the long-term priorities: how can play a role in helping the CEO achieve their goals, even those that don’t seem to directly involve you? You impressed the organization enough through the recruitment process to get this position; what were the strengths they saw in you that you can leverage immediately? How can your ignorance of how things get done be used to the organization’s advantage? Are there things that the “newbie” can say that would be more difficult for those who are entrenched?
5. Creating a Personal Rapport.
When I asked Pat Anderson about his experiences getting to know his CEO, he turned the issue around, thinking about what he likes to do in early meetings with his own subordinates. At the top of his list was getting to know people as people.

It strikes me that a CEO will do the same thing in their initial meetings with you. Be open to sharing personal information that would not have come out in your interviews. Talking about your family or your interests, sharing a book or article you recently read or talking about house hunting if you’re hiring involves a move will provide a glimpse of you outside of the office. And this helps to build trust.

The power dynamics of your relationship makes it difficult for you to overtly take the lead, asking personal questions of the CEO that you don’t know the answers to. It is fair game to volunteer information about yourself in an appropriate setting. If there is a public way of knowing something about the CEO (where they went to school, non-profits they are associated with, etc.), these can be avenues to build a personal bond

Coming out on the other side

Need Any Help?

Quick Links

Resources

Information

Phone

Email

Location