In this episode of our Nevermind The Pain Points series, we dive into the complexities and challenges organisations face during post-merger and acquisition (M&A) transformations.
Host and Clarasys Subscription and Customer Experience Practice Lead Tom Carpenter is joined by Rebecca Clark of Sojourn Solutions, a marketing operations consultancy, and Moray Busch, who heads the M&A practice at Clarasys, to explore how to successfully navigate integration.
The discussion focuses on the need for early preparation, including setting a clear vision and involving on-the-ground teams from the start, as well as the importance of establishing clear decision-making authority and governance to operationalise the program. They outline the critical roles for an effective integration team, including C-suite sponsorship, SMEs, and a product ownership function to manage technology and business tension. Ultimately, they argue that M&A is an opportunity for transformative change, advocating for using Customer Experience (CX) to resolve internal conflicts and urging companies to adopt a 'greenfield' architectural mindset over simply performing a transactional 'find-and-replace' integration.
Packed with practical advice on people, process, and technology, this episode is a must-listen for anyone involved in an M&A transformation program.
Listen here or read on for an edited transcript.
Tom Carpenter: Hello, and welcome to our listeners to another podcast episode with Clarasys, and we're joined today here by Sojourn. I'll let Rebecca and Moray introduce themselves. We're gonna be talking today about some of the complexities and challenges that organisations can have post a merger or an acquisition.
Clarasys and Sojourn: Expertise in M&A
Tom Carpenter: My name is Tom Carpenter. I lead our subscription and customer experience practice, and we help customers a lot with the end-to-end customer experience and the different capabilities that are involved in delivering an end-to-end customer lifecycle. And quite a lot of the work which I myself do in Clarasys, particularly happens off the back of a merger or an acquisition, where there are lots of different businesses working in different ways. I think for me, one of the big highlights of my career was an acquisition of a intelligence organisation where we created a brand new product and launched it within six months, which is very exciting, but also very stressful, and getting different individuals and businesses to align and make the best decisions for the future of the product, which we'll talk a little bit about going forwards, but Rebecca, do you wanna introduce yourself to our listeners?
Rebecca Clark: Yeah, I will do. Thank you very much. So I'm Rebecca Clark. I work at Sojourn Solutions. We are a marketing operations consultancy. We have been in business for over 10 years now, but the breadth of experience that we have across the team of consultants is massively beyond that, so spanning different industries, and, like you do here at Clarasys, we support clients in end-to-end operations. And whether that's transformation, day-to-day processing and making sure that everything you're doing is as beneficial to the overall business goals as possible. And of course, like you. A lot of that comes with change through mergers, acquisitions, and what that actually means to the day-to-day operations.
So we focus on the marketing side, whereas you are obviously a lot broader, but the two work very closely together.
Tom Carpenter: They do, and we massively enjoy working, from a cultural perspective, with Sojourn solutions. You share a lot of the values that Clarasys do as well. So it's great to have you here, Rebecca. Do you have any particular highlights of working with clients on M&A or interesting tidbits for anyone?
Rebecca Clark: I think we just see things going around in circles a lot. I'm not sure if that's a highlight, but it's a
Tom Carpenter: Or a lowlight possibly.
Rebecca Clark: Yes, it's, yeah, it's definitely a trend. We've worked with the same clients on the same things numerous times. And the strategy changes, and it kind of goes around in a circle. It comes back to what they did a few years ago. And it really depends on what's happening in the world, I suppose, is one big impact, but also how technology is changing. A lot of our clients are technology-focused, so that obviously plays a really big part in what they're doing. I'm not sure if there are any highlights that I've just mentioned.
Tom Carpenter: I'm sure we'll find some as we're going through some of our war stories of supporting clients with this kind of work. But Moray, do you wanna introduce yourself to our listeners?
Moray Busch: Yeah, sure. Happy to. Lovely to meet you as well, Rebecca. My name is Moray. I head up our M&A practice here at Clarasys. I've done pretty much every shade of M&A project, from mergers to acquisitions to divestitures, to launching new businesses that were combined out of multiple different organisations as well. I think for me, the main highlight probably has to be when we combined four different organisations into one in the middle of COVID. That was a really intense project, but it's really great to see how you can bring lots of different cultures, processes, technology, and ways of working together to create something really amazing.
I think what I find really exciting now is I think probably two things. One is the realisation, to Rebecca's point, that when organisations do the same thing over and over again, how can you actually start investing in your own capabilities? So I've seen more and more organisations create integration management offices where they actually think about how they can have some of this capability in-house. The other really exciting thing that I'm now seeing as well is these organisations are also experimenting with AI during the due diligence and early post-merger integration phase. So a couple of our clients are now adopting versions of AI where they can look at, for example, process mapping, do their diligence faster, and look at how they can quickly identify areas of risk as well, which is really exciting. So yeah, I think there's lots of movement in that space and it's really exciting to see how these organisations are starting to adopt more of these technologies.
Tom Carpenter: Wonderful. It's great to have you both with us. So today we're going to be talking to you about how businesses effectively manage transformations post a merger and acquisition. So we can talk kind of across different capabilities, but largely when this is gonna be happening, there's a technology component to it, but there's also a sort of business operations element in combining different teams together. So different technologies, different processes, and different teams to create something, which probably, for most M&A business cases, means that the end product is greater than the sum of its parts. So you can create a more effective team, a more effective kind of end-to-end processes, and hopefully a better customer experience as a result of that.
So before anything gets started, there are some things that people really need to think about a bit upfront. So Rebecca, Moray, what would be your advice to clients who are in the process of the merger and acquisition? They're about to get themselves ready, therefore, for the transformation that comes as a result. What do they need to be thinking about in those really early stages?
Early stages: How to prepare for M&A transformation?
Moray Busch: I think there are a couple of things for me. I think when, let's assume this is just before the post-merge. Integration is still in the due diligence phase.
The due diligence dilemma: Privacy vs readiness
If that's where you are, in my experience, I would love to hear your experience as well, Rebecca, is people have to be very private and kind of sensitive about what they can talk about before things get announced, so I think a hard balance to get right is how much you test the readiness for post-merger integration, and how much you have to keep that in a closed room? And often, what we find is that when we then start the post-merger integration activity is that we have lots of questions that maybe should have been answered in due diligence but weren't. And then when you start your post-merger integration and you mobilise and you put in your, so maybe some of the really necessary but unsexy things like governance or how do you make decisions or how do you bring people on the same journey? All these things often require like a bit of rework in our experience of what happened early on. So I think my main piece of advice, or kind of the inflexion point for me, is how much of that due diligence handshake between them and post-merger integration is actually ready for post-merger integration to run. Because normally I find we always need a bit of extra mobilisation and rework of that.
Rebecca Clark: Yeah, I could not agree more.
Involving on-the-ground teams: Bridging the planning gap
Rebecca Clark: One of the things that I think we see is that we obviously work with the teams who are on the ground doing the doing, working with the processes that have been defined. They're the people who know what needs to happen in the end state, and or at least the requirements of what is needed. They are always left out of the conversation, and I understand, as you said, a lot of it's sensitive upfront, early days, huge amounts of sensitivity. They'd have everyone under NDAs. Right. Which is a really complex and long process to do, and not really realistic, but like you say, when it comes to actually planning the transformation, the internal team who are there from the start have something in their minds of how it's gonna roll out. It's not practical until they get those people involved because that's when the detail comes into the plan and it's so often that we see that plan change dramatically, or the company ends up going through sort of a, an MVP phase, which is then completely flipped on its head to actually work in reality of how this business needs to operate, how these teams need to talk to one another, what technology they need.
So it's a big headache, and I'm not really sure how they can get it right, but there's got to be some middle ground between having that initial team working on the planning and including the people that need to be involved.
Avoiding project-centric pitfalls: Vision and morale
Tom Carpenter: Yeah, I think we've witnessed that quite a lot. G enerally, there'll probably be some tight timelines involved. There are special ways in terms of accounting for budget, for post-acquisition work as well, where normally there's limited time to do it and therefore a lot of emphasis gets put on delivery. So bringing in sort of PMO program, project management type people really early on, which is absolutely the right thing to do. But as a result of that, getting almost too quickly into a project without knowing why you're doing it, what the reason is for it. And I think it is really difficult 'cause there's obviously a lot of sensitivity with post-merger acquisition of if you're merging teams, people aren't sure what their roles may be. What the future will be like and which organisation is gonna be taking more of a lead in operations going forward, for example. But honestly, I think everyone is aware that that is being discussed in a consideration. So instead of avoiding it and just being like, we're just delivering a project, don't worry about what you're gonna be doing. They should get ahead of that. So like, what is this new function we are creating, and how do they work together? And really selling the sort of vision for those teams and how they will operate and what they're trying to achieve. And then from that, deciding what you're gonna do from, technology and a more detailed operations point of view.
So really involving the heads of marketing, the heads of sales, the heads of finance, et cetera. In shaping what things should be like in the future, which will also really massively build team morale and create this, one organisation kind of mentality. I just see a lot where everyone's very concerned about the deadline of the transition, and it becomes this project. It's very stressful for everyone, and no one's really sure why it's happening, even though it's kind of obvious from the acquisition. But what's it trying to achieve? And getting everyone bought into that really early on I think would be massively impactful.
Measuring success and building internal capabilities
Moray Busch: Yeah, I think just building on that point, the two things that always jump to my mind, one, how do you actually measure the success or the effectiveness of that merger?
So if you have that really tight timeline and you deliver the project, and now all on the same technology. Is that you done and you having achieved your return on investment? In my experience, the answer is no. Because you have people who still need to adopt their ways of working. You still need to embed; you might want to restructure your organisation as a result of it.
There are all these other things that you have to do to be able to really embed the new ways of working and then actually get the return investment as well. And the other thing is for organisations which are by nature, quite acquisitive and do this more than once a year. If you're thinking of really large organisations that do multiple small acquisitions and then divest businesses, again, there is something around the internal capabilities that they need to develop and also building on their previous experience.
So, as an example, a very simple way, going back to Rebecca's point earlier, of how you can involve the people who are actually on the ground, if you get your plumbing right, if you understand your technology and your processes as is. And maintain that, that is a much easier to do future transformation and post-merger integration activity than starting the project from scratch and back. Right. Let's map our process again. That was updated a year ago, the last time, and then jump through the same hoops again and again. Because then you also go to those people on the ground twice a year and say, can you describe to me how your process works? And it is a waste of everyone's time, right?
The cost of migration and ROI impact
Rebecca Clark: Absolutely. And I think on top of that, if people aren't having those conversations, they miss out on fundamental things, like if we've chosen this piece of technology and you're not currently on it, part of the team, let's say two organisations merging one team's on one piece of tech, the other has to transfer off that. What they don't think about is what the cost of that migration is and how that then impacts the ROI of this whole program. And sometimes that is completely forgotten and can have a big, big impact on that ROI. So I think it is so important from multiple levels to get those people involved and really have an understanding of what is today and what is the future, and what does the change look like, and what is the impact of that change?
Tom Carpenter: I think a few things that are interesting with me from that conversation is also if you're going and asking someone as is, you've probably got a bunch of consultants who've come in and are gonna be going, what do you do? Why do you do that? Which is very unsettling, right? Like, why am I being quizzed and what I do and how I do it? Whereas flipping that the other way of like, let's together design what we should do in the future, that's much more empowering, and you're probably gonna be much less stressed by that from an internal business point of view. 'Cause what we see as a result of that, which to your point Rebecca, is people can often see the integration as a distraction. They're like, we just need to get through this as quickly as possible so then we can do business. But the reality is that from the second the deal is done, you're doing business as one organisation now. You're just two disparate teams. So, actually using the integration program or project to create this sort of one-team mentality is probably gonna be most effective. And like a lot of the businesses we work with. We are there or we're involved more from a project perspective. What you see is often those businesses start to not hit their numbers, and then they get quite a lot of pressure on like, we need the integration to go quicker, so then we can hit the numbers. Whereas the reality is it's like we changed the way you did the integration to start with. Maybe that would help hit the targets that were set out, or maybe those targets are unrealistic because it's been unclear how the businesses would work together, which I have seen that before as well. Where you acquire a business that on paper it's quite similar. But the way they operate is so different that as soon as you try and force them together, you almost lose the USP of one of those businesses. But no one's figured that out early enough to do something about that. And now you're off down a path, which is probably inevitably going to be impacting a business's top line probably, but also maybe bottom line too, because you've not understood the nuances and how they do business. So you can get that a little bit from doing the process mapping, but you only really get that from getting the teams to speak to each other and try and understand their differences themselves. I think.
Moray Busch: Yeah, absolutely. I think just building on the point around then the point of you are kind of working as soon as the deal is done.
One of the big things that we found as well was the power of transition states, or call it an interim operating model, sustainable interim states, whatever you wanna call them. We often refer to them as horizons. It's really good when you can try to take something really, really complex. And if this is a really large acquisition with multiple different technologies, teams, like both organisations with a global footprint, normally it's too risky and too complex to try and do everything at once across the entire technology. And kind of process operating model changes. So what we start looking at is what those sustainable horizons are and how you can co-create them with the people on the ground. Because that way you can say, right, people, process, technology, data, these all things need to come together in this interim state to make sure we have this sustainable networks. And it can really then align people around this future state while also showing it a stepping stone in the right direction. Because if you don't have them, what I've seen as well is that then different teams work the slightly different timelines and design a slightly different shade of the future, and then you try to put it together and you realise, oh wait, so we're selling this product through this instance of technology X. Oh no, it's actually the other way around. And now we don't have access to the full product set or we can't invoice, or now we're sending two invoices to the client. All these things can can happen if you don't have that clear view of what this interim horizon looks like. And then it's just about, I think, realising that this is not gonna be a super quick, fast thing for large M&A projects, right? You need to realise that this is gonna take a year or more potentially, depending on how large the transformation is that you need to get your organisation through these states, while also respecting change fatigue of the people as well. So if you're doing in the business, as Tom said, you know you're selling your products, doing the work, and if the process changes every three months, just as you're getting used to a new piece of technology, selling a new product, working in a new industry, whatever it may be, to then constantly change. It's really, really exhausting, and that's a time when there's probably the most pressure on those people to sell more products, show the synergy, and unlock tons of growth. So it's just, I think, important to try to remain as human as well as you can throughout the process.
Rebecca Clark: I think you both made really good points about, as opposed getting rid of the risk or that pressure and the worry that the teams have of, well, does this mean I'm out of a job? Am I giving all this information over on how we do things effectively for somebody else to pick that up and take it? Or am I actually showing the value that I can bring to this organisation? So I think it's really impactful to empower that team to be able to try and design and shape what the future state is gonna look like and allow them to be part of that planning in some way to make them feel a little bit more secure.
And as a result of that, they will then help to make this new organisation, combined organisation or diverse organisation, more successful because they then feel empowered to stay there. They feel more satisfied. That goes a huge way into the success of any business.
Tom Carpenter: Yeah. And I suspect there's probably an assumption for some organisations, that slows things down and, you know, we're not getting to the like, it's just a simple process and tech change. I think it's very, very, very rare that it's ever just a input process in tech change, that there are always fundamental differences between how teams operate and culturally there's always things you can do. We've kind of spoken a bit about how we kind of get things set up, so I think we said let's set clear vision and, goals and aims of why we're doing it, and bring individuals from those teams into that conversation early on, and try not to make it too mechanical.
We said let's ideally not focus too much on as is. Great for most organisations to have a view of that which they keep up to date. So you're not conducting a detailed analysis, which can be quite stressful for individuals. And also if you're designing for the future, isn't helping you be future-thinking and future-forward.
What about now we get into a program of work, so let's assume here we've set things up for the right reasons. We've involved the teams. What's the best way in which we can deliver these projects, or programs successfully often that obviously are time pressures on it, so think of some examples of where we've seen that go well or not so well in the past.What advice would you give to our listeners?
Operationalising the program: Decision making and prioritisation
Establishing clear accountability and forums
Moray Busch: I think we touched on it previously a bit, but I think the principles around decision making and setting up the right forums as well where you want to run to be able to course correct, I think is' probably one of the most important ones. Regardless of what you do, as long as you have really clear accountability, a clear plan, and a forum where you can maintain that plan. You're then able to adapt because inevitably things, you know, as Rebecca said earlier, no plan really survives first contact with the enemy, right? You always have to replan a bit based on what changes and what happens. So once you're in that program, it's then about how do you operationalise it. In the same way that if you have built some kind of plan, chances are if you don't maintain that plan, people are not gonna use the plan. People work ad hoc, and then at some point people get really frustrated that there's no clear structure and someone says, let's build a plan. Now to break the cycle, you have to maintain the plan in some kind of forum to maintain it, right? Otherwise you go through that same cycle over and over again. So I would say having a clear view around accountability, clear decision making, clear principles that guide decision making and the forum to maintain it are probably some of the, maybe slightly unsexy, but really clear fundamentals that you need once you're running to make, to kind of stay the course.
Prioritising migrations and dependencies
Rebecca Clark: Yeah, I agree. And I would also add in prioritisation of migrations, for example. And what are the dependencies on those? So current contract end dates, for example, what impact can we make if we need to continue a contract license for an extended period of time during this migration? How can we make that as cost effective or have as little impact on our overall budget as possible during that time?
So I suppose really understanding those dependencies and then prioritising the tasks that you have in your plan. Like effectively is really important, which again, to your point, is often the less sexy stuff.
Tom Carpenter: Yeah, I think that's true. Often a lot of the delays become due to confusion or misalignment. We're not sure who's making the decision. We're not sure how it aligns to what we're we're trying to achieve. So yeah, having those principles clearly aligned upfront and I think is absolutely critical to success of that. Something else which I'm interested in as well, is, often we, obviously we have the deadlines and we have different people who are involved. But getting to your point, Moray, of roles and responsibilities, how do you think we set up that team? Like what kind of activities do need to happen to make sure that the project delivers who should be doing what in an ideal sort of world, like how would we advise our clients to set up in a team that is effective?
Building an effective integration team
Critical roles: Sponsorship and program management
Moray Busch: Now, there's a $1 million question. I mean the get out of jail answers. Obviously, it depends, but I think if you're assuming that this is quite a large acquisition, very complex, and obviously, the governance and the roles and responsibilities would be in line with the scale of the acquisition as well. If it's smaller, you can up to smaller teams. If it's larger, you might need different steerco delivery boards, program boards, sponsorship from the C-suite, et cetera. I think the most important roles, I would probably say is apart from having really clear sponsorship from the C-suite for like escalations and decision making, because especially when you're working across multiple different hard decisions that you have to make, you need to agree who has ultimate decision making power, and you might have that at like project level. You might have the at technology level, you might have that program level if you break down the acquisition into multiple different programs, but you then need some kind of exec. issue resolution layer where the sponsor can say, this is my baby, I'm accountable for this, and now I decide. So you need someone at the highest level that can make decisions and then that to kind of filter down.
I think the second thing is the program management and that kind of layer of governance that makes sure that people stay on track.
The importance of SMEs and product ownership
Moray Busch: You manage your risks in an effective way. And the two other ones I would say are really important. And Rebecca touched on this earlier, like the SMEs who really understand how technology, data, the nuances, all the stuff that is kind of hidden outside of documents and outside of processes, all of those things where someone says, oh, we can do this thing.
It's like, well actually, if you do this thing, you're gonna break this other thing. So those SMEs who actually know all the unknown unknowns, they're really critical. And I would say the final really, really important role is, is like an equivalent of someone like a product manager, product owner. I've actually seen this role often not be in a post-merger integration, but I think it's actually one of the most important ones because they manage the tension between what the customers want or the employees, what's actually feasible to be delivered by the team and what's viable from a business perspective. So to avoid this program team versus one business versus the other business, and one business says, we want all these things and technology says no. You can't always have the executive sponsor to try to manage that tension in detail for every decision that's not sustainable. So you need some kind of responsibility, some kind of role that can effectively manage the tension between technology, business, and customers to make those right decisions to design whatever the outcomes look like or whatever this interim horizon looks like.
So I think there are obviously more roles in that as well. But I think the overarching sponsorship, the program management, the SMEs, and then I think this product role for me would probably be like the no regrets, must have type roles for any successful post-merger integration project I'd say.
Rebecca Clark: Yeah, I think that's pretty good.
Change management communications: Internal and external
Rebecca Clark: And then I would say change management in the communications. The people.
Moray Busch: Yes. Let's not forget about the people. Yeah. To land. Yeah, absolutely. You're right.
Tom Carpenter: Yeah. And I think there's a few sides to that internally, but also in terms of messaging out to customers and this, you know, being an interesting thing that's happening. It's not just an internal thing. Obviously, there are ways to do it where it is about simplifying internal operations only, but there's always going to be a potential customer impact of that. So there's the kind of comms change side from the customer point of view, and then there's also internally make sure people are, are bought into what's, what's happening or what's changing.
Customer experience in M&A: A shared vision
Rebecca Clark: Yeah, actually, yeah, you are right, Tom, because we've seen customers who have gone through mergers and part of the organisation is gonna be led by one part of this merged organisation and the other's gonna be led by the other, and that means that sometimes customers have a very different experience to what they're used to.
Impact on customer journeys: Digital vs. hand-holding
And I don't think that should really be ignored, the change and the impact that that can have if you are very used to being handheld by your account manager in sort of B2B setting, and then you are moved to a very digital, hands-off, self-serve approach. Well, that is a big change and not everyone's gonna like that.
Some might think, great, he's backing off whatever, like he's leaving me alone for five minutes. But others might think, well actually I really needed that person handholding and telling me and guiding me through what we can do. And I, I don't think that should be ignored. And often it is.
Using CX to prioritise and resolve conflicts
Tom Carpenter: Yeah, I think so. And Moray and I, having done quite a lot of sort of product-based work as well as the M&A work, using customer experience to prioritise and get decisions made is so much less combative than one business wants to do it one way and another business wants to do it another. So it's also just a great tool of like we're delivering for now a shared set of customers. One set expects something one way, one expects something another. Like, how do we create something which pleases both and makes both happy? And now it suddenly becomes less of a like, well, I want to work in this way and I want to work in this way from a business point of view. Ultimately, it's about the impact of the customers.
Moray Busch: That point, I think, is absolutely core and critical, I think, to any successful transformation, especially when you think about incentivisation and how different organisations work together. So on one post-merger integration project, I worked on sales and marketing were working more separately, and they had very different goals.
Rebecca Clark: I can't believe it.
Breaking down silos: end-to-end systems thinking
Moray Busch: Sarcasm detected. And um, had like different incentivisations as well, and they thought, we wanna look after this piece, so we wanna work it in this way. And the other team said, no, actually, it's easier for us if it works like this. And the kind of critical thing, really two critical things that really surprised me was the handshake between often organisations and teams is not really managed well as part of a post-merger integration as well.
You kind of hope that, well maybe, you know, we move on to this new technology and then you click on this button and then it's someone else's problem. But actually having joined goals and thinking about how you as an overarching team can work more effectively together, 'cause to Tom's point, ultimately what you want as an organisation is to have better customer experience, grow your brand or sell more products, improve the quality of your products, get better brand recognition, all these things. It doesn't matter if you have the best marketing function in the world, if you have a terrible handover to sales and they can't actually close anything. Equally the other way around. If you have the best sales function in the world, but you just don't give them any leads and they have to work 10 times as hard to get anything, it's also not effective, right. So how you think end to end across organisations, break down those silos and apply a bit more like systems thinking and think about the customer end to end is absolutely critical, but that's where I think the post-merger integration part becomes very, very tricky because now you're starting to talk end to end across people, process, technology, data across multiple organisations over time. That gets very complex. So needing some kind of capability to simplify that and be able to tell the story to articulate that is really, really tricky. But I think it's at the heart of what makes a transformation really successful if you can do that.
Rebecca Clark: I think that is also true for teams coming together.
So two sales functions merging, two marketing functions, merging, and how you're gonna bring those teams together with shared goals because again, back to the point of is my job at risk? Bringing them together and sort of making them work together and understanding how you can both benefit one another through your experience and through adapting and merging your operations together can be really successful. But if that is ignored, you just get teams fighting with one another when really they're working to the same goal, but they don't realise it. So I think it it goes for in teams as well.
Moray Busch: Absolutely. I think the, I can't remember who said this to be honest, but, I think the, the best way I found to summarise it was that it's like the difference between compliance and commitment. Like through compliance, you can force certain behaviours, but as soon as those incentivisations go or that person who is really kind of direct goes, it all falls apart. But actually, if you, to your earlier point, which both of you made around involving people in the design and getting them on board, you actually create that commitment, which means that when the pressure eases, they still run at the right pace because they want to, because it's right. And there is something about having the right pace of a integration as well, where you wanna make sure it's not too fast, it's not slow, and you don't always wanna constantly be micromanaging people. Right?
People still need holiday. It's not like no one goes on holiday for like one and a half years. That's how long the integration takes. So how you create the environment for commitment as opposed to compliance is a really tricky balance to get right. But to your point, I think it's also a really good thing to think about when you put teams together.
The opportunity for improvement: Beyond find and replace
Tom Carpenter: I think this kind of gets us onto a slightly different subject of like what's the sort of right solutions for businesses that are integrating. And of course it does depend, but we are getting to a kind of shared point here, which is probably a lot of organisations will feel the pressure to just like get two businesses working together and if they haven't done what we were suggesting upfront of setting a vision, which the business teams are aligned on, they're bought into it, they've developed it together, then it's gonna end up feeling might quite mechanical. And what you end up with is potentially something that's worse for both businesses than what they originally had. Like, no one's happy. Or you've biased it towards one business 'cause that's easier. So like let's say they look like on paper, they've got the best operations and technology platforms, so you just stick everyone else on that. But you've missed the opportunity that transformations can take time and they cost money. If you're gonna do one, you may as well also improve things for people at the same time. And a lot of businesses do start thinking about that and then they realise they're running out of time and then they start cutting corners. And then we're back to the like, let's make it as easy to implement as possible. And we've lost what is the real shame is the potential to do something new and something different, which is a benefit to both organisations. So yeah, I think for me, in terms of getting to like what's the right solutions or right thing to be designing, for me it's like take the opportunity of you've got a acquisition budget, which is normally protected. You've got the attention of the organisation, you've got fixed time. Use that and that sort of effort and attention to do something that takes your organisation to the next level, not just to sort of find, replace. And I know that seems like the more obvious thing to do. Like let's just make this really quick and easy and then the businesses can carry on doing what they were doing. But you're not trying to create businesses, carry on doing what they're doing. You're trying to create a new organisation that can do something together that it couldn't do separately. That's your ideal situation. So creating something that's new, it's much more modern in terms of platforms. Maybe it's using AI and automation in different ways. It's freeing the teams up. Starting from, let's design something that's better for everyone, rather than just how do we get two teams working together as quickly as possible? It seems like quite an obvious mindset, but I very rarely see it. The pressure of teams just like getting them working together is so strong that people don't think, wait, we've got a great opportunity here to design something better. Why don't we do that? So I think for any M&A thinking about how they use the next, however many months agreed here to design something better and just start with that mentality from the forefront. What I like to be much more successful.
Strategic vs. tactical solutions: Balancing short-term gains and long-term goals
Moray Busch: Yeah. Time is a critical factor though isn't it. I mean, I'd love to hear both your views on this because the question of. What is the right solution will probably depend on what horizon you're working towards. Because you're right, you might say, you know, we want to design this really cool thing, but it's gonna take us two years to implement it across the entire organisation. And to Tom's point earlier, you are obviously working, living in the future, the day the deal is signed. So I wonder from both of your experiences, how you balance the tactical solution that unlocks value earlier. With the strategic solution that takes longer, but it's ultimately better. And how do you minimise the risk of your tactical solution becoming strategic? Because at some point, you just accepted that this workaround is now actually not that bad, and people got used to working in this terrible interim way, and now it's just normal. And then just as you settle in, you want to do another M&A project, or maybe you want to divest that part of the business, just as you implemented the interim way you're working. So, from your experience, Rebecca, how do you balance that tactical value now MVP version versus the strategic solution later.
The role of experts in accelerating success
Rebecca Clark: I always think the best thing to do is ask some experts, get people involved who can help you really drill down to what are you trying to achieve, what have you got now. To Tom's point, which I think you are so right, it's forgotten that we are trying to make things better by bringing these organisations together. How can it be better? What have you got now? But how can it be better? And if you have people who know what they're doing, planning it from the start and not thinking, we can just do this all internally, which you probably could, but it would take longer, and it'll cost you more. Getting people in who can say, really quickly analyze, this is it. These are the gaps that you've got, and this is how you can very quickly implement those gaps into your current processes. You're gonna see that development, you're gonna see that engagement from your employees. You are gonna see that engagement from your customers and the the value that you're adding. And it's not as hard and as long-winded as it may seem. And it's not just wasting time on development and planning and analysing. It's actually setting yourself up for future success quicker. We see so many times organisations and teams coming to terms of capabilities, move back. They like take 15 steps backwards and three years down the line, there are only two steps forward and it's just so painful for everybody involved. And I think if you get those experts in, people who've done it before, people who can really look at it from a holistic view. Put those steps in place for you, you're gonna move forward faster.
Reframing M&A: From transactional to transformative
Moray Busch: Yeah. I think we maybe inadvertently stumbled upon a little, branding issue with post-merger integration because if you think about, well, at least in my mind, if I think about integration, it feels quite transactional. You put these two things together, so in some people's minds it's much more transactional, almost like a hurdle to overcome. We're integrated and now we're done. Actually what both of you're saying is that from your point, Rebecca, it's about getting the right SMEs in to do something much more transformational and better. And to Tom's point, it's an opportunity where this is supposed to be a positive growth acquisition, right? Where you wanna say, we have the chance to create something really amazing here, to bring the best of both worlds together to create something new and transformative as opposed to let's make sure they're all in the same instance of Eloqua or whatever the challenge may be.
Right? So. I think the framing of M&A activity, once you sign the deal, often is the post-merger integration, but it's just a transactional bit to put them together. So now we can run as a new combined organisation. But it's actually the quite sexy, exciting part where you then can go into the detail in a much more open forum than in the early NDA due diligence phase where you can say, right, now we can talk about this openly.
How do we bring all these people together to actually design the right solutions in the right way at the right time? And create a positive momentum, which can also mitigate some of the worries that you mentioned earlier, Rebecca, around operating model, you know, changes to jobs and that kind of stuff as well.
So maybe post-merger integration isn't the right phrase for this after all, but needs something a bit more, a bit more transformative and positive actually.
Tom Carpenter: Yeah, it's, the story we said, I suppose, of like you're creating a new business, a new experience. So it's creating that new thing, that new organisation together. That's what this is really about.
Greenfield architecture: Designing for future success
Tom Carpenter: My thoughts on your original question, Moray, is you have an opportunity or a decision to make really early on of do you have something in place which can scale to do what you wanna do for the rest of your organisation. Or do you start afresh? So I think that's the first thing a lot of businesses need to make.
The decision to start afresh: Scaling vs. unpicking
Tom Carpenter: It's sometimes considerably easier to start with a new instance where you're both designing that together than try and unpick what you already have and redesign it together, for example. Now it feels like quite a drastic decision, but as Rebecca says, if you bring in people who know how to do it before then, to be honest with you, it is actually probably much quicker and easier to have something where there's no mess or complexity where you had to try and work out what was done before and why it was done. You just start with a like blank sheet paper. How do you want this to be in the future? So for most organisations, that normally does make sense. The only exception I'd say to that is maybe you've recently undergone a transformation or you've implemented a new technology and new way of working and it's quite clean. Like it's not over-complicated. It's not over-integrated. In those scenarios, it probably is okay to use what you have, but I think in lots we see two businesses where they've got platforms and ways of working and operations, which have been built up over many, many years that are just too complicated or nuanced and don't allow you to scale.
So I think that's one thing for most organisations that can make it speed things up for them and do the right thing is go greenfield, design something that will work for both organisations from the ground up. And probably you'd be surprised that that is simpler and quicker than trying to merge one organisation into another.
Breaking the cycle of iteration: Clean cuts and architectural runway
Moray Busch: Yeah, I would agree. I think that the two things, just to add to that, which I have found to work really, really well, is one, if you break the cycle of constantly iterating on existing technology, your example of, you know, this tool that's been iterated for 20 years, if you continue to iterate on that as well, what you find is that you actually design design constraints into your next horizon.
So even if you're thinking of then building something more strategic later on, your first foundation is already limited through like the design kind of architecture, solution architecture of something that's maybe 20 years old. So having a kind of clean cut once in a while can be a really good thing.
And the second thing is your architectural runway. So if you're thinking about, let's say you have a perfect organisation, beautiful architecture, business and enterprise architecture, and every time you have a new post-merger integration or make some kind of tactical changes, incur tons of technical debt, and over time that becomes really, really messy. A post-merger integration can be a really good time to actually clean up that architecture as well. To say we can't actually control this technology anymore. We can't make any more integrations. We are running on like 50 different point to point integrations, we don't actually know where our master data is, these things can be solved quite neatly. If you then to, to Tom's Point, move on to a new architecture re-baseline, and then importantly, I guess to come back to our original point, maintain it as well to think about how do you maintain your architecture and your ways of working to be sure that you don't consume too much of your architectural runway, especially if you are a highly acquisitive organisation, does this on a regular basis because you just get more and more return on investment for every small thing you maintain. You then might carve off a couple of months of extra pain and effort whenever you do this type of project.
Key takeaways for successful M&A integration
Tom Carpenter: So we've heard quite a lot of things about how to run a post M&A program or project in a successful way. Some things that really stood out to me from what you both have said, focus on the customer, focus on future forward thinking, what you're trying to create as a collective, not trying to sort of hack in one organisation's way of working into another.
How do you think about that from the start, building on what we said at the beginning of the podcast about setting a vision together as a team. How do you then use that going forwards?
How do you take the customer's needs across both organisations into account and so you can create something that is is better for both organisations than what you have?
As always, there's gonna be time pressures, so trying to get stuff set up in the right way up front, and think about whether you're gonna go down more of a greenfield architecture where you can more easily create something together.
Get some experts and SMEs in early. I think like we have actually seen quite a lot that organisations can, let's say you've got a year to do the migration, spend three to four months doing as is and trying to work out like what you want to do and just losing time there where obviously you bring in people who know what they're doing. They've done it before, you can save a lot of time upfront and back to your point, Moray of not spending so much time on the as is can save some time there. Often we do see a lot of organisations spending lots of time on the as is, and then when we come in we're like, we need to design something new anyways. It's great, we know that, but let's get a blank sheet of paper up and plan from the start. Do you guys have any final thoughts for our listeners or some takeaways for them?
Rebecca Clark: I would just act up that final point on not just thinking it has to be as is in terms of process. Also think about the technology. You don't have to stay with what you've got. And it could also be that you might have a platform that is all singing and dancing now, but if you really look into it, you might only be using 20% of its capabilities because that's all you need. So this could be an opportunity to reevaluate your tech stack as well and move on to something that is actually much more beneficial to what you need and more usable. And yes, that might mean a bit of training of the team to start using that, but it could be more cost-effective on your budget, and it's a good opportunity to really, really, re-evaluate that as well.
Tom Carpenter: Great. Thank you.
Moray Busch: My final reflection is maybe what we should have started with, with hindsight, which is the context of the project, and I think often, I think it's important to realise that this post-merger integration is not the only type of transformation that is going on in an organisation. You might find that your large organisation is having a huge whatever, SAP transformation. Maybe there's a huge change in operating model where they want to move to account-based marketing, which supersedes the priorities of the post-merger integration. So just being aware of the wider ecosystem of transformation in both organisations and thinking about how you can align to that will be really key as well 'cause otherwise you might find that you are creating an interim horizon, which is actually a step backwards from where the rest of the organisation is trying to go. So I think having just that wider ecosystem view is a really helpful thing to have at the beginning and then maintain throughout.
Tom Carpenter: Some great takeaways. Thank you both. Thank you very much for your time and yeah, hopefully our listeners have enjoyed listening to us. Do you feel free to contact Clarasys or Sojourn for any of your post-merger acquisition or creating new businesses, shall we call it? Needs in the future. Thank you.
Moray Busch: Thank you. Thanks everyone. Thanks, Tom.
Thank you for joining us for another episode of Nevermind the Pain Points. If you enjoyed this episode, please subscribe on your favorite podcasting app or site. We would love your feedback, so please leave a review or drop us an email at podcast@clarasys.com.
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