2016 was a bumper year for M&As, the second largest since the downturn. In the words of the Financial Times’s Arash Massoudi, “the deals just keep on coming.”
Despite ongoing pessimism that the post-Article 50 economic apocalypse is just around the corner, report after report points to more evidence that the appetite for deals isn’t going anywhere. Sectors across the spectrum from food right through to pharma are still forecasting booms in deal activity and the downturn narrative seems to have been firmly quashed, for now at least. The lack of ambiguity around which direction the market is headed in is probably best summed up in the headline “Article 50, schmarticle 50.”
But with 3.6 trillion dollars worth of businesses changing hands last year, and at least the same again on the cards, the logistics of acquisition become exceptionally important – even more so when you consider the widely accepted reality that between 70 and 90 per cent of mergers and acquisitions fail.
The number one cause of failure among M&As is considered to be culture – a clash between old and new that leaves employees confused, unengaged and fearful for the future. As a result, loyalty slumps, dragging productivity and innovation with it and resignations follow. Soon the value destined to be unlocked in the deal has been eroded and everyone loses.
Unfortunately, that’s been the reality for a long time, and the perennial nature of the challenge attests to the fact that it’s not something that firms can easily fix. While change consultancies and companies like McKinley work hard with firms to smooth out their cultural disconnects as they come together, one of the reasons the solution is so hard to pin down is that the mechanics of culture – internal communication systems, in particular – are diverse, both in their make up and in how they are used.
Put another way, there’s an awful lot that companies need to put right, and in the orchestrated mayhem of a major acquisition it can be exceptionally tough to plan, or follow through on, a coherent strategy.
The problem comes in two parts. First, companies have to figure out where they want to end up, what “good” looks like, and how to engage employees across two organisations in that process. The second comes once the change is complete: how to unite two sets of employees, making them feel, act and think as one.
Turning two companies into one requires a lot of compromise as those helming the transition try to figure out where to cut excess systems, how to streamline processes and all the while keep the diverse requirements of each business in mind.
The downside of those attempts at reconciliation is that as a company emerges from its transition period, it will almost certainly be left with a scattering of systems and processes which weren't initially designed to gel with one another, but which necessity requires to do so. Overlapping functionality, poor or non-existent interoperability and mismatched communication are all commonplace. And that's before taking shadow IT into account.
The result is a communication catastrophe. While half the workforce learn their way around a new piece of technology, the other half are probably also having to learn their way around a different new set of systems and process. Rather than having a carefully tailored onboarding process that tackles those issues the onboarding must take place in a mismatch of formats and timescales, depending on the familiarity of a host of different groups with the new ways of working, and the urgency of making them more familiar.
With the added challenge of a tangled up communications infrastructure, uniting potentially disparate groups of employees under one banner isn’t made any easier. It’s not difficult to see why cultural disconnects are so much at the heart of failed M&As.
But in the enlightened words of William Shatner, “when things happen, they happen with a purpose.” Conveying that purpose in a way that the whole company can align themselves behind is the central principle of any good transformation. And in reality, getting the communication piece right and encouraging collaboration and open knowledge sharing between the employees of each former company isn’t actually so hard, as long as you accept that there are some things that can’t be fixed in the short term.
Another quote that unfortunately will ring true for some internal communications teams comes from academic and Guardian columnist Ben Goldacre: “Bad things happen when problems are protected by a force field of tediousness”. In the example of an acquisition, the problem is the cultural void, and the force field is the lacklustre and cobbled together communications infrastructure that neither company has been given the time or the incentive to buy into.
The good news is that finding a solution doesn't have to mean a complete overhaul of all legacy infrastructure. The maze of post-acquisition corporate compatibility can be negotiated without having to resort to a one-size-fits-all approach.
That’s where the cloud comes in. With well thought through, well-implemented tools like Microsoft’s Yammer, the core component of slick company communication can be overlaid above flawed legacy systems from one or both former companies. In this way, firms can provide a brand new intuitive interface, with a great user experience, to sit in front of and mask the chaos of M&A IT – while also giving teams the opportunity to fully engage with one another on an enterprise grade social networking platform.
It’s that engagement piece where cloud-based internal networks really deliver – whether its through digital collaboration across global projects or as a
shortcut to finding out everything anyone needs to know about what’s going on in the rest of the company, from new ways of working to new teammates’ coffee preferences. The ease, fluidity and informality of information sharing is one of the most important things for internal comms to nail through the turbulence of a transition.
Tools like Yammer and SharePoint can support a host of initiatives, from competitions through to all important feedback and engagement exercises, all of which makes them essential for reassuring and connecting teams in times of uncertainty. It’s understandable that building a new internal infrastructure that perfectly serves the needs of everyone in the new hybrid organisation won’t happen overnight, but cloud tools mean that there’s no need to wait that long to start rebuilding communities and getting employees back on the same page.