JACK MIXNER STRATEGY

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

You bought that new division to maximize the value of your firm.  Let's assume, for the sake of discussion, these things:

• The new acquisition is in the same industry as your existing businesses
• You're not a holding company
• You don't have a lot of time - and neither does the new division
• You want to maximize the value of the new division while
• Increasing the return on your invested capital.

Let's start the discussion with two words, finance and behavior.

Finance includes the quantifiables like income, return on investment, gross profit, net profit and other financial measures your might find important at your firm - and in the new division. Finance has a human face in the way interactions occur in the finance departments of the newly merged entities.

Behavior is the way the organization acts when dealing with folks. Obviously, behavior has a human face as well. Since this is a new acquisition, there are five steps that probably describe the scale of interactions between the management and functional teams in both the acquirerer and the acquired.

The five steps in an acuirerer/acquired continuum (Jackson, 96):

1. Ignorance - My way is the only way.
2. Arrogance - My way is the best way.
3. Respect - You have a good way too.
4. Inquiry - Let me learn your way.
5. Building - Let's define what we want and create our way together.

Let's assume you've invested a lot of capital in the new entity and you want to maximize your investment. Maximizing your investment is a level 5 topic. You've defined what you want, at least. You're still unsure how to create a way together.

My advice?

Skip levels one and two. Don't ever assume your way is the only way - or even the best way - to go. Build respect in and with your new division. Listen first. Listen a lot. Learn how they do things. Finally discover a way to work together.

One company recently described to me a bit of its history in building value.

• About five years ago, they scored one of their divisions using the Baldrige Award methodology.
• They found they had deficiencies, including some in strategy.
• To overcome them, they installed a Balanced Scorecard approach to create strategic objectives to measure current progress against.
• Now they want to roll the process into another region and then, ultimately, across the country.

How will they probably begin?

• I'll bet they decide to go back through the whole process, region by region. Doing so will take some time. Time helps address the problems in the Ignorance/Building continuum.
• Training for the team is part of the process.
• So is a open dialog between the main company and each division.
• The focus of the entire process ultimately is on (Jackson, 96):
• Articulation of strategic imperatives,
• Integration of the cultures, and
• Building bridges to the divisions to achieve results.

Some of the folks who are "stuck in the past" will leave. Those who remain will build new divisions that address the past - and the future.

Reference

Jackson, Tim and Liza Spence. Hearts and Minds: The Key to Successful Mergers. Sisk, Michael and Andrew Sambrook, editors. Pages 90 - 100. The Whole Deal Fulfilling the Promise of Acquisitions and Mergers. Booz Allen Hamilton. 2006.