(attention, long vehicle)
Anand’s article touched an explosive combination of decision+change management+money. It was inspiring indeed, and got me to write down two or three thoughts looking the M&A from inside a house. To write this piece, time popped-up by chance and bad luck in the same time. Nevermind why I found myself out of gas and battery in the beginning of my Friday evening, I really enjoyed my decision to go back to cocooning.
The decision
This is the thing about deciding to do an M&A or change, it’s not wise to be 100% sure about the best direction. (Ok, don’t skip the due diligence). A choice might be considered as good by more people and for a longer time, but if you search too long your competitor will do your A and no M for you. So you have to make it early. For normal people with no 6th sense, this means they have to deal with the effects of their choice both personally and in their team .
Why you take the decision? Probably for financial value creation, technical synergies, or to phase out potential competitors.
How you take it? Depends on the decision model of your company : single minded, organizational, political, garbage can. (insights from Strategor, 4th edition, Dunond 2005)
Once the change is there, I’ve observed two styles of dealing with it and getting others to deal with it.
The behaviors
One is that you explode and overwhelm everybody with excitement yourself included, partying hard on change. People are normally happy before they realize what has hit them. The happy tail is guaranteed to last, varies on the party. Life stats say that happiness from a good home party last about 3 days, from a football final for about a month, from Olympic games about a year.
Another approach is that you go Zen, as if nothing has happened, act naturally etc. This works if with adult-ish organizations because routines are very important for adults, etc.
In both cases you surf slower, either because you focus on partying or because you surf tai-chi style.
To keep surfing fast, Brazilians have thought of Kapoeira (training masked in partying).
Ok, this is people, what about the business?
The money factor
Change+money is a bit more tricky, because it involves more tension and more aggressive effects. Culture of money asks for more traditionalism, thoughtfulness, respect.
Mutual respect :) and money-related expectations makes M&As such showstoppers for internal rhythms and decision making (the case of M&A driven by financial value creation). In my view, if the motivation is pure value creation the results risk being lost in translation. And M&A is a showstopper.
other motivations
If it is value+product synergies, the organizations quickly recover and from change and get productive on the common focus. In that case, the initial slow-down, frames significantly the savoir-faire and prevents chaos. The focus is scaling on innovation and this can happen within a few months. And M&A is an investment on strategy.
Let’s not forget that innovative products carry this identity either because they target niches or if not, they are innovative for a specific period of time, on their way to bannalization. So when the Big Fish frames how you scale on innovation, the Small Fish start changing skin. Shouldn’t it? It is very difficult to see in retrospection, what part of product or service the Small Fish has fit in since identity integration is necessary.
Last, if motivation is gulping competition early the M&A is a showstopper by design.
the project
Beyond initial motivation for the M&A , the time to market and style to market of an M&A-ed innovative stg is very much bound to internal Big Fish culture but also to many external factors such as market dynamics.
My basket of examples include,
- Mobile payment : has travelled from developing countries to the developed ones like a financial and regulatory Benjamin Button. (TTM : ~7y, STM: sponsored by heavy banking industry to open-up consumers)
- Peer-to-peer communications : have travelled from early experimental internet to the gray napsteric zones, masked in skypish applications to land through Big Fish in the B2B space as a feature of datacenter operating systems / “branch cache” how it is called in MSFT (TTM : ~15y, STM: integration into the mosaic, identity change)
- Video semantics tracking : has travelled from academia to consumers in speed-light (less than a decade to launch project Natal) (TTM : ~10y, STM: innovation transforms the product)
- Biscuit-flavored yoghurt : Marketing innovation, where you test a few recipes and you build on on insghts that people love biscuits but are too guilty to consume them at the rhythm of yoghurts. Also have to buy the rights of a favorite biscuit brand. (TTM : ~6m, STM: act naturally )
- With this last one I want to emphasize that if software was simpler to build, simpler to adopt, and was sold in cheaper units, end users could possibly profit from and indulge in innovation faster and more naturally. This is why social-technology + M&As are a better match.
Hey I am not pocket-Gartner, so please feel free to challenge my examples.
After aaaall this analysis, I come up with a…question: We’re pretty much involved in producing innovation so it’s normal that we’re pretty demanding on change happening fast. However, how fast can an average consumer or ITpro absorb and adopt software innovation?
In virtualization for example, a lot of which passed through M&As, MSFT carries the burden of late TTM. By the time MSFT was into virtualization, it was no longer innovative. But still adoption rates by the market were loooooow and (relatively) sloooow moving. So buzz-wise TTM was late, but adoption-wise TTM was early. Crazy? just a paradox of software and friends. The attained benefit for MSFT was catching up with the buzz rhythm and also syncing with the adoption rhythm. Isn’t this a successful strategy?
Conclusion?
Overall, even though M&As slow down and phase out a lot of good stuff, technology is still a great industry for M&As because
- A lot more of fresh attitudes survive in tec- fresh towards life and change as well.
- The money culture is less pronounced
- Creativity and innovation need change even in dinosaur size and style.
“Don’t feed the lions!” – please do….
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