Realigning after an Acquisition

There are a lot of advantages to acquiring other companies such as gaining access to new customers, expanding your organization’s product or service offerings, and increasing scale. But there are also significant challenges to assimilating differing organizational systems, processes, and cultures. If not done efficiently, it can result in a variety of operational disruptions and competitive missteps.

Buying another company and trying to successfully blend it into what your organization does to leverage new strategic capabilities and better optimize efficiencies is similar to a sports team acquiring a new player. A new free agent on a good team should lead to instant success, right? Not always. Without figuring out how to effectively integrate the capabilities of the new free agent into the team’s successful formula, a free agent investment can disappoint.

It’s not just a matter of what the player does on the field or the court; chemistry also matters. Poor chemistry and fit will cause the team’s performance to suffer. Similarly, on paper an acquisition might look like a brilliant move that will improve your competitiveness and strategic capabilities, but it doesn’t always play out that way. Common issues include poorly managed integration, lack of strategic clarity, and cultural misfits.

So the challenge is to solve those problems to reach full potential by aligning the acquisition. Here are some steps that can increase the chances of success.

First, leaders need to be really clear strategically on how to take advantage of the acquisition. Does it really fit our strategy and help us accomplish what we need and want to accomplish as a business?

Second, if strategy is clear, you can identify what capabilities that strategy demands. An acquisition can help the organization add capabilities you don’t have today or enhance those already in place. Going back to the sports analogy, after acquiring the star free agent, did the coach come up with new plays and a strategy to really leverage the new player? Has the team created the organizational capabilities that allow the free agent to play well and develop chemistry with their new teammates so they can work together effectively? The best teams—whether in sports or in business—ensure that they are more than a collection of parts, they are an aligned whole.

The last step is to ensure the organization has been redesigned to operate with the new pieces in place. In too many cases an acquisition is never fully integrated, so full organization realignment takes place years after the acquisition has occurred, when the organization is still struggling to find the benefits and strategic advantages that prompted the acquisition in the first place.

According to McKinsey research, only 16 percent of mergers deliver their objectives in the expected time frame, while more than four in ten take longer than expected. Locking in the strategic intent, understanding the needed capabilities, and facilitating an intelligent organizational realignment enables businesses to integrate acquisitions smoothly, allows corporate activities to be standardized and streamlined, and creates a foundation for competitive synergies to flourish.

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