5 Keys to Integration Success
Best practices across 5 key dimensions of managing a successful integration
By Scott Whitaker, US Partner at Global PMI Partners
While every deal is different, sometimes just doing the basics right can mean the difference between tangible success, or an unsatisfactory result. This article is not meant to address everything that must get done in an average integration, but instead focuses on 5 key dimensions that are consistent across integrations regardless of size, sector or complexity.
The 5 most common dimensions are:
- Strategy & objectives
- Program Management
- Day 1 and First 100 Day Planning
- Communications, Culture & Change
- Post-close Execution
For each dimension, we have outlined a few best practices, and associated common pitfalls. Addressing the 5 areas outlined below will put companies on the path for a successful integration.
Strategy & Objectives
While most executives we work with do a good job at defining the overall deal thesis, translating that into tangible direction for the integration teams can sometimes hang up even the most experienced acquirers.
Early on (as in ideally pre-close), you have to define that “north star” at the program and functional level to ensure downstream initiatives deliver the value you need to deliver the deal thesis.
- Value drivers and objectives defined and agreed upon at Steerco level
- Specific integration objectives defined at functional level
- Measurable success metrics and integration KPIs defined and can be monitored/tracked
- Strategy and objectives defined “as we go”
- Unresolved direction for strategic workstreams (e.g. Target operating model, go-to-market, product roadmap, synergy targets)
- Inability to measure success metrics & KPIs
Integration Program Management
Companies should not underestimate the level of effort for full people, process & technology integration, and the rigor required around program management that is necessary to plan and execute integrations. Establishing a rigorous and disciplined integration management process, even for smaller add-ons or modest transactions, will help IMO (Integration Management Office) participants use their time efficiently and effectively.
- Formal governance framework with defined roles & responsibilities
- Defined methodology, tools, templates & technology platforms, and status reporting enablement
- Defined program milestones, workplans, and weekly process
- Informal governance
- Limited and disorganized target involvement in process
- Inconsistent and/or ad hoc IMO process
Day 1 and First 100 Day Planning
We believe a successful Day 1 and first 100 days will ensure a successful integration overall, so starting early and prioritizing activities is one of the most critical pre-close planning activities. Also, rigorous planning here helps inject a “bias for urgency” into the integration in the early days, which helps keep sustain momentum throughout the integration period.
- Day 1 mandatories identified at functional level
- First 100-day functional integration initiatives prioritized and detailed in functional workplans
- Tracking in place to ensure completion and issue mgmt.
- Starting detailed Day 1-100 planning too late
- Lack of prioritization or tracking at program and functional level
- Lack of urgency overall
Communications, Culture & Change Management
This is probably the home of the most easily avoidable and unforced errors across most integrations. Poor attention to communication requirements across employees, customers and other stakeholders puts leaders in reactive vs. proactive mode. Also, failure to understand and take action around culture and change requirements will slow progress and delay and/or erode value realization.
- Materials prepared for sign, announce, & close across all stakeholder audiences
- Assessment of culture and change management requirements completed by Day 30
- Consistent post-close communications to maintain stakeholder engagement
- Assigning already busy marketing or investor relations people to manage integration communication programs
- Dismissive approach to cultural integration obstacles and/or change management needs
- No formal communications after Day 1
It is essential to keep the integration cadence and “weekly rhythm” in place until the majority of integration initiatives are complete. The goal should be to not lose any momentum, but to use a completion target as a goal and “carrot” to transition to business as usual.
- IMO process in place until 80% of initiatives complete
- Plan optimization to finalize plan of record (POR)
- Orderly transition to business as usual (BAU)
- No plan optimization to ensure final POR delivers value drivers & objectives
- No tracking to determine % complete
- IMO process disintegrates post-close
The 5 dimensions outlined in this article are common denominators, and the key is to understand early on what will ensure integration success for your integration, and build that discipline into your planning & execution approach.
Scott Whitaker (firstname.lastname@example.org) is a partner at Global PMI Partners, an M&A integration consulting firm. He is the author of Cross-Border Mergers and Acquisitions (2016) and Mergers & Acquisitions Integration Handbook, (2012).