Many successful executives have experience with mergers and acquisitions. With so many experienced executives, why do over half of US mergers fail? Think about it. What lessons have you learned about successful organizational integration? What did you do?

Successful chief executives and their teams harness the power of organizational integration. Despite colossal time investments that executive teams apply to acquisition choices and selections, few are prepared for the aftermath of organizational integration. The rational factors that guided acquisition selections and choices are replaced by organizational confusion, disruption and loss of control.

Making a merger or acquisition work requires high regard for human and organization development. Integration activities necessitate a distinctive combination of executive introspection and action. Executives who understand the lessons of successful integration forge powerful alliances with organizational stakeholders every step of the way.

Here are seven indispensable lessons executives have learned from winning organizational integrations.

1. Have a point of view and communicate it.

   In the first days and weeks of integration, negotiation-weary executives believe that rational choices and activities will drive integration success. The infant enterprise is driven by the need for sales at a time when executives are strained by demands from analysts, the Board, customers, employees, and suppliers. In the initial weeks, it's easy to let organizational values and vision take a rear seat to seemingly endless demands on executive time.

   Organizations succeed when the team at the top pays something other than lip service to the future. Values and vision setting are unlikely to be successful when these foundational events are sandwiched between other organizational demands. Chief executives who opt to delegate values and vision-setting to committees create an illusion of speed and end up producing insufficient results.

   Value and vision setting will provide opportunities to "re-recruit" employees, many of whom will be unsettled by the integration activities. It will also provide the basis for the organization to clarify its value propositions, and to yield a return on the significant financial and emotional resources deployed on merger and acquisition activities.

2. Set participative goals.

   Beyond its value as an interesting exercise, ask members of the new executive committee to identify six-month and one-year goals. One group of 12 leaders on a newly formed executive team I worked with produced an outstanding variety and number of goals - nearly 50 distinct goals among 12 smart people. There was keen interest to reduce the list to 3 or 4 short and moderate term goals, but the process failed to evolve, because the new team and organization lacked vision. Sadly, for all stakeholders, there was no Hollywood ending to this merger.

   Participative goal setting is a means to creating and developing the new executive team. Participative goal setting reduces silo-towering and involves executives in the personal and professional success of one and other. These activities contribute to the development of trust and productive working relationships between and among executives. A participative goal-setting process creates a climate and pattern for other organizational leaders to follow.

3. Learn as you go.

   Successful integration takes time, and few stakeholders are willing to go the distance unless they see compelling results. Successful executives create short-term wins during the integration process as a means of reducing resistance and combating organizational fatigue. The creation of successive short-term wins builds organizational capacity for the long-haul organizational transformation effort.

   The team at the top of the change effort will not have all of the answers for successful integration. Acknowledgement of doubt and self-imposed exclusion from problem-solving is difficult for seasoned executives. However, real change efforts require broad and deep involvement of employees. Involvement creates organizational learning, which may be the cornerstone of competitive advantage.

4. Find humor in situations.

   Humor is a spring for creativity that contributes to the flow of executive and organizational effectiveness. Leaders know that humor helps to maintain perspective. Integration executives can be overwhelmed with amounts of transactional and transformational change in the new organization. Humor provides the comfort and grace to sustain grueling integration schedules and to produce the deliverables stakeholders expect.

   To maintain your focus on the bigger picture, you'll need to laugh at some of the well-intentioned cost containment and revenue generation proposals that are generated by employee teams. Successful executives balance serious work with humor. The balance of humor and serious work creates positive environments for employee contribution.

5. Take pride in what others accomplish.

   People want to be acknowledged, and you want to gain their commitment. The affirmation and support of others is essential to gaining commitment. The objective of a successful transformation isn't to blend two or more organizations; it's to create a new organization. Successful executives want to end up with something more that a sum of distinctive organizational parts. The creation of a new organization requires everyone's efforts and energies. The best way you can encourage contribution is to acknowledge and to take pride in best practices and noteworthy solutions to thorny integration issues.

   In time-pressed environments, the top team can show its pride in the organization through regular and ad hoc communication means. To maintain enthusiasm and momentum, learning and achievement needs to be celebrated. Successful integration executives focus away from reports of integration progress and towards creative accomplishments, results, and solutions. Top team executives who lavish their praise maintain employee momentum to deliver the new organization.

6. Act ethically.

   Leadership scholar James O'Toole wrote that convictions are necessary to sustain leadership energy. Convictions, according to O'Toole, make it possible for leaders to attract followers and to provide the focus and optimism to lead. Energy, focus, follower-ship, and optimism are essential for the long-term success of integration efforts.

   Stakes are high in integration: new contracts, new suppliers, and new markets. Increasing pressure makes many reminisce for the newly perceived slow pre-merger pace. By acting ethically, top executives create climates for trust and honesty.

7. Remember your passions. In their 50s and 60s, many executives reflect on their career successes and end-up discovering that their lives are empty. Regular diets of merger and acquisition activities can contribute to the feeling of loss. During integration, executives often lament about the lack of time available for complete accomplishment. Business triumphs are often fleeting, but lifetime accomplishment is readily sustained through focus on both business and personal passions.

   The benefits of life at the top enable you to live life fully. Remind yourself that life is full of opportunities for contribution and meaning. Management guru Peter Drucker attributes his success to developing a new leisure pursuit each year. Passion will prolong your energy and involvement in creating and building a successful new organization.

Questions for discussion:

• Consider your experience in merger and acquisition activities. What integration advice would you give to young leaders in your organization?
• What passions are sustaining your energy and involvement for complex organizational problem-solving?
• As an integration leader, what have you learned from direct and indirect reports?

References

Bell, C. R. (2000). Seven lessons on teaching and training. Learning journeys: Top management experts share hard-earned lessons on becoming great mentors and leaders. M. Goldsmith, B. Kaye and K. Shelton. Palo Alto, California, Davies-Black Publishing: 191-196. The author is indebted to Dr. Bell for providing the framework for this article.

Heifetz, R. A. and M. Linsky (2002). A survival guide for leaders. Harvard Business Review. 80: 65-75.

Kanter, R. M. (1996). The new managerial work. Fast forward: the best ideas on managing business change. J. Champy and N. Nohria. Boston, MA, Harvard Business Review Book: 181-196.

Metcalf, C. W. and R. Felible (1992). Lighten up: Survival skills for people under pressure. Reading, MA, Addison-Wesley Publishing Company.

O'Toole, J. (1999). Leadership A to Z: a guide for the appropriately ambitious. San Francisco, CA, Jossey-Bass, Inc.

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