Avinash JhangianiInnovator. Digital Strategist. Business Technologist.

http://about.me/avi

2012

M&A 2.0Leveraging emerging technologies to address “social aspects” of mergers & acquisitions

Point of View

Mergers and acquisitions have become a familiar part of today’s business landscape. The ability to rapidly yet effectively integrate is imperative to gaining the strategic competitive advantage that companies sought for before closing the deal. However the integration of two companies not only means amalgamation of their business processes and systems, it also means combining of two organization structures, cultures, and working relationships. In order to create one company whose value is greater than the sum of its parts, effective collaboration and communications are essential. These human capital or social aspects of mergers and acquisitions are overlooked many-a-times, causing integration delays and/or merger failures.

This point of view discusses the social challenges of M&A and provides recommendations to creatively address these challenges by leveraging emerging Social Media concepts and tools during post-merger integration.

Preface

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The adverse impact caused by the social aspects of M&A quickly compound over time if they are not addressed before core integration activities begin

Key social challenges in

M&A integration

Communications• Inconsistent tone and

content of key messages to employees and customers

• Lack of appropriate feedback mechanisms to address concerns and risks

Communications• Inconsistent tone and

content of key messages to employees and customers

• Lack of appropriate feedback mechanisms to address concerns and risks

Collaboration• Poor interaction between

employees of the merging organizations

• Top-down approach to integration, esp. in areas decision making and sharing of best practices

Collaboration• Poor interaction between

employees of the merging organizations

• Top-down approach to integration, esp. in areas decision making and sharing of best practices

People• Loss of critical employees

and social connections

• Culture clash

• Loss of productivity

• Fear-uncertainty-doubt (FUD)

People• Loss of critical employees

and social connections

• Culture clash

• Loss of productivity

• Fear-uncertainty-doubt (FUD)

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CIOs can leverage emerging Social Media technologies to address these issues, thereby effectively managing and accelerating integration

Improve visibility over integration activities

Enable effective knowledge transfer

Increase employee productivityand organizational efficiencies

Enhance combined NewCo brand equity

Promote workforce stability and address external stakeholder concerns

Retain key talent to maintain business continuity

Organizational alignment towards integration objectives

Business Benefits

En

ab

lin

g

To

ols

Online Profiles Social Networks Web-based communities

CEO Blogs, Moderated consumer-facing blogs

Podcasts RSS

Co

ns

tra

ints

Organization: rigidity of the organizational structure (hierarchical vs. flat collaboration model), existing knowledge management tools, operational alignment, cultural alignment (reclusive vs. eager to engage), and level of governance

Workforce: diversity, age, and geographical distribution Business: employee turnover, importance of knowledge retention, level of transparency

with customers, level of regulation

Ho

w S

oc

ial

Me

dia

ca

n

ad

dre

ss

th

es

e i

ss

ue

s

Identify, maintain, and leverage existing working relationships in the combined organization

Define skills sets and locate SMEs to fit the job

Analyze knowledge exchanges and information flows between cross-functional teams

Manage interactions between LOBs, workstreams, partners, vendors, and other ecosystem entities

Define target operating model

Decentralize decision making

Capture best practices and facilitate learning

Create an employee feedback loop to attain real-time, ground-level feedback about the perceptions of the deal

Manage customer and community concerns and misperceptions addressed proactively

Bridge the gap between leadership and staff

M&

A

Iss

ue

s

Collaboration platforms Wikis Social Tagging Ratings

People Collaboration Communications

“Connections can help combine cultures”

“Leverage wisdom of the crowds”

“Be consistent, accurate and timely”

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Companies that have used Social Media for merger and acquisitions have benefited in some very compelling ways

• Collaborative decision making: Defining Target Operating Model and sharing decision documents in the Integration planning phase using employee-facing collaboration platform

• External communications: Blogging to connect with customers and address questions and concerns about the merger at http://blog.wellsfargo.com/wachovia/

• Integration efficiencies: Drastically increasing its already-increasing efficiency in merger integration efforts by collaborating using Social Media tools like Wikis

• Reduction in transaction costs: Closing acquisitions far more quickly is proof of an enterprise-scale reduction of transaction costs, thereby enabling Cisco to undertake more transactions and be more responsive and adaptive

• Tracking integration interactions: Used social network analysis to map and measure the melding of information flows, work relationships, and knowledge exchanges to track where integration was happening and where it was not occurring.

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Define scope, scale, and goals of the project

Develop a detailed business case

Use business case to identify and manage risks, set goals and define metrics

Develop a project plan to focus on the metrics and mitigate the risks from the business case

Incorporate best practices for launching a successful Social Media initiative

Assess Plan Execute Manage and Grow

Assess the current environment and the characteristics of Social Media

Develop a plan for using Social Media to deliver value

Launch the Social Media project and execute the plan

Determine overallbusiness strategy

Understand Social Media and specific pain points that it will address

Assess strategic alignment with goals of Social Media

Analyze technical environment

Assess alignment and readiness of organizational structure and humancapital initiative

Implement theproject plan

Focus on the goals and measures defined in the business case

Take incremental stops and measure actual metrics against assumptions inbusiness case

Make modifications where necessary based on actual results

Analyze success of the initiative: understand where things went well and also where not so well and why

Understand where value was truly created and how to leverage it

Identify a growth strategy based on experience and maximum value creation

Manage the Social Media initiative and develop a growth strategy

Following a structured approach similar to those used for other enterprise applications is the key to successful Social Media implementations

Social Media is more about people and less about technology. Developing a business case to assess its fit and value is essential.

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Two fundamental questions need to be addressed…

Developing a detailed business case is a key component of successfully leveraging Social Media

What value is created bythis investment and howis it measured?

What are the major project decisions and how do they affect costs?

11

22

- 8 -- 8 -

Define Quantitative Benefits: Identify components and

measures of the benefits Determine variances and

dependencies among components

Define Qualitative Benefits: Clarify operational

improvements Understand how to gauge

improvements anddetermine indirect measures

Understand project steps that will affect the quantitative benefits and the operational improvements created by qualitative benefits

Determine area’s of the organization affected by the Social Media initiative

Establish ownership of the operational changes

Define cost drivers Understand how costs are affected by project plan decisions

Determine areasof indirect costs related to changes or operational improvements

Analyze areas of future costs related to managing and growing the initiative

It is important to define the quantitative and qualitative benefits along with cost drivers for a comprehensive business case for Social Media

Determine direct costs of implementing the initiative

Social Media

Strategy:

Social Media

Strategy: Goals

Scope and Scale

Support

Goals

Scope and Scale

Support

Business Case Results:

Business Case Results:

Quantitative Analysis:

NPV

IRR

Graphical Scenario Analysis

Qualitative Analysis:

Areas of operational improvement

Indirect measures for assessing effects

Quantitative Analysis:

NPV

IRR

Graphical Scenario Analysis

Qualitative Analysis:

Areas of operational improvement

Indirect measures for assessing effects

Stakeholder buy-in, ownership responsibilities, and clear plan for realizing andmeasuring value

Stakeholder buy-in, ownership responsibilities, and clear plan for realizing andmeasuring value

- 9 -- 9 -

The answers to key questions will help maximize business value from Social Media

Category Questions and Considerations

Value Which of the M&A challenges (people, collaboration, communications) are you trying to address? Are you planning to leverage Social Media in BAU mode?

Strategy

Does Social Media align with your company strategy? Will Social Media enhance your competitive advantage? Are you already experiencing the adverse effects of not implementing Social Media?

HumanCapital

What are the demographics of your combined workforce? Has a part of your workforce already begun using Social Media for business purposes? What is the target state of the combined culture of NewCo?

OrganizationalStructure

Do you believe there may be value in exposing hidden or untapped networks within the combining organizations?

How much collaboration between employees does your current organizational structure allow? What changes to your organizational structure are necessary and how difficult will they be to

implement?

Audience What specific audience(s) are you trying to engage? Employees? Customers? Business partners? What are the risks associated with giving power to this audience?

Existing Systems

What existing systems does your company have? To what degree do you want your Social Media to be integrated with existing systems? What technical requirements does your company have?

Compliance What external government regulations does your company and industry have to follow? What are your internal compliance rules? Information-specific rules? Technology-specific rules?

Thank you for your time!

Need help?Contact Avinash Jhangiani if you need help with developing innovative social, mobile, and web strategies for your company.

Profile: http://about.me/avi

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