Per our earlier article on A Merger & Acquisition Leader’s Playbook For Success, avoid the traps of 1) poor strategic focus, 2) poor cultural integration and/or 3) poor delivery of synergies by leveraging the full playbook and its seven sub-playbooks: Strategic, commercial, operational, financial, governance, organizational, change management.
This article focuses on The Operational Playbook and its components of cost optimization, operational excellence, and technology especially important in delivering the synergies.
Don’t underestimate the importance of your operational, executional and financial practices in terms of putting all your value-creating theories into practice and in freeing up the resources you need to fuel them.
If there’s a right place and a right way and a right time, there’s a wrong place, a wrong way and a wrong time when it comes to allocating resources. To allocate resources to something, you have to pull resources away from something else.
- Resource allocation practices
- Rules of engagement
- Action plans and processes
- Performance management plans and processes: operating and financial performance standards and measures
Create a list of high value-creating processes to look at while layering in new processes on top as required to 1) deliver the needed cost reductions, 2) leverage capital synergies across assets and capital and working capital and 3) fuel revenue growth.
Operational excellence, supply chain, distribution and continual improvement comprise the second component of the operational playbook. The heart of operational excellence is turning your cultural choices into guiding principles and then continually improving how you implement them.
On the surface, this one is relatively straightforward. Solve for what’s getting done by whom by when by laying out the actions, measures, milestones and timing, accountabilities and linkages to make things happen.
In a merger, you want to maintain and evolve the best of the current processes while adding new processes as required. You do not have to change everything. And you certainly do not have to change everything all at once. Start with the processes around the core focus of the newly combined organization (design, produce, deliver, service). Then move on to strategic enablers.
Identify the processes that are working well – in either organization. Fold the other organization’s process into that.
- Make a hard shift where possible.
- Adopt the new process completely as is first, with no changes.
- Then, once the combined process is running smoothly, improve.
Put in place weekly demand management, daily, weekly and monthly business operations management and semiannual performance management systems with a focus on
- Pricing and margin stabilization
- Demand management and customer experience via application of technology tools
- Supply chain resiliency
- Market share expansion
The pivot point is milestones—checkpoints along the way to achieving objectives and goals.
The third component of the operational playbook is technology. While it’s an important, stand-alone component on its own, it’s even more important as a critical enabler of the first two components.
Leverage technology across your priority choices to improve effectiveness or efficiency in different situations.
Make sure you are leveraging technology to further your strategy. Your technology choices must help you win where it matters. Having the most advanced knowledge is merely a fleeting advantage. Technological superiority is not in itself a strategy; it’s part of enabling a greater vision.
Think through how technology aids you along the proactive-responsive scale. Do you need your technology to help you innovate and get ahead of your customers’ needs? Or, do you need your technology to help you keep in touch with your customers so you can be responsive to needs they identify?
Be conscious of how technology influences your behavior and relationships with others. If the technology is enabling your relationships, great. If the technology is allowing you to have a bigger impact than you would without it, great. If not, the machines are winning. And that’s not acceptable.
The technological solution never stands alone. Think SIPOC (supplier–input–process–output–customer) and the suppliers of inputs into the process so the outputs meet the needs of the next person in the customer chain. Don’t guess at other capabilities, needs, and barriers. Ask them.
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Click here for a list of my Forbes articles (of which this is #774) and a summary of my book on executive onboarding: The New Leader’s 100-Day Action Plan.