M&A Integration: Decision Making and Leader Lessons from the Dunes of Royal Birkdale
- Posted by metre22
- On November 14, 2019
- 0 Comments
Effective leadership and speed are essential for M&A success. Executives need to balance the need to make informed decisions with the need to act quickly and be decisive. Some tips to ensure effective decision making include:
- Evaluate alternatives, but beware of falling into the “no-decision” trap
- Leverage a set of Guiding Principles as your filter for fast decision making
- Focus on the “gain” decisions through clearly established and communicated Value Drivers
As this year’s Open Championship approaches, I couldn’t help but think back to the drama from one year ago. And, how many leadership lessons on decision making emanate from that event. As a Jordan Spieth fan, it was gut wrenching to watch his final round reaction after a wayward drive on the 13th hole at the historic Royal Birkdale Golf Club. After starting the final round with an apparent, comfortable three-shot lead, a slow start left him tied with Matt Kuchar for the final stretch of the Championship. Now his ball appeared to be lost somewhere in the deep, dune-scaped rough some 60 yards right of the fairway. At that moment, standing on the tee box with his head in his hands, he must have felt with that one swing, the Championship had all but slipped away. He had a crucial situation to deal with and – if he could find his ball – some very serious decisions to make.
Jordan did find his ball and he, and his caddie Michael Greller, worked to quickly explore their options. Go back to the tee, incur a one stroke penalty and lose distance to the hole? Take an unplayable lie? If so, where should he drop? Surveying from the top of the marram grass dune to the adjacent practice range filled with TV trucks, they finally made the call: drop the ball beyond the dunes, beyond the trucks, and in the middle of the practice range. Three shots later, Jordan pulled the ball from the cup for a bogey. He had salvaged the hole and, ultimately, the tournament.
There is no doubt Jordan’s victory was the result of his extraordinary talent and years of practice honing his craft. But, it is also the product of his ability to analyze a difficult situation, quickly process the available information, and commit to a decision.
Jordan’s decision-making process that Sunday demonstrates several leadership qualities that executives can learn from. While they apply to decision-making in general, we believe they are especially applicable during post-deal merger and acquisition integration – a time when M&A leaders are under a tremendous amount of pressure and their decisions have a magnified impact on employees and shareholder value. Here is our view of some of the key lessons.
Seek alternative options, but understand the cost of “no decision”
There is often a fallacy that decisions are about choosing between two alternatives — e.g., A vs. B and assessing the cost and benefits for the organization between the two. What organizations tend to miss is that there are always other alternatives.
Once Jordan and the rules official deemed his ball was unplayable, most players would have assumed they had two options: A) take a drop from the dune area or B) take your medicine and go back to the tee box and re-hit the drive. Jordan created a third option: C) Go back in line with the flag all the way to the Birkdale practice range for a clean drop area. Greller credited Jordan’s awareness of the situation and deep understanding of the rules of golf for this decision. “I don’t think people can appreciate his being in the situation and for him to have the process to think the range is in play.”
Being creative is certainly an asset all leaders can benefit from; however, it is important to know that searching for alternative solutions can also get in the way of progress. Often time leaders can view their third option as not making a decision at all. Too often, organizations “choose” this path due to fear of making the wrong decision. Based on our experience, choosing any alternative is typically better for the organization than avoiding the decision all together.
Decision Making and Speed: Remember that speed and nearly right trumps methodical perfection
Integration success depends on speed. There is no doubt a solid game plan is required to lead all complex initiatives, but adjustments throughout M&A integrations are essential, as unforeseen situations inevitably arise. When new situations emerge, leaders need to make fast decisions that do not impede the speed of integration. This means analyzing the data available to you and applying a process or filter to determine the best path forward. A lot of times this means not having the luxury of having all the information, but nonetheless trusting the process in place and acting and communicating decisively so the rest of the organization has the confidence needed to execute. We’ve found that memorializing this philosophy as one of the Guiding Principles for integration is beneficial. These act as guardrails for decision making throughout the integration. (To learn more about Guiding Principles Click Here.)
When Jordan determined the practice range was in bounds and it was his best option for success, he needed to quickly analyze his remaining yardage to the hole – all from a place on the course he and Michael had not prepared to find themselves. “Just give me a round number,” Spieth yelled to his caddie. This round number was not a perfect measurement, but when fast decisions are critical, sometimes that’s all it takes. Trust the process and the information you have, commit to a decision, and swing away. Although the time between his tee shot and recovery shot lasted a mere 20 minutes (no doubt a lifetime for Kuchar) a lot had to be processed in that time period. Quick decisions don’t guarantee success, but they do give the organization confidence and energy to move the effort forward.
Be aware of leader’s tendencies to either prevent pain or pursue gain
In the book Decide: Work Smarter, Reduce Your Stress, and Lead by Example, author Steve McClatchy argues that people are innately programmed to either prevent pain or to pursue gain and that these conditions motivate all our decisions and activities. Prevent pain activities are those that are intended to avoid unwanted consequences, things like doing laundry and taking out the trash. They need to happen, but are things that can be delegated and do not require a high sense of urgency. Whereas, pursue gain activities are those that align to your strategic aspirations or opportunities to gain improvement. These things cannot be delegated, such as gaining an advanced degree or starting your own business.
When Jordan was faced with options at the Birkdale 13th hole, he could have easily acted on the human impulse to prevent pain merely by accepting his fate and going back to the 13th tee. Had he thought to delegate this decision to his caddie (or even Johnny Miller), they would have likely recommended the same approach. With that said, Jordan recognized what was at stake and his competitive instinct to pursue his ultimate gain, the Claret Jug, allowed him to countermand the natural appeal to prevent pain. Similarly, leaders need to ensure they have the discipline to override this condition and focus only on those activities that align to a greater vision and create tangible value.
One way M&A leaders can safeguard that they and the organization are programmed to pursue gain is to develop a set of Value Drivers that act as your “must do” strategies that lead to success, such as maintaining customer service levels, realizing cost synergies, expanding acquired services into new markets, etc. These Value Drivers focus the organization and leaders to make decisions in the lens of what will truly create gain. (To learn more about Value Drivers Click Here.)
Check out some additional perspectives on leadership by clicking here.