A successful acquisition requires a unified leadership team that can navigate the complexities of blending two distinct organizations. Prioritizing one company’s approach without collaboration can lead to inefficiency and discord. Fostering leadership alignment from the start is critical for a smooth transition.
An exploration and production (E&P) company was recently acquired by a similar-sized energy company. Going into the acquisition, both companies had their own systems, processes, and cultural norms. After the acquisition, a mixed leadership team remained, comprised of executives from both organizations. The acquiring company set a precedent that its systems, processes, and objectives would take priority unless the acquired firm could make a compelling case otherwise. A mindset like this can quickly lead to a contentious integration where neither organization’s goals are fully realized due to disagreement over which systems and processes to adopt.
Issues like this can be resolved by aligning leadership. Below are three steps to achieving leadership alignment immediately after an acquisition.
Leadership alignment starts with defining guiding principles for the acquisition. These principles are the rules of the road that guide decisions and actions throughout the transition and ensure everyone remains focused on shared goals. Establishing these principles early helps mitigate the impact of changes on stakeholders by keeping their preferences in mind from the very beginning.
Guiding principles might center on themes such as accountability, team unity, and communication. No matter the subject, guiding principles should be grounded in the values of both companies. This approach sets a strategic direction for the integration.
It's important to have the right people in the room for guiding principles to be effective. This includes key decision makers, consultants guiding the acquisition process, and leaders from both sides. These guiding principles sessions create a space for open dialogue, allowing perspectives from both companies to be heard and acknowledged. In these initial meetings, consider short and long-term goals and prioritize what’s best for the newly merged organization rather than favoring one side over the other. Focus on creating the smoothest transition for everyone involved.
Once guiding principles are in place, leadership can turn their attention to shaping a future-state vision for the organization. Essentially, this is the “5-year plan,” or the ideal state. A future-state vision can be visualized in the form of a Process Improvement Vision (PIV), which details what an ideal version of the company’s processes and operations might look like.
Start by asking these questions: What are the main work processes? What are the more specific functions within these processes? Who is responsible for each part of the process? While answering these questions, document any process gaps or areas for improvement that are identified.
After mapping out processes and subprocesses, review leading industry practices and see how these could be incorporated to bridge any gaps.
The future-state vision should illustrate why the organizations were brought together and how they will operate more effectively and efficiently as one. This step is essential because aligning processes will streamline operations and create a clear roadmap for the entire organization to follow.
Throughout the creation of guiding principles and the PIV, leadership may have ideas or goals they quickly agree on—these are quick hits. A quick hit could be something as simple as standardizing a document format or outsourcing specific tasks. It could also be something more intensive that the companies agree needs changing, such as process reengineering or training for a certain department. Addressing these low-conflict changes immediately can give leadership a quick morale boost. Early successes create a stronger sense of teamwork and positive momentum, preparing for more complex integration steps that will follow.
A company’s future success depends on an aligned leadership team. Establishing guiding principles, creating a future-state vision, and finding quick hits lays the foundation for further organizational alignment. Without these steps, later stages of the integration, like system selection, may falter or even fail. Prioritizing leadership alignment ensures that both companies come together to operate as a single, more efficient, and cohesive entity.
At Trenegy, we help organizations align leadership, processes, and systems throughout the integration process to achieve short and long-term success. For more information, email us at info@trenegy.com.
