Mark L. Feldman - Five Frogs on a Log: A CEOs Field Guide to Accelerating the Transition in Mergers, Acquisitions and Gut Wrenching Change

Foreword
Mergers, Acquisitions, and Large-Scale Change

Introduction: The Salado River
The Seven Deadly Sins of Transitions

1. Opportunity Lost
The Dealmakers Nightmare

2. The Ugly Truth
Deciding Is Easy, Executing Is Hard

3. More Ugly Truth
Why Performance Deteriorates

4. The Law of the Band-Aid
The Need for Accelerated Transition

5. 260 Priorities
Economic Value Creation

6. Windshield Watching in Seattle
Early Communication and Stability

7. No Secrets, No Surprises, No Hype,
No Empty Promises
Connecting with Your Stakeholders

8. Five Frogs on a Log
Launching Transition Teams

9. Acute Structural Anxiety
Organization Structure and Role Clarity

10. The Two-and-a-Half-Ton Truck
Policies and Practices

11. The Ultimate Scapegoat
Unconventional Advice About Culture

12. The Blind Mans Dog
Value Creation Incentives

Whos kidding whom? The history of corporate change is replete with false starts, missed targets, and dramatic disappointments. And as more and more business leaders find themselves managing a merger, acquisition, or other large-scale restructuring, the threats to personal and reputational capital loom large.

Nowhere is this more apparent than in mergers and acquisitions. We recall the client who referred to his investment bankers as 2 percent country gentlemen and 98 percent rogue used-car salesmen. The experience started out easy and ego-pleasing, with its aura of big money, immediate growth, and instant competitive advantage seasoned with a touch of colonialism; cheering from the sidelines, the investment bankers promised much and pocketed more. What the bankers didntand rarely everdiscuss were the jolts, curves, and emotional potholes on the rough road ahead.

If only I knew then what I know now, I never would have done the deal, he moaned. When I add the cost of the deal to the post-deal downturn and the opportunities we lost because we were distracted and loaded down with debt, its clear that U.S. Treasuries would have been a better investment. But acquiring seemed so easy. You buy it one day, and its yours the next.

He was right. Acquiring is easy. Owning is hard. Big organizational changes offer the opportunity to reap big losses. Acquisitions are never risk-free. Integration is never seamless. Expectations always exceed actual gains.

Whether youre buying another company or acquiring a new vision of the future, this is a time of relentless change. Increasingly, the companies that win are those that learn faster, act quicker, and adapt sooner. They compress time by making and executing early, informed decisions about economic value creation, ruthless prioritization, and focused resource allocation. They use these decisions to take early, firm stands on management deployment, organization structure, and culture. Their actions are increasingly linked to long-term, sustained economic value creation.

The principles and practices described in this book chart the path. They apply to a wide range of business and operational problems: from accelerating the development of a new product to merging two companies; from creating a service-driven culture to repositioning a business in a whole new marketplace. However, the most rigorous test of these principles is how they handle the turbulence surrounding mergers, acquisitions, and gut-wrenching changes.

Navigating a major transition is a race against time. Executives quickly discover that they are late even before they get started. Everything becomes a priority. Years of deployment decisions must be made in days. There are hundreds of questions and only a handful of vague answers. Nobody is doing his or her job effectively. Customers are being neglected. Productivity is plummeting. Chaos is spreading like wildfire.

These special situations magnify the operational, organizational, and human resource problems facing executives who are expected to work miracles. Navigating a major transition is a race against time. Executives quickly discover that they are late even before they get started. Everything becomes a priority. Years of deployment decisions must be made in days. There are hundreds of questions and only a handful of vague answers. Nobody is doing his or her job effectively. Customers are being neglected. Productivity is plummeting. Chaos is spreading like wildfire.

This is not the time to call up the latest management fad. Its the time for a financially driven, solidly pragmatic, results-oriented approach to accelerating changean approach that is focused on creating economic value and stakeholder opportunity.

This is the environment into which the executive team is thrust. A beleaguered group who set aside other business concerns to do the deal, they are now faced with a backlog of decisions to make and a surplus of new challenges to tackle. They struggle for control and search for direction. They have little patience for process, no tolerance for wasting time, and a single-minded focus on eliminating the staggering costs associated with every day of delay. This is not the time to call up the latest management fad. Its the time for a financially driven, solidly pragmatic, results-oriented approach to accelerating changean approach that is focused on creating economic value and stakeholder opportunity. The accelerated transition approach described in this book is a distinctive proposition for generating momentum, capturing early wins, and creating shareholder value. While the approach has been successful in a wide range of environments, it has proved to be most valuable in the hostile and unforgiving world of mergers, acquisitions, and large-scale change. It is for this reason that most of the stories and examples are drawn from this environment.

Sabinas, Mexico, September 6, 1960. An unusually heavy thunderstorm drenches the fertile farmland on the eastern slopes of the Sierra Madres. The sheer volume of water filling hundreds of small creeks and tributaries causes the Salado River to swell. A few small concrete dams built across the river as part of a long-term plan to provide water for irrigation and livestock quickly fill up and begin to overflow. Even though there is little threat of serious flooding, the citizens of Sabinas face another challenge. You see, in Sabinas the top of the dam also serves as the bridge connecting the small rural community to the more populated cities of Monclova, Saltillo, and Monterrey. Today, however, few people are crossing the hundred-yard stretch of concrete now submerged under two feet of the Salado River.

The overflow presents a minor inconvenience to the local residents and a major problem to any traveler passing through Sabinas. By the next day the water level should drop, allowing safe passage to all who wish to cross the Salado River. But today only large trucks and buses are successfully fording the river.