Executive Summary: Literature on acquisitions to manage disruptive change often focuses on the art and science of the acquisition deal and the short term post-merger acquisition program. For the acquirer, are other organizational factors which must be in place for sustained longer term success? Are both success in the acquisition deal and success at the 180 day mark into post-acquisition integration just first steps in transforming an organization to align with disruptive change? If so, what boundaries, hand offs and interplay must exist between the
organizational structures and related processes and the acquisition and
integration effort? From the Desk of Objects-In-The-Rearview-Mirror-And-In-A-Firefight-Suffer-From-Short-term-Bias.
Flesh Out the Problem to Build A Solution
There are several approaches to handling disruptive change, however, let's drill down on one specific question:
For organizations which leverage acquisitions and integration ("and" is key) programs to handle disruptive change, success in the acquisition deal and success at the 180 day milestone into post-acquisition integration all they need for sustained success with disruptive change?
For simplicity, we consider a scenario where the acquirer needs to make just one acquisition in its inorganic deal strategy, even thought his thought process can be applied to multiple acquisitions in the inorganic change program.
Disruptive innovation is Tough for Organizations
After a certain size and scale, organizations have challenges in nurturing and sustaining paradigm shifts.
Size is a good first pick as a proxy for organizational inertia in accepting disruptive change. In The Innovator's Dilemma, Clayton Christiansen highlights the disk drive industry and how companies were not able to transform with technologically driven business paradigm shifts. On the other hand, experience with digital startups will tell you that they will go through some changes in strategic direction and the successful ones navigate these nimbly.
Also, let's pick span of disruption as another factor in considering the impact of disruptive change. In an industry where sales channels are commoditized and thin, and operations as well as operational efficiencies are key, a disruptive shift in operations would be a tougher challenge compared to a technological product shift, with a long gestation period and long sales cycle that can easily be plugged into an existing industry ecosystem.
Specific Factors Which Make Disruption Tough
Companies in specific categories of size and scale, in specific markets, have unique challenges with, and have unique (organic and inorganic) solutions for, handling disruptive change. Smaller startups may find it easier to change direction and compete head to head in their new space, compared to larger organizations.
Would you pick more factors to identify a unique set of challenges and solutions for disruptive innovation?
Rate of change in the market?
Investments (not just money) required in addressing disruptive change?
Rate of adoption of disruptive change in the market?
Ratio of investments for disruptive change versus run of business size and scale of operations?
Any other factors you would consider?
While I have listed just a few factors, especially those that are external to the organization, this line of thought would help us structure the distinct categories of challenges and solutions for specific data sets.
Driving the common understanding of its common challenges and solutions through an organization would be invaluable for more effective decisions in finance, corporate development and business development roles. This would be an important internal factor in handling and managing disruptive change.
As we delve into this list, you will find that the challenges and solutions set may vary at the sector, sub-sector, company and even the business problem level.
Acquisitions and Disruptive Change
A company with a sustained, successful acquisition strategy for disruptive change is an outlier.
There are examples from the Pharmaceutical and Technology industries, in outlier companies like EMC and Cisco, around their solutions to the "acquisition and integration" of disruptive innovation. Some thoughts are here:
http://reflectionsblog.emc.com/2012/06/explaining-emcs-success-in-ma.html
Questions Illuminate the Problem
Given the broader challenges in assimilating disruptive change, would you tailor your acquisition and integration strategy to the unique challenges and solutions set at the sector, sub sector, company and business problem level?
What factors would you pick to identify a unique set of challenges and solutions for "acquisition and integration" for disruptive innovation?
Is the "acquisition and integration strategy" for disruptive innovation a subset of the overarching problem of handling disruptive change in an organization?
If not, what would be time horizon for the "acquisition and integration strategy" to play out for the acquisition to be deemed a success? In this case, would success really be measured by how the company has handled disruptive change?
If so, what boundaries, hand offs and interplay must exist between the organizational structures and related processes and the acquisition and integration effort?
Magic Bullets?
In this case, one approach could be to promote a federated organizational structure, set up functions as services to different units, and tailor unit performance monitoring and corporate services to its set of challenges and solutions. Is that a magic bullet, or does that need some further thought and tailoring?
What do you think?
Flesh Out the Problem to Build A Solution
There are several approaches to handling disruptive change, however, let's drill down on one specific question:
For organizations which leverage acquisitions and integration ("and" is key) programs to handle disruptive change, success in the acquisition deal and success at the 180 day milestone into post-acquisition integration all they need for sustained success with disruptive change?
For simplicity, we consider a scenario where the acquirer needs to make just one acquisition in its inorganic deal strategy, even thought his thought process can be applied to multiple acquisitions in the inorganic change program.
Disruptive innovation is Tough for Organizations
After a certain size and scale, organizations have challenges in nurturing and sustaining paradigm shifts.
Size is a good first pick as a proxy for organizational inertia in accepting disruptive change. In The Innovator's Dilemma, Clayton Christiansen highlights the disk drive industry and how companies were not able to transform with technologically driven business paradigm shifts. On the other hand, experience with digital startups will tell you that they will go through some changes in strategic direction and the successful ones navigate these nimbly.
Also, let's pick span of disruption as another factor in considering the impact of disruptive change. In an industry where sales channels are commoditized and thin, and operations as well as operational efficiencies are key, a disruptive shift in operations would be a tougher challenge compared to a technological product shift, with a long gestation period and long sales cycle that can easily be plugged into an existing industry ecosystem.
Specific Factors Which Make Disruption Tough
Companies in specific categories of size and scale, in specific markets, have unique challenges with, and have unique (organic and inorganic) solutions for, handling disruptive change. Smaller startups may find it easier to change direction and compete head to head in their new space, compared to larger organizations.
Would you pick more factors to identify a unique set of challenges and solutions for disruptive innovation?
Rate of change in the market?
Investments (not just money) required in addressing disruptive change?
Rate of adoption of disruptive change in the market?
Ratio of investments for disruptive change versus run of business size and scale of operations?
Any other factors you would consider?
While I have listed just a few factors, especially those that are external to the organization, this line of thought would help us structure the distinct categories of challenges and solutions for specific data sets.
Driving the common understanding of its common challenges and solutions through an organization would be invaluable for more effective decisions in finance, corporate development and business development roles. This would be an important internal factor in handling and managing disruptive change.
As we delve into this list, you will find that the challenges and solutions set may vary at the sector, sub-sector, company and even the business problem level.
Acquisitions and Disruptive Change
A company with a sustained, successful acquisition strategy for disruptive change is an outlier.
There are examples from the Pharmaceutical and Technology industries, in outlier companies like EMC and Cisco, around their solutions to the "acquisition and integration" of disruptive innovation. Some thoughts are here:
http://reflectionsblog.emc.com/2012/06/explaining-emcs-success-in-ma.html
Questions Illuminate the Problem
Given the broader challenges in assimilating disruptive change, would you tailor your acquisition and integration strategy to the unique challenges and solutions set at the sector, sub sector, company and business problem level?
What factors would you pick to identify a unique set of challenges and solutions for "acquisition and integration" for disruptive innovation?
Is the "acquisition and integration strategy" for disruptive innovation a subset of the overarching problem of handling disruptive change in an organization?
If not, what would be time horizon for the "acquisition and integration strategy" to play out for the acquisition to be deemed a success? In this case, would success really be measured by how the company has handled disruptive change?
If so, what boundaries, hand offs and interplay must exist between the organizational structures and related processes and the acquisition and integration effort?
Magic Bullets?
In this case, one approach could be to promote a federated organizational structure, set up functions as services to different units, and tailor unit performance monitoring and corporate services to its set of challenges and solutions. Is that a magic bullet, or does that need some further thought and tailoring?
What do you think?
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