The Importance of Strategic Thinking and Critical Success Factors in Change and M&A ... read on
The Importance of Strategic Thinking and Critical Success Factors in Change and M&A.

In Vino Veritas. ‘The truth is out in wine’.  A message for hope and new beginning.

Seen from above, it could be just an airplane wing, and the river could be the Amazon, The Mississippi or the Nile.

In fact, these two rivers merge at one of the most valuable pieces of agricultural real estate in the world.  It’s the Medoc in France – the celebrated wine growing region around Bordeaux and home of the Rothschilds’ estates, Margaux and the exquisite Chateau Yquem.

Each Friday evening (until recently!) I left my client’s HQ in Bordeaux and headed for London, reflecting on our week’s work. On clear evenings there’s a splendid view out over the Medoc, the coast heading north and Channel Islands to Gatwick Airport.

Merge not just ‘join’

Looking down from my window seat, it’s significant that these two rivers truly merge to form The Medoc and not just join. You can see the different coloured silts become one river heading for the sea.

There are two messages here concerning the business of mergers and acquisitions.

Firstly, in a good merger companies muster around a common vision and purpose.  Cultures integrate and Unique Selling Points (USPs) stand out as the new future world. If it’s just a ‘join’ and not true integration, the venture will fail. Two companies will remain two companies, despite a name change.

Second is the importance of seeing things from above – strategy. What are the factors essential for making the new business a success? These are the Critical Success Factors, CSFs.

In the case of Bordeaux, the vineyards are sandwiched between two huge bodies of water - the River Medoc and the Atlantic Ocean, both have cooling effects that temper and nurture vines to perfection. Without these CSFs the land would be an interesting piece of gravely stones washed down from the Pyrenees.

Critical to the Medoc’s success are the cooling breezes from river and sea.  Seen here Cabernet grapes, giving Bordeaux wines their mature tannins, famous worldwide. Without these CSFs the land would be ‘a piece of gravelly stones washed from the Pyrenees Mountains’.

In your own merger you must identify the Critical Success Factors that will enable you to thrive and advance.

Think strategically

  • What’s your vision and future for the business?
  • What are the benefits and your products’ differentiation?
  • What adds value to the total customer experience?
  • How can you surpass customer expectations?

Think about people

  • Do you have the right behaviours and culture to develop the new business?
  • What knowledge, intellectual capital and expertise do you bring?
  • How do you foster motivation?
  • Do you reward performance?

 Think about operations

  • Are operations and processes clear and supported by consolidated information systems?
  • Does the enterprise-wide system generate the right KPIs for the business?
  • Do you have the right economies of scale?

Think about finances

 What’s your business plan for growth and development?

  • Do you obtain competitive gross margins and profit from your enterprise?
  • Do you have the right balance of facilities and equipment?
  • Are assets 100% utilised with economies of scale?

Marketing

  • Are you building long term customer loyalty?
  • Are you aiming at market share, growth or both?
  • Have you built brand equity and brand promise?
  • Have you established a unique market niche?

The majesty and richness of Chateau Margaux is no accident. Unique Critical Success Factors, vision, people, detailed operations and marketing give unique brand equity, promise, profit and beauty.

Storyboarding

Few of the great companies that we know today exist through organic growth alone. Most have expanded through merger and acquisition. In fact, researching the histories of companies is interesting and revealing.

For example, the $50bn pharmaceutical company Pfizer, started in 1849 by two German immigrants to New York with a $2,500 loan. Rapidly growing in the US civil war through production of painkillers and antiseptics, Pfizer then developed citric acid which fuelled new soft drinks companies like Coca Cola.  The company worked with the US Government to develop penicillin and most of the penicillin that went ashore with Allied force on D-Day was in fact made by Pfizer. Mergers with Warner Lambert and others followed until the blockbuster of the 1990s was the little blue pill Viagra, formulated initially as an anti-hypertensive, it was found have “unexpected” side effects.  The rest is history.

Other examples include the brilliant US inventor William Shockley whose discovery of the silicon transistor / semiconductor in 1956 gave rise to Silicon Valley, making possible Apple, Microsoft, Facebook and Google – to name but a few.

Returning to France, by the Bordeaux Airport runway sits the Dassault Aviation company, the world beating producer of military and civilian aircraft. Founded by a single engineer, Marcel Bloch, after World War II, the company grew by acquisition eventually producing the now famous Mirage jet which was recognised in the Six Day War as a supreme fighter – representing the quality and vision of that company, growing to now Euro 7bn turnover.

We can all be proud of the history of our own companies.  The past tells us where we’ve come from, but the story importantly tells us where we are going. It’s the visual storyboard that conveys the passion and motivation.

Successful growth can only be achieved with vision, strategy and through the Critical Success Factors shown above. The Medoc is the lifeblood of Bordeaux just as your own important CSFs are the life blood of your company, your growth and your success.

Storyboarding is used extensively in planning movies. Create your storyboard to make your M&A come alive.  A picture says a thousand words. From The Matrix, Warner Bros.

Creativity and inventiveness bring about success. Corona Virus.

Superb vision combined with practical ability and inventiveness have shown how the most intractable problems can be solved.

It’s a salutary thought as I write that the Corona Virus pandemic seems unstoppable.

Looking at how we have risen to challenges in the few short years since the industrial revolution, I have sincere belief that the crisis will soon be resolved.  Not only will we find a vaccine, but we must investigate the causes of the pandemic and put measures in place to prevent deadly pathogens entering human society.

We hope that by the time of the wild bluebells there will be a new spring and a new dawn.  I wish everyone health and strength at this difficult time.

Leon Labovitch is CEO of The Labovitch Consultancy www.labovitch.co.uk

The Labovitch approach to change is encapsulated in The Eight Pillars http://labovitch.co.uk/the-8-pillars-of-change/. A practical and tested method which works with clients to deliver rational and creative change

Strength for Change, Success for Transformation.


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