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The business landscape is littered with failed mergers and acquisitions, but a unique African approach to post-merger and acquisition integration recently helped two large IT service providers defy the odds. Not only did they successfully integrate, the company also posted impressive financial results, with headline earnings a share rising from the previous year’s 1c to 7,4c.

This article looks at one of the key change-management tools they used to get it right.

Mergers and acquisitions are difficult growth strategies to pull off, and many fail. The marrying of two organisations often makes excellent strategic and financial sense, but the stakes can be high. The success of a merger or acquisition often depends heavily upon the two companies being able to integrate their workforces and join disparate groups of people together into a unified whole.

This was the daunting task facing JSE-listed IT service provider, Faritec, after it acquired Enterprise Connection for R54m in February 2006. As well as expanding the range of services the company could provide, the acquisition nearly doubled Faritec’s workforce to more than 400.

“Mergers and acquisitions force large-scale organisational change and can fail for many reasons,” says Lee Knobel, consulting director at WorldsView, the company tasked with helping Faritec navigate the human-capital challenge. “But lack of communication and inability of leadership to build and sustain the energy needed to transform are the major causes of post-merger or acquisition dysfunction.”

Organsiational transformation consultancy WorldsView was chosen to partner Faritec and Enterprise Connection in integrating the firms and cultures and aligning staff with the new values, goals and customer-centric strategy of the integrated organisation. “In such uncertain circumstances, there is a need to communicate the transformation as a compelling story. One of the key ways of integrating people is by allowing them to genuinely participate in envisioning their future,” says Knobel.

“Management sets the initial vision and direction and then creates the forums that give employees the opportunity to participate in identifying the strategic actions needed to achieve the organisation’s goals.”

WorldsView took on the challenge in highly collaborative way. “We decided to use a whole system event (WSE) as the catalyst for the organisational transformation,” says WorldsView change agent Donna Kipps. “This is a powerful tool that effects profound change in real time and allows all individuals to co-create their future.”

WSEs are a means of getting all the people from the “whole system” into the same room to develop strategies and solve problems through debate and discussion. “It is a way of recognising and tapping into the wisdom that exists within an organisation because all staff members are engaged and involved,” says Kipps. As these are the people who execute on strategy and are close to the issues, their participation offers powerful results. “It also generates the high levels of commitment required to put the new plans into action because people have been so involved in creating them.”

The “whole system” includes the various stakeholders who have an interest in the subject under discussion; and in many cases may include key customers or suppliers invited to participate and share their experiences or expectations.

Once the “whole system” is in the room, the process is one of a mixture of small group discussions and large group debates. It is not a conventional conference, with panels of expert speakers and semi-structured group sessions, but is based on shared problem solving and dialogue with a view to building a collective understanding of the issues.

“The employees formed two separate groups when they first entered the room, a lot like two defensively circled wagon laagers,” says Kipps, “but it changed dramatically over the next two days as participants were continuously divided and mixed into small, cross-company and cross-functional groups. This process enabled us to identify and filter their strategic strengths.”

The underlying principle of a WSE is that everyone has something valuable to contribute and that the insights, agreements and commitments are shared as much as possible. Knobel says: “One simple illustration of this was having the leadership freed from the podium during information-sharing sessions. With the use of body microphones, they were able walk around and interact with the hundreds of people present, answering questions and seeking input.”

For a WSE to produce profound transformation, every participant must be fully engaged and involved. WorldsView achieved this by drawing on an old African method of decision-making — lekgotla.

Although a Setswana word, lekgotla refers to an inclusive style of consultation and dialogue that is common to most southern African societies. The lekgotla can best be viewed as a platform for meaningful conversations, open communication and decision-making, in which all community members participate.

When whole system events combine the use of lekgotla in the process of shared decision-making through dialogue, the results are catalytic, leading to transformational journeys. “Lekgotla was fundamental … because it helped encourage each of the stakeholders to examine the different issues through the eyes of other stakeholders and build on each other’s views,” says Knobel.

Peter Winn, head of the integration leadership team, attributes a large part of the extraordinary success of the post-acquisition transformation and integration of the two companies to the assistance provided by WorldsView. “The project was a great success. While the integration process is a work in progress, I believe the whole-systems-event concept and the change-management methodology were successful.”

Winn is quick to point out that whole system events are complex, active interventions that require skilled facilitators working in the background. They not only coach the executive team through their event roles and help filter the ideas coming through, but also closely observe the group dynamics at the tables and ensure that the process remains positive and collaborative.

“The cultural change-management process associated with the integration of two businesses is highly emotive, so having external facilitation and consultation is crucial to ensuring impartiality and maintaining momentum.”

Despite the importance of external facilitators, Knobel reiterates the fundamental role the Faritec leadership team played in the process. “A WSE does not mean that senior management can just sit back as observers,” she maintains. “It is actually the opposite and much more like ‘showtime’. They have to communicate a compelling vision and high-level strategy with passion and energy, and then engage and challenge the organisation to help make it happen, in a manner that is both authentic and motivating.”

Perhaps the best testament to the success of the event is the fact that Faritec is planning to hold another “goal alignment” whole system event this year. WorldsView emphasises that these events are neither quick fixes nor panaceas for organisational transformation. Knobel says: “This event is just one part of a continuous long-term change-management partnership with Faritec.”

The quality of ideas and acceptance of change is greatly enhanced by involving multiple stakeholders and employees. “The paradoxical bottom line when it comes to mergers is that possibly the best way to meet your shareholders’ interests is to put your employees’ ones first,” says Kipps.

This article was published in the Business Day Management Review, Monday, 23 April 2007.
See the original article here.