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Wednesday, September 26, 2007

Save a Seat for Marketing at the Table: Avoid a Merger and Acquisition Blind Spot

Over the Summer, I read a wonderful article in The Wall Street Journal, in the "Business Insight Journal Report." I was excited after reading the piece because it validated many of the tenets upon which I founded our firm nearly nine years ago. The article was entitled, "M&A Blind Spot. When negotiating a merger, leave a seat at the table for a marketing expert." Unfortunately, this rarely happens.

The article talked about the integral role of marketing in securing and consummating a deal through internal acceptance by the organization. It reminded me of a statistic I heard nine years ago to explain M&A failures. Dr. Michael Hammer said "that 80% of mergers and acquisitions fail and that 50% of the reasons that they fail are due to personality and culture clashes between the companies and their leadership." This is just as true today as it was a decade ago.

In my opinion, marketing and branding are lynchpins of a successful merger and acquisition. All too often, however, marketing is just an afterthought. Bankers, lawyers, and accountants have a place at the M&A table to ensure that the deal lives up to its potential in regards to risk minimization, asset evaluation, and legal due diligence. But where are the marketing experts? They should be at the table as well to ensure that the organization embraces the merger, positioning it with positive benefits inside and outside the company. Effective communications and messaging can win over all the critical stakeholders and ensure success.

Ensure success with marketing and branding

Find me a lawyer, accountant, or banker who can manage all this:

1. Vision and direction

  • The company must have a clear sense of direction and vision after the M&A plan is laid out. The vision should be in simple language (with examples) so employees can relate to it and understand the benefits for themselves and their company. Marketing departments and their leadership are trained and experienced at creating this kind of messaging.
  • Creating a new, combined vision is clearly the role of marketing. Imposing one company's vision on two merged entities often alienates half of the people the instant the merger is launched.
2. Overcoming uncertainty through employee engagement
  • Without doubt, uncertainty is the number one issue after announcing a merger or acquisition. Overcome it by enrolling the staff through relevant messages and experiential communications programs.
  • Marketing professionals understand consumer insights and motivations that translate into actionable tactics and communications. With knowledge and understanding, employees gain motivation. After internalizing the merger value proposition, they finally gain inspiration. They will be engaged and enrolled.
3. Understanding where your employees stand on issues
  • Companies should segment their employee audience the same way they segment and analyze their external audiences to measure their acceptance of change and learn the best ways to communicate with them.
  • These are the types of questions that marketing will answer:
    - What motivates employees?
    - What inspires them?
    - What are their opinions of management and the corporation?
    - How do employees relate to management and management communications?
    - What forms of communication do the employees prefer?
  • Marketing professionals are analytical. They are in constant search of insights and buyer values that can be deployed toward an internal employee audience as well as an external one.
4. Experiential communications
  • Particularly in an M&A situation, old forms of internal communications are no longer relevant or successful alone. New and more creative methods, with involving and entertaining communications, are more appropriate for adult learning.
  • Media should vary by audience: video games, gadgets, viral campaigns, role playing, one-on-one meetings with senior folks, skits, outings, company-wide challenges, events, internal trade shows, a staff radio station, a webcast-whatever draws them in. The key idea is to engage the employees to participate in the exchange and learning.
5. Developing the message
  • Like any other marketing campaign, internal branding starts by understanding the change readiness of the organization, followed by developing messages that are relevant and meaningful at all levels-corporate, team and department, and individual. The company needs a clear positioning and sense of what it aspires to be.
  • The messages should be presented by the leaders of the organization who know their business and the marketplace best.
6. Establishing brand ambassadors
  • Seek out the critical internal stakeholders and opinion leaders for their support and help first, then build consensus within the organization.
  • Involve the full spectrum of employees. Ask for their input into the program-they know the customers and the business from all angles.
7. Project management, not ad hoc effort
  • Treat the plan like a program-management launch. Assign a great program manager and allocate the proper monetary and HR resources for the effort to succeed.
  • Reinforcement is critical. Your employees need to see the message all the time, in lots of different media via different channels. You can emblazon it on a lapel pin, a parking-lot sign, a redesigned uniform, or a lunchroom banner. Or anywhere else that it makes sense to remind people.
8. Measurement and Feedback
  • Take measurements and make adjustments. The campaign will need fine tuning as it gains momentum. Gauge how the organization's culture is receiving the message and reacting to it. Then modify your emphasis as needed.
  • Budget for post-campaign analysis and an audit of effectiveness. Conduct before-and-after employee surveys to measure business literacy, brand awareness, and awareness of M&A messages and corporate initiatives.

In the end, what matters is an educated and aligned workforce motivated to get behind the sale, acquisition, or merger. You want your people to be inspired to work for your firm. They should be proud of what it stands for and what they do. If they care about being part of the process, they will spread the word to your clients and to each other. By enrolling your employees, you will accelerate the changes you have planned and get down to business faster, with fewer internal squabbles, and with a steady stream of re-energizing successes that will sustain itself over time.

Is your company facing a merger or acquisition, or just going through major changes such as ERP implementation or re-engineering? Don't forget to reserve a place at the table for professional marketing counsel. With marketing present as an equal partner with the lawyers, bankers, and accountants, you will ensure success of the merger and win over your employees, who are ultimately responsible for making it all happen.

Give us a call and let us describe how we help companies as they face acquisition or sale.

PS, Click here to enjoy the WSJ piece the way I did.

Happy Reading,

-Allan

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