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  • Want to improve M&A success by a third? Prioritize people.


    In business, the numbers may not lie, but they also may not tell the whole truth. That’s especially true when it comes to mergers and acquisitions.

    Those vastly complex deals are often presented to the marketplace as primarily numerical transactions — valuations, market share, debt loads, and the like.

    But behind all the financial details are the people who will have to run the combined firm, a firm that may operate in a vastly different way than business was done prior to a merger. And sometimes those people get lost in the M&A data.

    Scale up, morale down?

    “M&A activity is often motivated by providing some kind of scale in operations,” says Shideh Sedgh Bina, a founding partner at Insigniam, an international management consulting firm.

    “But mergers and acquisitions also have profound and material impact on the people from both companies — from the senior leadership to the frontline worker,” she says. “These deals depend on the right economics. But the right execution depends on the people.”

    That’s not easy, though. While an M&A is being worked out, all manner of people problems can develop. Productivity often drops. Pay may be cut. Healthcare plans may be changed. Leaders may lose their enthusiasm for the merger, or at least fail to communicate its goals.

    The corporate culture barrier

    Also, culture clashes between merged firms are common. In fact, Insigniam says failure to address cultural differences is often the single biggest barrier to M&A success. And that success rate is already low. According to one recent study, some 83 percent of mergers & acquisitions fail to enhance corporate shareholder value.

    To its clients, Insigniam recommends disposing of the conventional wisdom on M&As to get that people part right. “Most of the time, companies think about M&As as a way to merge two different corporate cultures together,” Bina says.

    “But rather than doing that, we suggest bringing the key stakeholders together in both firms and invent an entirely new company. It will have some things that will look like the old companies, but the context will be a very different.”

    Said briefly, here’s how that process can unfold.

    1. Assess people and teams.

    Who are the key team members in both of the companies involved? What are their strengths?

    2. Retire the legacy organization.

    Move away from the old corporate structures.

    3. Create a cross-functional, cross-organization team to bring the merged companies together and redefine the new company.

    This team should make a new mission statement, draft a new statement of values, develop new operating principles, and sketch out the new, breakthroughs that the new organization wants to accomplish.

    4. Set up integration teams.

    Although these teams exist in most M&A situations, they often aren’t operating in the context of reconstituting a new firm.

    Back to those truth-telling numbers: How does this kind of people-first approach to combining organizations work out in M&As? The data, from several studies, is clear: Make cultural, communication, and integration issues a priority and M&A success rates shoot up by a third.

  • Kill that strategic plan and build a framework instead


    Right in the middle of the current economic downturnThe Wall Street Journal ran a story that said the recession wasn’t just hurting businesses, it was killing strategic plans. The Journal reported that executives were increasingly finding that, in these turbulent times, the forecasts that underpinned their long-term plans were faulty, thus turning their plans into useless pieces of paper. A consultant from another firm even told the Journal, “Strategy, as we knew it, is dead.”

    Two years have passed since then, but, the way we see it, strategy is not dead — but it is different. That’s because, predicting the future, as traditional strategic planning has required, is a pipe dream.

    A Pliable Business Strategy Framework

    Indeed, the ultimate failure of traditional planning — one that charts a course from Point A to a Point B many years in the future — is that it doesn’t account for how individuals, firms, governments, and institutions interact, react, and adapt to each other and to the changing environment.

    Our advice: Don’t create a strategic plan. Rather, build a strategic frame; A ship of business, if you will. One that can adapt to constantly shifting seas, overcoming threats, and charting a quicker, more innovative course whenever possible. This ship’s frame will be aligned around your company’s purpose and ambition, its stakeholder commitments, strategic assets, and guiding beliefs.

    Within that flexible frame, you can set out on long journeys from Point A to Point B, but you can make course corrections when needed without having to abandon ship and start all over with a new, rigid strategic plan.

    Need to talk strategy? Contact an Insigniam breakthrough consultant to talk about strategic frames and your enterprise.

    To build that ship, your business should be able to answer the following questions:

    1. Corporate direction

    What is our collective ambition? What are our objectives over the next year, five years, ten years, or beyond?

    2. Definition of success

    How will we measure the achievement of our ambition? By sales growth? By brand reputation? By global reach? By improving our infrastructure? By all that and more?

    3. Enterprise stakeholders

    Besides our customers, who are our stakeholders, and what does our strategic plan promise them? What promises are so core to our enterprise that we would be willing retreat from our ambitions in order to keep the promise?

    4. Corporate values

    What promises to our stakeholders are we unwilling to compromise?

    5. The competitive environment

    Who do we compete with? What do we assume it will take to get ahead of the competition? What’s the mainsail of our ship of business — the primary competitive advantage we will leverage to achieve long-term advantage in the marketplace?

    6. Our guiding beliefs

    Which beliefs that we hold about our market conditions are the most crucial to our enterprise purpose and ambition? And, how much risk and opportunity is associated with betting our future on any of our beliefs? Which beliefs are we placing our bets on?

    7. Strategic Assets

    What are our assets from intellectual property, capital to the “secret sauce”? Which one of these assets is unique to us and has high value to the customer and therefore forms our competitive weapons?

    Connect with Shideh and other executives through the Insigniam Executive Forum on LinkedIn.

  • The Power of Company Purpose


    Mission statements and declarations of corporate values are great things. They look nice in an annual report or hanging on the break room wall. But, when a company purpose is committed, when it “walks the talk,” as we sometimes say, it can find power in those statements of purpose, too. Real, results-oriented power.

    Here’s an example. At Insigniam, one of our clients is a large, regional healthcare provider with almost 9,000 employees. About a year and a half ago, the company hired us because its leaders had committed to a new company purpose, a lofty purpose at that. They wanted to transform healthcare by putting their people and their patients first. People and patients. Then profits. In that order.

    This commitment got results. The sense of urgency was equally relevant; at the time of the announcement about the new purpose, employee engagement scores were very low — right in the middle on a scale of all healthcare providers. Just 18 months later, employee engagement scores were near the top ranks, jumping from the 51st percentile to the 87th.

    Employee retention increased as well. The company was losing an astonishing half of its new workers every 12 months. Today they lose 20 percent.

    Improved patient care

    Patient surveys were also showing better results, and the number of patients who were being discharged without readmission — a key metric in the industry — had substantially improved.

    That’s the power of company purpose, for sure. But here’s where commitment really matters. This year, the company had a big financial shortfall. It was millions of dollars off target. (Case Study: How a biopharmaceutical company earned $1 million per day and delivered a drug to the FDA 45 days faster.)

    In the past, the response would have been simple, although not easy. Leadership would have announced layoffs. Instead, top leadership tasked managers from around the country to find a way to close the financial gap without firing anyone because, in the new purpose, people come first.

    Saying that, though, writing it in the annual report and posting it on the break room wall, was one thing. Actually believing in it — even when times got tough — demonstrates that this company is truly committed to its new purpose. Will good results follow? We think they will. Indeed, we think they already have.

    How does your company utilize its purpose? Does it “walk the talk?”

    Did you know that uniting people and purpose could improve the success of a merger and  acquisition by a third? Find this article and more change management research by downloading the new Insigniam app.

  • Insigniam: How one company regained perspective on healthcare management


    Can an organization be spoiled by its own success? A regional healthcare provider that’s operated for more than 50 years asked itself that question recently. The answer: Yes.

    The healthcare company has grown steadily since opening its first hospital in the early fifties. Today, the organization has more than 100 locations, including five hospitals, two medical centers, three urgent care centers, and 55 physician practice sites. It also boasts a solid balance sheet. Revenues, which have grown steadily in recent years, are now more than $1 billion annually.

    But when executives got together to talk about their company’s future more than a year ago, they decided that something still wasn’t right. Something important. “We’d always been successful in terms of financial performance,” the president says. “But we had lost sight of the patient as the center of everything we do.”

    Healthcare management complacency?

    This healthcare provider was hardly alone in finding complacency issues. Healthcare companies nationwide have been nursing their balance sheets as much as — and in some cases more — than they’ve been nursing their patients for years, thanks to the mounting costs of healthcare service.

    The Institute for Healthcare Improvement reports that the U.S. healthcare system is now the most costly in the world, eating up 17 percent of the nation’s gross domestic product this year. That bite out of GDP will only get bigger, the IHI says, reaching 20 percent by 2020.

    That’s why IHI has developed a framework to help healthcare providers reduce costs while boosting patient services. Called “Triple Aim,” the framework was the primary benchmark that the provider used in realigning its corporate culture and its mission — not around the bottom line, but around patient care.

    Top-tier healthcare performance

    The organization had been in the middle of the pack of the nation’s healthcare providers in Triple Aim, and its executives wanted to become a top-tier performer.

    “But they realized their existing corporate culture wasn’t going to get them to that goal,” says Shideh Sedgh Bina, one of the founding partners of Insigniam, an international management consulting firm, which was brought in to help the healthcare organization achieve its new goal. “So they decided to pursue a cultural transformation that was tied into the elevation of performance. That is the best kind of transformation. Because culture is actually in service to performance — not the other way around.”

    The transformative goals were simple: Focus on patient’s needs, improve patient care, and better control costs. But achieving those goals involved a complex, coordinated series of initiatives. For one thing, 18 of the organization’s top leaders committed to a leadership development initiative custom designed by Insigniam aimed at driving a culture change.

    Redefining hospital values

    In addition, a leadership coalition was created to develop a new mission statement and redefine the company’s core values and operating practices. The organization also established a team that defined the operational objectives needed to move them up to the top tier among healthcare corporations. That team called upon the entire organization to achieve multiple, specific objectives, including decreasing the average length of a patient’s stay, boosting patient safety, and increasing physician engagement. Finally, and importantly, a campaign was launched to engage the workforce.

    Within months, the vast majority of the 9,000 employees had one-on-one discussions about the new corporate mission and objectives.

    That coordinated effort produced quick results. “Within just eight months, they saw significant, measurable outcomes from these efforts,” says Insigniam’s Bina.

    Improved patient outcomes

    Among them: Patient mortality rates and complications have declined while patient safety ratings have increased. One example: Patient falls, common in hospitals, have declined 38 percent in just one year.

    And, in the past 12 months, patient satisfaction scores, as measured by Thomson Reuters, have jumped six times more than the average hospital nationwide.

    “Not only is the substance of the care we provide getting better, but the patients’ perception of that care is also going up,” says one of the vice presidents.

    Structured marketing

    The culture assessment also revealed an absence of a structured marketing plan. A year and a half later, the provider won nine national awards in recognition of the new branding campaign, including magazine ads, radio commercials, and an employee wellness calendar.

    The key to changing the culture and the company’s performance, Bina says, is that the top executives conducted an honest assessment of what they wanted to change — including their own leadership styles. “The leadership bought into this process entirely,” she says.

    Employee satisfaction increases

    So, too, did the company’s employees. Survey results show the company is now in the 88th percentile of healthcare firms nationwide in terms of what the industry calls “employee partnership.” A year ago, it ranked near the middle.

    “This culture work has helped us refocus on the fact that patients are at the center of everything we do,” the vice president says. “And refocusing on patients has really brought back the passion of our workforce.”

  • Surprises from our executive sentiment survey


    Executives everywhere are worried. That’s the bottom-line finding of Insigniam’s recent Global Executive Sentiment Survey, which asked 250 senior executives from dozens of diverse companies, including Chevron, Johnson & Johnson, Sony Pictures, JP Morgan Chase, and Air Canada, to rank their major concerns in several key areas of operations.

    Conducted by Insigniam, an international management consulting firm, the survey uncovered an undercurrent of concern among executives worldwide when it comes to their companies’ ability to innovate, to get good products to global markets faster and with fewer resources, and to effectively manage existing employees.

    Of all executives surveyed, 38 percent say they were worried about their employees’ potential performance over the next 12 months. More surprising, 42 percent of global senior executives say they are frustrated by complacency and cynicism in the workplace.

    Employee performance concerns

    “Executives are clearly worried about teamwork, leadership impact in driving innovation efforts, and productivity,” says Shideh Sedgh Bina, one of Insigniam’s founding partners.

    The concerns over employee performance are particularly worrisome for one key reason — a majority of executives say operational excellence is the biggest single factor that will define the success of their companies. Indeed, 57 percent of executives globally, and 74 percent in the United States told Insigniam that they believe that’s the case, easily outpacing the 13 percent who said they were chiefly concerned with business targets and revenue growth.

    Operational excellence, to these executives, means several things. They include improving communication with prospective clients; managing new, worldwide product launches even with fewer resources; executing development plans flawlessly; and deftly dealing with crisis.

    Innovation: the competitive advantage

    Said in fewer words, executives told Insigniam that they want to get more, and better products to global markets faster and more efficiently than ever. And the process of doing that can be summed up in a single word: Innovation. An overwhelming majority of executives surveyed — 76 percent — said that innovation, whether in product development or in internal processes, is key to strengthening their competitive advantage over then next one to three years.

    But, as Insigniam’s Bina puts it, “To drive operational excellence, companies need people who are pushing the envelope, looking for change, and taking risks. But those were exactly the things executives told us they had frustrations with in terms of their people.”

    In fact, 42 percent of global senior executives who participated in Insigniam’s survey cited frustrations over complacency, cynicism, and culture, as their main concerns with employees. And those frustrations with cynicism and complacency were cited by twice as many executives as were other concerns about people. Globally, the second and third place frustrations fell under the categories of “processes, resources, and management” and “alignment and communication.”

    Bina says executives have good reason for those concerns about their people.

    “There was a time in business when trying to adhere to the status quo was a good thing,” she says. “But that time is gone. So, the companies that do successfully innovate — like the executives in our survey told us they wanted to do — will be the ones that get the best performance out of their people.”

  • High-Performance Leadership in a Hurry?: Michael Jensen’s Four Foundations of Great Leadership


    HONG KONG — Can high-performance leaders really be created in a matter of months? The U.S. Air Force is doing it. And so are a growing number of business schools and organizations around the world. The life work of Emeritus Harvard Professor Michael Jensen is reversing the adage that leaders are born, not made with the four foundations of great leadership.

    High-performance leadership isn’t just about virtues and right vs. wrong. Instead, Jensen says his four principles are absolutely essential to a leader’s own self-interest as well as the organization because all four bring joy, personal and professional value, trust, and workability.

    Jensen recently shared the four-tiered approach, “The Four Foundations of a Great Personal Life, Great Leadership, and a Great Organization” developed by Jensen and his co-author Werner Erhard, during interactive leadership seminars to executive audiences in Hong Kong and Bangkok.

    Lest you think Jensen’s approach is ambitious, consider this: Years of research proves his premise that it’s not enough to be knowledgeable about leadership or innovation; today’s business requirements demand 24/7 leadership as a natural state of being.

    It’s an observation that Insigniam management consultants see again and again with clients around the world: Successful leadership requires these four principles. (And if you have followers, you’re leading wrong.)

    Four foundations of great leadership

    During the seminars, Jensen shared the four foundations of great leadership — personally and professionally:

    1. Authenticity
    Be and act consistent with who you really are. But before you can get there, you have to be authentic about your “inauthenticities” to yourself and others.

    2. 100% Responsibility
    Take a stand and be responsive. However, it doesn’t mean that you shouldn’t hold others accountable.

    3. Purpose
    Purpose gives drive and passion required to lead. It’s also why a leader is persistent, even when the path becomes tough.

    4. Integrity
    Honor your word, and when you don’t, resolve the matter honestly and quickly.

    The power of commitment

    These four foundations fuel perseverance. There will be many days when objectives aren’t met, when everything seems wrong, and help is not on the way.

    Jensen argues that a leader’s passion to be committed to something bigger than himself or herself provides the endurance to get through anything, and inspires others to adopt that quest as their own as well.

    Without that passion or realization of the future, organizations and people experience a profound lack of fulfillment, resulting in an “is this all there is?” crisis, leaving companies and employees disoriented, confused, unhappy, and uninspired. All the knowledge about leadership can’t turn that around. The leader committed to the future, however, is already addressing matters. Which one are you?

    Sponsored by Insigniam, an international management consulting company, Jensen’s presentations were hosted by the American Chamber of Commerce Thailand, the Thai Institute of Directors, and the American Chamber of Commerce, Hong Kong.

    Are you a Breakthrough Leader? Evaluate your strengths with this assessment.

    The full Erhard-Jensen paper can be downloaded here.

  • There is a Sea Change inside Employee Expectations, Says Insigniam


    Insigniam, an international management consulting firm, has come forward with analysis of the recent spate of high-profile resignations, their potential underlying causes, its effect on employee expectations and professional recommendations for companies facing the same issues.

    Both Greg Smith and James Whittaker left their former companies with a perception of a negative change in leadership focus. Smith branded Goldman Sachs as a toxic environment without clients best interests in mind, and Whittaker called Google an advertising company with a single corporate-mandated focus.

    If we look beyond the very public Goldman Sachs and Google resignations, we are witnessing a sea change in employee expectations, says Insigniam co-founding partner Shideh Bina. Employees today no longer come to work just for the paycheck they have come to expect that their work will connect to some form of greater meaning, and that they should be able to match their company’s purpose and values to their own.

    A big contributor to this change in expectations is the amount of time and effort invested by most companies in the last 20 years to engage their employees commitment to an aspiring vision and corporate values. In a 2005 study of Fortune 500 companies, more than half of the companies had a statement that described their vision, mission or purpose.*

    Yet when many of these same companies that touted inspiring vision and values are faced with some kind of threat, such as the seismic economic changes that began in 2008, without tight discipline these principles are abandoned. This shift away from high internal values to protecting the bottom line at any cost shows a need for companies to reevaluate their corporate cultures and refocus leadership on investing in a culture that gives back to employees and clients alike.

    As executives, we must be responsible for what we have bred, says Bina. If we enjoy and thrive from the fruits of an emotionally engaged workforce, and are held in high regard by our customers for the values that we are perceived to uphold, then we also have to bear the responsibility that staying true to values and on course for mission are now principles in the latest version of the employee-employer contract and fulfill our end of that contract for our employees.

    For more information on Insigniam’s approach to cultural transformation, please click here.

    *A Study of the 2005 Fortune 500 Vision Statements by Bart Kasowski and Louis Jacques Filion

    Insigniam is an international management consulting firm serving large-cap firms in multiple industry segments including pharmaceutical, healthcare, consumer goods, transportation, banking, and finance. Since 1985, Insigniam’s proven approach to enterprise transformation, elevating leadership performance, shifting culture and creating speed-to-results for the C-Suite has generated $ 9 billion in client business results.

  • 3 Levels of enterprise integrity your company can’t survive without


    Inside one company cafeteria, a handwritten sign above the stack of Styrofoam cups warns hot tea drinkers: “Adding Lemon May Damage The Integrity of This Cup.” Sounds formal, doesn’t it? The sign could simply say that acidic lemon juice may eat a hole in the cup, leaving readers to infer that hot tea could leak and seriously scald them.

    But the formal-sounding sign uses the word integrity the way that an engineer would define it: The state of being whole, lacking no component part. When applied to a business, corporation or global operation, that kind of integrity is essential.

    Sometimes, the slow erosion of enterprise integrity can start in small ways as seemingly harmless as that squeeze of lemon into a Styrofoam cup. One leak can lead to others. And before the business leaders know it, the enterprise isn’t functioning properly anymore.

    Enterprise Integrity

    With so much on the line, executives feel compelled to diligently guard the integrity of their enterprises. Such firm intent toward preserving integrity in all aspects of its enterprise can be contagious among an organization’s leadership.

    We encourage managers and executives to consider three levels of enterprise integrity:

    1. Maintaining basic organizational hygiene. Sounds clinical, but this idea gets at the notion of diligence about basic care — the daily to-dos essential to the health of the enterprise. They include:

    • Monitoring ethical behavior of leaders and employees alike in all dealings and interactions.
    • Staying true to promises or pledges to fellow leaders, employees, business partners, and customers.
    • Applying the standard of integrity to all written communications, standard operating procedures, promises for performance and results, and the like.

    2. Aligning operations with the enterprise intent. In this aspect of integrity, systems and processes are consistent with and support the business vision, strategy, principles, and values. And they should actually work. Too many times, processes seemingly work on paper and look fine in black and white. But ask employees about work-arounds and pain points, and they’ll often confess that what’s written doesn’t match reality. Getting real about what works and what doesn’t and having honest conversations about processes and systems can preserve or improve enterprise integrity.

    3. Watching conversations at the leadership level. Executives and managers can strive to keep their conversations — in the boardroom and in the break room — aligned with the enterprise values, principles, and vision. No game playing, finger pointing, or manipulation. Those tactics have a way of trickling down, and that’s how erosion can begin. It is “walk the talk” in its full meaning.

    In fact, this third level of integrity serves as the primary platform that allows an organization to achieve Breakthrough Performance rather than operating under a status-quo mentality. We define breakthroughs as unprecedented outcomes that lead to new possibilities for future results. An organization that generates breakthroughs in a reliable and consistent manner is an organization that has integrity in the truest sense — complete in form and function, as well as completely incorruptible.

    Keep the integrity conversation going; join the Insigniam Executive Forum LinkedIn group for insights and discussion from other executives and expert management consultants.

  • Why Your Business Won’t Be the Same in 5 Years: The Case for Strategy Innovation


    IBM once made grocery scales and cheese slicers. Nokia made paper products. Both are now known for something entirely different, building the case for strategy innovation.

    The business you operate today won’t be the same in a couple of years, say long-time management consultants Robert E. Johnston, Jr., and J. Douglas Bate, both of Insigniam. Venturing out for more aggressive topline growth means that organizations have to regularly scan the horizon for what’s next, even if it means completely changing the business model.

    Like IBM and Nokia, leaders have to search unchartered strategic frontiers for new opportunities. These strategic frontiers require business pioneers willing to take the risk of experimenting with innovation while successfully running the day-to-day business. But, as the authors warn, if you won’t take a risk, your competitors will.

    However, turning innovation into a core competence that creates topline growth and uncovers new opportunities is complicated. That’s where strategy innovation enters the picture.

    What is strategy innovation?

    Strategy innovation identifies new business opportunities for new growth, dispelling the myth that strategy planning and innovation are separate functions. Johnston and Bate argue the two opposing exercises of business planning and innovating can be combined for powerful results.

    And Johnston and Bate, the authors of The Power of Strategy Innovation, have a startling answer as to why more companies don’t pursue strategy innovation:

    Because companies don’t have the internal structure or process to do it.

    5 steps to strategy innovation

    In their book, the authors remove the guesswork of setting up a discovery process. Their strategy innovation method is outlined in five phases:

    1. Staging. As discovery team members assemble, define roles, and accrue resources for the process, they act almost like the crew of a tall ship preparing for an explorer’s journey.
    2. Aligning. The team and senior management coalesce around the “strategic frontier(s)” where the ship should go, akin to a ship’s captain getting approval from his patron on an anticipated route.
    3. Exploring. The team gathers information on the strategic frontier, like an explorer and crew chronicling their discoveries of new lands and treasure to present to sponsors back home.
    4. Creating. Based upon their discoveries, the team develops ideas for new business opportunities, just as opportunistic explorers did for their newly discovered lands.
    5. Mapping. The team forecasts the plan for achieving the new business venture and guiding it toward success, just as early explorers drew maps to help them return to the new destinations and realize the potential they touted.

    Realizing that even the best practices can fall by the wayside if execution isn’t successful, the authors dedicate a third of the book to implementation and another third to advanced questions, encouraging readers with case studies and straight-to-the point advice.

    With strategy innovation at the helm, what strategic frontiers could your company explore? Download or order Johnston and Bate’s book from amazon.com.