Until my newest car, I always drove a five speed standard transmission vehicle. I liked its responsiveness in variable driving conditions. I believed I was more in control of my car, and I liked the feel and sound of the increasing revs as I shifted. I also believed I got better gas mileage.

So I looked up what a transmission does as I considered buying a new car. It ensures the gear ratio between the engine and drive wheels changes so the engine can stay near its optimum rpm range and efficiently produce the needed power and speed as I drive. I also learned about the continuously variable automatic transmissions in almost all cars today. These allow the engine to produce maximum power at all times without human interference and, sadly, without a lot of racecar-like noise. In fact, they also get better fuel efficiency than a standard transmission.

It struck me that business owners, like drivers, may also believe that the racing noises they hear in their organizations — as they personally manage changing business conditions — may not be the sound of maximum performance. What they might be experiencing is the sound of grinding gears and the smell of a burning clutch. And in mergers/acquisitions, the “service engine soon” light is usually blinking!

Racing Sounds and True Performance

There are normal and abnormal sounds in your organization. The normal sounds are what most companies experience in the course of their life cycle — the sounds of excitement with success and the sounds of great effort in overcoming challenges. These are the sounds of effective internal processes, decisions, and human capabilities being deployed during transition periods.

The company’s transmission is humming along and shifting without much leader intervention. The racing sounds of over-revving are missing. But for some leaders who like having their hand on the shifter all the time, it can be disconcerting. What is their value?

Effective leaders of high performance organizations know their role is to focus on the road ahead, communicating the path forward, and less on the mechanics of the journey.

Grinding Gears and Burning Clutches

The abnormal sounds and smells of an organization are those that come from chronic problems that have the organization stuck. These are the sounds of conflict, turf wars, or broken processes that drain resources and threaten goals. They are the burning smell produced by leaders riding the clutch i.e. micro-managing, and slowing down forward motion with unnecessary reviews and approval levels, weak delegation of authority, and high risk-aversion. Such sounds and smells signal the need for a change in driving habits, major repairs, or at least a tune-up to avoid a total breakdown.

Leaders in these organizations sometimes choose to ignore these sounds as just growth pains, believing that given time, they will go away. Or they just love to personally tinker with the problem month after month vs. have an external professional take a look and advise on maintenance, repairs or performance enhancements, even though the best of race car drivers do not do all their own maintenance.

With a merger or acquisition, anticipating and listening to the sounds of multiple organizations as they integrate, really tests a leader’s skills and foresight.

Acquisitions with Maximum Performance

Imagine buying a multi-million dollar racecar organization, including the racing team and its facilities, and not having a plan to ensure it can perform at its best under your ownership. The equivalent of a paddle shifting, automatic transmission in a merger/acquisition is an Integration Plan prepared before a deal closes. It allows a leader to keep both hands on the steering wheel with no need to take their foot off the accelerator. It produces a more seamless transition and faster optimization of the deal.

The Integration Plan includes the hard-side business goals and the soft-side culture and process plans.  Its success measures include business and financial results certainly, but also: a shared vision, values and culture; a mobilized and committed workforce; retained customer loyalty and aligned systems and structures.

What would be the sounds or smells of grinding gears or burning clutches in an acquisition? 

• loss of key talent
• loss of customers or suppliers
• power struggles and wall-building or turf protection
• repeated missed financial or product goals

The track record of successful mergers/acquisitions is dismal. Up to 50% fail to achieve their intended objectives, and it isn’t due to buying the wrong “vehicle”. It’s due to a failure to plan for the integration of cultures, values and human processes like communication and decision-making and to the misalignment of measures, rewards and talent. It is the failure to form a uniting vision and sense of purpose. It’s the failure to recognize and value the unique histories of the entities while telling them to “get on with it.”

In Exit Signs, I discuss in more detail the elements of integration plans. 

Great Leaders Do Five Things Consistently

To drive a company smoothly, whether in times of growth or in an acquisition, leaders must convert organizational energy and resources into forward motion with the least wear and tear on people and processes. Successful leaders consistently do five things well: 

1. They build an inspiring and uniting vision with a strategy people know, believe and are energized by.
2. They know their role: read the environment and adjust the course (stay pro-active); listen for gear-grinding noises; don’t abuse the engine.
3. They build strong teams who are tough on results and on living the values (e.g. quality or safety.)
4. They test every link in the value chain for its ability to deliver performance.
5. They trust and allow their people to use their expertise and respond to new challenges. They don’t second guess their pit crew, but keep them informed of performance indicators.

As a leader you don’t want to think about and manage all the elements that must be in sync and mesh to convert scarce time and energy into results. You do want to know that your people and processes are running optimally to achieve great outcomes. That means tuning your ear not only to the sound of the proverbial cash register, but to the sounds of your organization’s health.

 

What Sounds are You Hearing?