What is the opportunity for the IT Director?
According to Clayton Christianson et al. in their article “The New M&A Playbook” between 70% and 90% of acquisitions fail.
When two organisations come together, it can create a significant amount of work to realign processes, organisational structures, integrations between systems, and employment contracts. That by itself, if not planned for, can be more than what the organisation can bear.
However, that’s just what is at face value. Mergers can also bring changes to the organisation in terms of culture, values, and expectations. This can lead to significant differences between stakeholder groups, employees, and reconstituted management teams. It’s no wonder that Dr. Christianson can claim such a high failure rate.
With a merger, the intention is that the new whole is better than the sum of their parts, but this takes a real appreciation of what the goals of the new organisation are going to be, how they are going to be delivered and what are the best changes to make to the organisation in order to realise the intended value.
This is a great opportunity for the IT Director to act strategically with other peers to identify the opportunities and risks associated with such a venture.
A critical success factor is understanding the level of organisational stress that the employees and company will be exposed to during the transition and what they are capable of managing.
What is Organisational Stress?
Organisational stress is a simple idea: If there is more change required of us than we are capable of handling, then we’re overstressed; conversely if we are more capable than what our environment demands of us, then we’re under-stressed. Both conditions present risks to the organisation and consequently the optimum we want to aim for is when we feel challenged and motivated – but not to the extent where we experience burnout, anxiety, loss of productivity or loss of clarity in decision making.
Here is a sample list of questions from our diagnostic, Reconnaissance for IT®.
Change Quantity: How much organisational change is there today? How much is there tomorrow?
Change Capability: I feel that my colleagues and I…:
- ….can sustain operational effectiveness whilst at the same time incorporating new services and products with current resources
- ….can manage organisational politics (influence and power exercised in a positive way) without it becoming “stressful“
- ….believe the changes made so far have produced the outcomes required by the business strategy
There is a clear inference to these and many more questions contained in the diagnostic that give an indication to the state of readiness; an indication to where the strengths and weaknesses in the organisation to manage change lie. These indicators can then help the IT Director plan for structural, large scale organisational change more effectively and inform the level of outside assistance the organisation may require to successfully manage organisational change.
Translating this into an indicator that can be benchmarked:
Optimum Organisation Stress = Change Quantity / Change Capability = 100%
What is the opportunity for the IT Director?
How often are IT Directors consulted or invited to be part of the team to assess the impact of a potential company acquisition? How often are they told of the outcome and asked to come up with a plan to subsume another organisations technology assets, enlarge the security perimeter or onboard 1000 new users to the existing system?
The most value an IT Director can give to an organisation is when the organisation operates at “Strategic Partner” status, where teams and individuals share the same goals, risks and collaborate effectively across the functional boundaries. So although the IT Director may represent the technology function and seeks to optimise the technology capabilities for a given business intent, they will not be able to do that effectively without a high level of maturity or “strategic partnering”.
We at Baxter Thompson Associates believe therefore that IT Director cannot just be technology specialists but also be contributors to and enablers of organisational change. Without this mandate, any required changes to the technology will become a symptom of the failure to change rather than a driver of its success.
This is not to say that they suddenly become Organisational Change Management experts but instead that they are sufficiently aware of the impacts of change on the organisation and plan accordingly, recognising when experts are needed sufficiently in advance. This is to manage the transition that inevitably consists of changes to roles, processes, technology and data, not to mention the attitudes, behaviours and cultural values that need to be addressed.
Demonstrate Business Savvy and be consulted on change.
Organisational Stress is one of the dimensions we measure for in our proprietary diagnostic. This questionnaire provides the vocabulary and key attributes to look for in the overall health of the organisation when it comes to large scale change.
In 2016, we conducted a UK IT Business Partner survey that asked some sample questions from the diagnostic to ascertain how current UK IT Business Partners feel about their role. Interestingly they reported a level of 130%, 30% above the optimum level of Change Quantity / Change Capability.
One way to demonstrate sufficient credibility to be consulted early on mergers and acquisitions is to be cognisant of and engage in the debate about the broader impacts of organisational change. Our Reconnaissance for IT® Diagnostic helps achieve that goal.