Achieving success in Transformation and M&A
- Christopher Bonn
- Mar 21
- 4 min read
Click here for the full whitepaper:
Transformation & Integration Complexity Matrix
All transformations, whether deriving from internal organic strategy or from an external M&A transaction, are challenging and ambitious undertakings that require significant effort and dedication. At MAST, prior to planning, we employ a framework we call the “Transformation and Integration Complexity Matrix” to assess the complexity of transformation and what support will be needed to achieve successful results.
The framework is meant to drive a collaborative exercise that develops a high-level assessment of not only the level of complexity a transformative program represents but also how well positioned the company is to engage in the transformation.
But, before describing the framework, a quick word on the perspective we maintain heading into any project that is critical to achieving success… a focus on business outcomes and value creation. Two easily stated concepts that are anything but simple to achieve.
The creation of value is the sole purpose of business, and thus the sole core reason why we engage in transformative initiatives. Defining “value creation” typically revolves around discussions of achieving positive outcomes in key metrics such as the firm’s TSR, ROIC, and EBITDA. Corporations build these metrics into the compensation incentives for their executives which in turn flow down thru the company through organizational objectives and goals. These are the generally accepted “rules of the road” by which businesses operate.
When it comes to transformative initiatives, broad metrics don’t measure purely “operational” value creation, i.e. the value created by the leadership and employees in generating growth and positive returns. For those professionals that focus on enabling and executing strategic transformation, the outcomes of our work are revealed by isolating the metrics to a program’s outcome or using a modified metric such as COSR. Regardless of the specific metrics, the key is to remain focused on creating value from the program itself.
At MAST, despite these broad measures of value creation, we concern ourselves with true operational value creation. In other words, we focus on developing strategic planning and executing the derivative programs that create value from the core operations of a business, whether that be simple functional improvements in a targeted part of the business or executing a merger of equals that effectively defines an entirely new enterprise.
Transformation is hard enough without losing focus on the end objectives. Unfortunately, most projects run into this problem. Challenges abound from distractions running the business’ normal operations to shifting market and competitor dynamics that may steer managers away from getting across the finish line with transformative activities.
But, there is an even more fundamental challenge that underlies failures in achieving the desired outcomes of transformation. That is a focus on project or program outcomes instead of a focus on specific business outcomes.
Our methodology focuses on a collaborative assessment that engages the orbit of key stakeholders that are critical to achieving successful outcomes including leadership, the Board, key company employees, and external advisors.
In working through developing an understanding for this dimension of transformation, i.e. determining the high-level magnitude and impact of the program, we consider a set of criteria for guiding our analysis.
The first step begins with understanding the level of transformation a program or other endeavor broadly seeks to achieve weighed against a company’s ability to achieve it. Accessing a company’s ability to achieve a successful transformative outcome begins by developing an understanding of a company’s current operating model and identifying the areas and magnitudes of impacts.
While identifying the what and how of the impact of the transformation, its equally critical to consider the organization’s “Capacity for Change.” This is often overlooked or confused with having the resources (e.g. human capital, executive time, and capital investment) needed for a program. More fundamentally, every organization has a limit on the amount of change it can absorb and adapt to over a given period of time. This limit is fluid for a given program depending not only on the amount of change a company is undergoing and the number of associated strategic initiatives it's actively executing but also on the complexity of any future programs, a program’s time horizon for execution and outcome realization, and external market forces.
Managers must carefully consider the current state of their business and the level of active change occurring in the business when determining when and if a new program should be undertaken and the realistic timing and phasing that may need to occur to achieve success.
With the first dimension fully considered, the second dimension for any transformative program is defining and determining the level of resourcing and support needed to achieve success. Prior to introducing a new program to an organization, typically, most managers are already highly time constrained, and most employees are near or at full capacity in terms of work output. This creates a very real problem that can derail the success of a transformation.
The MAST Group is a management consulting firm focused on delivering excellence across strategic transformation, value capture, and mergers & acquisitions.
Reach out to learn more about MAST and how we help our clients achieve successful outcomes.
Main Contact for M&A:
Christopher Bonn
christopher.bonn@mastgroup.io
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Click here for the full whitepaper:
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