Insights
Achieving success in Transformation and M&A
All transformations — whether they derive 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 called the Transformation and Integration Complexity Matrix to assess the complexity of a transformation and what support will be needed to achieve successful results.
The framework drives 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.
Start with business outcomes and value creation
Before describing the framework, a critical perspective: a focus on business outcomes and value creation. The creation of value is the sole purpose of business, and thus the core reason organizations engage in transformative initiatives. Value creation typically revolves around achieving positive outcomes in key metrics such as TSR, ROIC, and EBITDA.
At MAST, our focus centers on true operational value creation — developing strategic plans and executing the derivative programs that create value from core business operations, whether through functional improvements or major mergers.
A common pitfall is a focus on project or program outcomes instead of a focus on specific business outcomes.
Transformation projects often lose sight of their end objectives amid the distractions of normal operations and shifting market dynamics. Our methodology counters this with a collaborative assessment that engages key stakeholders — leadership, the Board, employees, and external advisors — across two primary dimensions.
Dimension one: transformation level vs. organizational capacity
The first step is to understand the level of transformation a program seeks to achieve, weighed against the company’s ability to achieve it. Assessing that ability begins with understanding the current operating model and identifying the areas and magnitude of impact.
Critically, organizations must consider their capacity for change. This differs from simply having resources such as human capital, executive time, and capital investment. Every organization has a limit on the amount of change it can absorb and adapt to over a given period. That limit depends on the amount of change already occurring, the number of active strategic initiatives, program complexity, execution timeframes, and external market forces.
Managers must carefully weigh their business’s current state and active change levels when deciding whether to undertake new programs — and what realistic timing may be required.
Dimension two: resourcing and support requirements
The second dimension is defining the level of resourcing and support needed for success. Before new programs are introduced, most managers are already time-constrained and most employees work near or at full capacity. Left unaddressed, this is a real problem that can derail transformation success — and a primary reason experienced external support is often essential.