Posts Tagged “Business Solutions”

Freedom of Choice

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Freedom of Choice

The buck stops here. As a decision maker, every choice you make concerning the business affects the business, its employees, and even its clients. Many of those consequences may be minor, such as changing the brand of copy paper used in the office. Other decisions carry far-reaching and significant consequences that swing the pendulum of success from achievement to failure and back again. Savvy decision makers don’t assume they know every facet to every decision that must be made concerning their companies, or even their departments. They also have more to do than make decisions all day every day. In short, they delegate.

While important corporate decisions that affect employee livelihoods and clients should follow standard guidelines to ensure that those decisions are made from thorough analysis of the best information available, strict protocols that force decision making along a specific path stifle creativity and prevent innovation. Approval processes that add layer upon layer of unnecessary bureaucracy also clog the pipeline for simply conducting business.

Case in point: A manager needed a bookcase to hold the many manuals related to regulatory, organization and union rules, and the vehicles repaired and maintained by that department. The manager identified the basic bookcase that would serve the purpose and submitted the request for approval to his supervisor. He approved the purchase and submitted it to the next manager in the organizational hierarchy. That manager disapproved with the comment, “What are you going to do with this piece of equipment?” The manager’s sarcastic response to a colleague: “I’m going to build a nuclear submarine with it. What does he think I’m going to do with a bookcase?” The manuals remained in piles on his office floor.

Decision makers at every level need freedom to make the choices that will aid in their work. While executives understand that approvals are necessary to avoid unreasonable purchases, excessive layers of bureaucracy add frustration and resentment.

In addition to facilitating the daily work of business, decision making authority increases productivity and job satisfaction. According to Discover Business, “In a recent study from the University of Chicago School of Business, research found that happiness depends more on opportunities to make decisions (i.e., freedom) rather than money or connections.” Rather than hold tightly to authority and power, executives can unleash the productive and innovative potential of their employees by helping them learn to make good decisions.

The 6-step value analysis process, cause-and-effect analysis models, PEST, FMEA, and SWOT analysis, and other decision-making strategies aid in:
● Determining what information is pertinent to the issue,
● Collecting the necessary information,
● Analyzing the information,
● Generating ideas for resolving the issue,
● Evaluating those ideas for feasibility and benefit,
● Selecting the best ideas for action.

Critical decision making depends upon asking questions–the right questions. If you remember your parents urging you to think before you speak, carry this a step further: Think before you act. The thinking process involves critical questioning that “allows you to clearly distinguish facts from biases, stakeholders from observers, and solutions from potential solutions.”

Contrary to the belief of many executives, structure, scale, and disposition of resources do not determine performance, although they may affect it. In their article “The Decision-Driven Organization,” Marcia W. Blenko, Michael Mankins, and Paul Rogers refer to a study by Bain & Company: “57 reorgs between 2000 and 2006 found that fewer than one-third produced any meaningful improvement in performance. Most had no effect, and some actually destroyed value.” Their research shows that structure, scale, and disposition of resources “produce better performance if and only if it improves the organization’s ability to make and execute key decisions better and faster than competitors.” That means innovation, not organization, should be a company’s strategic priority.

Innovation requires freedom.



Making It All Work Together

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Business news is rife with reports of mergers and acquisitions, companies being sold for millions or billions of dollars in deals that make shareholders squeal with joy and c-suite executives give praise for their golden parachutes. The M&A strategy has become commonplace, Strategy+Business reports that 51.3% of mergers have demonstrated that such actions result in underperformance and reduced profit, which likely results from planning the way in which they execute implementation after the deal.

Once the decision to merge has been finalized, it’s important to stack the deck in favor of success.
● Create value greater than the purchase premium. The merger itself is not the business goal, but a step on the way toward achieving that goal. Leverage the value of the merged companies by combining their strengths, whether that be depth of market penetration, management team capabilities, or other factors.
● Develop a post-merger process that captures well-defined sources of value and guides sustainable exploitation.

Just because buying the competition appears easier than organic growth doesn’t mean that it’s the best direction. However, once the deal’s made and money has exchanged hands, it’s too late for employees. They will benefit–as will your shareholders and customers–from a thoughtfully prepared vision of the newly merged business enterprise. That vision will need leaders from both the acquiring company and the acquisition target who can lead the combined enterprise through the process of integration. Before the merger breaks down before it’s had a chance to function and thrive, leaders may consider hiring a navigator to lead them through the post-merger sea.

Best practices for post-merger integration consist of the following elements:

● Vision:
● Change architecture
● New company structure
● Leadership.

Navigation of post-merger process requires detailed planning. It builds a model for timing, cash flow, and resources. It establishes human resources policies that will be applied evenly throughout the combined company. It mandates frequent, honest, and clear communication to both employees and vendors. The post-merger architecture may not resemble what was planned, but the plan will help achieve the goals that the merger was supposed to accomplish.

Part of those goals includes identifying sources of value. Growth-oriented sources encompass new products or services, increased speed to market, improved efficiency, increased sales force, etc. Efficiency, while laudable in itself, cannot be defined as a concrete goal. Efficiency must be improved through other factors: supply chain, procurement, production, distribution, sales force, consolidation, etc.

Regardless of the architecture, the principals of the merged company must act. A thoroughly vetted process focusing on post-merger integration provides the analysis that yields the information management needs to make informed business decisions to act or not act. Action may entail walking away from a deal, testing assumptions, evaluating the organization’s competitiveness. Both action and inaction may result in improving or reducing shareholder value, which further necessitates a thorough planning and analysis process to ensure the merger’s success.

The Heggen Group has successfully guided diverse companies through the post-merger and acquisition process to capture increased market share of their industry niches and improve shareholder value. By combining two entities into one cohesive and functional business, we enhance the profitability and success of the companies we serve.




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