Perfect Biz Match | Transform | Escaping from the Jungle

Escaping from the Jungle

As the result of your successful manipulation of a product, product line, supply chain, and/or marketing channel, you pull away from all other competitors and achieve market domination.

On occasion, a company in a niche market that has been struggling against heavy competition finds the right mix of acquired or merged companies, functions, distribution systems, and finances. This enables the organization to overtake all its competition and become the ruler in a new kingdom market.

Making a leap from the jungle into a kingdom is both difficult and rare, but it can be done. Almost invariably, a series of mergers or acquisitions is required. One strategy is simple: acquire one company after another.

Making the jump from hunter to ruler status requires a major qualitative change. Typically, this means gaining control of some part of the distribution or supply chain. Red Lobster became the country's ruling seafood restaurant - and a model for many subsequent national restaurant chains - by making large-scale deals directly with big fishing fleets around the world and flying the product directly to their restaurants each day, rather than buying stored, refrigerated fish from wholesalers. Red Lobster also pioneered the use of teams in organizing waiters who, together, make sure the customer's experience is first rate.

Key Issues
Refocusing the business
Once a new organization has been created via mergers, acquisitions, and/or alliances, management must turn its attention to creating a new focus for that new company. No longer should such a high value be placed on retaining customers through attentiveness to their every desire and need. Instead, the focus needs to change to delivering high volumes of what you are sure the customer wants.

This does not mean that the customer is no longer important (although the change of focus may give that impression to many of your pioneer managers). It does mean that everyone must learn to build and rely on systems (rather than individual decisions and initiative) to take care of customers, and to do this with far more transactions than before.

In this new environment, it is easy to lose the customer voice in the millions of transactions that occur. Just trying to fulfill burgeoning demand is difficult enough. Customer satisfaction remains important, but it should no longer be the paramount concern.

This change is one of balance and emphasis, not a complete reversal.

Building systems across the whole organization
You will need to very quickly design and build systems that work across the business units of the new organization. This will be expected by customers, who do not care how big you are or what friction exists between the parts of the organization. If they cannot get their desired products in the places and manner in which they want them, they'll perceive it as your failure to perform.

In a ruler culture, leaders of the functional parts (such as marketing, manufacturing, and research) hold positions of significant influence in business decisions. These high-ranking people will need to work together smoothly in order to meet the needs of customers and make a good profit. This cooperation is both critical to success and very difficult to achieve. (Not achieving it is precisely the reason why some organizations fail to hold onto their ruler status for very long.)

Working effectively together, then, needs to be an organization-wide goal, supported both by 1) some internal mechanisms that forces cooperation and 2) goals and rewards set by management that reinforce such cooperative activity. For example, consider companies whose divisions often share the same customers, but offer them different products. In such organizations, management would be wise to establish a sales group comprised of people from all the different divisions who serve a particular customer or set of customers. Other such mechanism might include councils that represent the interests of marketing or manufacturing across division lines.

Furthermore, all of the units in the company need to be brought together into a form that can be used to effectively rule the relevant markets. Your organization will need to develop and implement a variety of systems to ensure that all parts work together in sufficient harmony to enable the company to succeed against potentially powerful forces. You specifically need to avoid having a series of separately organized units, each with its own infrastructure, and all competing for customers (and thus gradually losing ground in the market).

Common Difficulties
Ex-hunters who become rulers face many of the same issues discussed in the first section of this chapter, in which pioneers must learn to act like rulers. However, hunters have some additional concerns and issues as well.

When your organization moves out of a highly competitive environment with tight resources to a dominant position with adequate resources, at first your people will feel like they have died and gone to heaven. But they will pull their heads out of the clouds once they realize how difficult it is to continue to dominate a market over time, and how much effort is required to sustain a culture that encourages and supports such domination.

In order to make the transition to ruler status, the old culture of achievement, flexibility, and strategy must be replaced by one that focuses on profit numbers, management oversight and control, and successful use of power to maintain and grow the market. Such a culture may seem arrogant, power hungry, and unbending to someone who has excelled in a jungle.

Furthermore, people who feel that they have at last escaped from the intensity of the jungle will soon discover that they are at most half right. Yes, the specific demands of the jungle may largely have fallen away, but ruler markets are no less intense; they are simply fueled by very different concerns: fulfilling ever-increasing customer demands and generating consistently high profit levels.

Going from hunter to ruler is one of the toughest transitions that managers and employees can make in a 21st century market. The issues of leadership, values, human resource management, and organizational structure all become quite important, as well as emotionally charged. Significant resources and effort must be invested in helping people to make this transition - and replacing those who simply can't adapt.

I use the word "must" in the previous sentence quite deliberately. This investment cannot be avoided without incurring some serious consequences. Unfortunately, many companies, caught up in the excitement of securing a dominant position, tend to overlook the human and organizational problems that naturally result. These corporations thus unwittingly hinder their own success (and their smooth transition to ruler status).

To underscore this point, let's consider the different roles played by managers and marketers in the two types of organizations.

Hunters	Rulers
aggressively create loyal customers by attending to their every need and whim value customers for their loyalty and patronage	aggressively restrict consumer choices and meet only the critical ones value customers for their potential to increase demand and profit and help the company grow demand the highest prices the market will bear

It is not easy to inculcate these unfamiliar ruler behaviors and values into employees and managers, who may view the old hunter values as morally superior.

One common, and particularly thorny, problem results when the consolidation, acquisition, or merger of a number of hunter organizations transforms a market almost overnight and creates a new monolithic ruler organization. Such mega-organizations tend to be unwieldy, and forming the right kind of structure at the top is a complex and difficult task. On the one hand, it is critical to establish solid and reliable central control; on the other, it is just as critical not stifle the productive and creative energy within any individual unit.

Solutions
The solutions suggested in the pioneer-to-ruler discussion are very pertinent here. When hunters become rulers, however, the solutions that follow should be considered as well.

Develop a comprehensive business strategy
Typically, a group of hunters get pulled together through mergers and/or acquisitions into a new, multifaceted ruler. When this first occurs, the individual units (and, of course, the managers and employees in them) will be confused about their roles in the new system. Although this will cause some resentment and anxiety, this is entirely natural and, indeed, unavoidable. Nevertheless, those emotions must be addressed promptly - the sooner the better - by top management.

As quickly as possible - ideally before all the mergers or acquisitions are completed - people at the very top of the new mega-organization need to craft an organization-wide business strategy. This strategy should acknowledge and use the varied knowledge and talents of all parts of the new company. This means:

Helping key people quickly become familiar with all the units and divisions of the newly-structured organization, including the products, histories, missions, customers, markets, major successes, and cultures of each.
Clearly communicating how the different parts of the new organization will fit and work together.
Creating and clearly communicating organization-wide business goals.

If necessary, creating a new mission statement and/or corporate vision statement.
It is all too easy for organizations' missions to be forgotten (or at least partly unfilled) during a merger or acquisition. The consolidation itself is so engulfing and complex that management can easily lose sight of the essentials. As a result, managers often jettison their organizations' original mission and settle for what they feel they can wrest from the chaos around them. This is another reason why it is so important to quickly develop a focused, authentic mission and clearly - indeed, vociferously - communicate it to everyone. In fact, this is one situation where it makes sense to deliberately overcommunicate by repeating the same key messages to everyone in the organization over and over, using multiple media - e-mails, hard copy memos, meetings, posters, displays, etc.

To a large degree, the exact configuration of the new organization should grow out of and support the new strategy, goals, mission, and vision. This means that the individual units or divisions should more or less be left alone until these overarching concepts have been developed - otherwise your people may be faced with the demoralizing prospect of one reorganization after another. Yet this hands-off period cannot go on for too long - certainly for no more than six months or so - or your people will be equally demoralized by the uncertainty.

Immediately begin using the resources of the new organization for innovation
Wise leaders in new ruler organizations are keenly aware of the opportunity to create new products from the new relationships that have been created. They make a point of quickly developing processes to identify key capabilities throughout the organization, bring them together in supportive ways, and encourage them through concerted management action. This sets the stage for long-range domination of the market.

Resist the temptation to immediately and significantly downsize
Your stockholders, and other people with their eyes primarily on financial concerns, may want to make as many visible gains as possible in the short run. They would have the company shed people and take all the losses right away, in order for it to create profit gains as soon as possible. But don't rush into such actions thoughtlessly.

There will be obvious areas where redundancies occur, and there will surely need to be downsizing in those areas. However, allow some time to pass, and observe how the organizations learn to merge and work together. This will provide you with a clearer view of what the new system needs to look like, and it will help you to avoid the all-too-prevalent practice of reducing headcount, only to build it back up again. Learning how the different units work together creates opportunities for interesting innovations in products and/or processes.

When leaders succumb to the temptation of the short-term bottom line and quickly rid their companies of seeming redundancies, they seriously undermine the opportunity for creative synergy. Furthermore, the message is given out that the merger or acquisition was really about immediate profit, not about strategy, long-term development, and market domination. Is this the message you want your stakeholders to hear?

Only after the new organization is up and running fairly smoothly is it time to look for redundancies and overlaps that indicate a need for fewer resources. I should add that, in my experience, the issue of redundancy is less significant in ruler organizations than in warrior organizations.

This is not to say that all jobs should be considered sacred. Some minor bloodletting may be necessary, even at first - particularly when one of the newly-acquired units is overstaffed, or when one has a history of poor performance. But handing out pink slips like party favors in order to quickly boost the bottom line ultimately serves no one.

Build a new identity
People who have been part of a hunter organization usually feel a strong allegiance to it - and justifiably so, because they have worked hard for it to succeed in a very difficult market environment. Now, however, their allegiance needs to be focused toward both their original company and the newly-formed one.

People at the top of the new organization thus need to create an overarching corporate identity that:

Gives meaning to all the different parts
Unifies the parts into a single, consistent whole
Positions the functions and departments that need to lead the organization so that they have sufficient influence

This task is often difficult, and it is always very important. The better a job top management does with it, the more energy will be created and applied, and the less resistance there will be at all levels.

Avoid over-politicization
A ruler organization runs on the good will that is created among its parts, as well as on the leadership of its CEO (who, in essence, is a benevolent king or queen). This requires the building and sustaining of good relationships, which in turn requires a culture that rewards discussion, negotiation, and active listening. However, in the very legitimate interest of getting things done, people in a newly-formed ruler organization can very quickly become absorbed in taking sides and forming coalitions. Soon, despite (and, indeed, partly because of) everyone's best intentions, the organization can become immersed in political infighting. In fact, it is not uncommon for people who were quite cooperative and friendly in their hunter organizations to quickly become enmeshed in politicking and infighting once their companies become parts of a larger whole.

While there is no simple or across-the-board solution to this problem, much of the infighting can be avoided if management:

Exercises strong leadership
Creates, implements, and clearly supports and communicates a solid strategic plan
Defines and communicates clear goals and expectations
Provides strong, steady involvement of top managers in each of the units and divisions
Demonstrates the desired openness and teamwork at the top

There's a personal component to this as well. In companies that are new to the world of domination and large profits (e.g., those with stock options and profit sharing plans), people suddenly see the potential to get rich. They then work long and hard to become positioned to share in the organization's success. Management needs to formally recognize these efforts as supporting the organization as a whole, as well as by advancing individual business units. Furthermore, it must be careful not to over-reward individual initiative and performance, or it will only encourage a dog-eat-dog culture.

Adaptation Issues
Since the move from hunter to ruler status normally takes place quite quickly - and since most merged or acquired hunter organizations have been in existence long enough to have their own entrenched cultures - the adaptation issues are both significant and thorny. Here are some ways to successfully manage the change:

Be patient and careful with hunter managers and employees
People who are used to a hunter culture will have great difficulty understanding the need to get management approval on a regular basis. They will not be able to easily tolerate what looks to them like unnecessary bureaucracy, or even outright power-mongering. Therefore, from the highest levels down, management needs to help people to understand the benefits of increased coordination from the top. People at all levels also need to know that, while a larger bureaucracy is now necessary, everyone benefits from one that is no larger than necessary. These messages will probably need to be delivered over and over, with patience and understanding.

It is of course crucial that these message be reinforced with genuine (and genuinely useful) information. Even the slightest hint of "oh, don't you fret about it, we in management know what's best" can inspire a mutiny.

Use the hunting knowledge of people in the organization to minimize the bureaucracy
Although your organization is now a ruler, this doesn't mean that management should forget the lessons its divisions learned in the jungle, such as understanding and attending to customers' issues. Use jungle wisdom whenever and wherever it can be helpful - especially in keeping bureaucracy to a minimum.

It is a swift road back to the jungle, and forgetting the customer - or, indeed, ignoring any of the important lessons learned in the jungle - will bring competitors out of the woodwork quickly.

One of my favorite top managers made it a practice to ask people he met in the hallways what they had done to reduce the amount of unnecessary bureaucracy in the organization. He listened carefully to what they had to say and put the best suggestions into practice. And, guess what? They worked.

Carve out places in the new organization for hunter leaders to exercise their influence
The aggressiveness that had been rewarded in a hunter company can be turned into either a negative or positive force in the new ruler organization. There is a tendency among top management to replace hunter leaders with more profit-focused people. Resist this tendency and, instead, give the best hunter leaders positions of significant power and influence. Also make them accountable for profits, however.

Hunter managers who find themselves in ruler organizations often get the idea that profit is the purpose now, even though they believed differently before. But a ruler's focus on profit does not change the fact that organizations are in place to serve customers. I am continually amazed by the number of people who truly believe that the purpose of business is profit. Unfortunately, ruler companies tend to promote that erroneous view - and it is easily learned.