Perfect Biz Match | Transform | Survive as One of the Winners from the Jungle

Survive as One of the Winners from the Jungle

Your company merges with or acquires others in your industry, forming a larger organization with a more integrated line of products that have become commodities. You will eventually share the market with a few other large players, who are also consolidating to offer their products more efficiently.

In the jungle there is strong competition from many sources. No one dominates the market for any significant length of time. Eventually, however, competitive pricing creates a need for efficiency in production. Once all competitors have found all the ways of improving production efficiency that they can, there is nowhere else to go but to consolidate to achieve even more efficiency from scale or volume.

When product lines or industries reach this point, it is a natural progression to create a battleground market through mergers and acquisitions. The banking industry, for example, has been moving in just this direction - out of the jungle and into a battleground - for the last decade. Banks and other financial institutions have been steadily consolidating to form huge national and multi-national companies, which in turn are merging to create even larger institutions.

The credit card industry has also developed over time into a battleground with only a handful of major players (American Express, Visa, Discover, and MasterCard) who, together, all but own the business. They battle it out through advertising and the acquisition of points of distribution, but there are few real differences between their products. Car manufacturing and air travel are also steadily moving out of jungles and into battlegrounds.

Key Issues
To survive as a newly-formed warrior organization, you will have to quickly and efficiently cut through all the cultural differences of the merged pieces and form one institution with a single clear identity. Currently each unit or division has its own culture and practices, some of which may be in conflict with those of other new partners. These differences will quickly need to be superceded by the creation of a new, strong, dominant metaculture.

From the time when the merger is first being planned, you must have a plan for working across all the different businesses and cultures. Otherwise, some very dangerous sparks will fly - as they did, for example, when General Electric acquired NBC.

It will also be necessary to build (or re-design) systems that must now work across multiple organizations in order to create lower costs and/or larger volumes. Indeed, two of your major objectives should be to 1) arrive at the absolutely lowest manufacturing and distribution cost as quickly as possible, and 2) move products through the organization to as many new and existing points of distribution as you can.

Your organization's new focus should be on efficiency and speed. Customer satisfaction should now be based on delivering products to buyers in the way they typically want them., rather than providing great customer service and customized responses to individual needs.

In order to create adequate margins, you will need to use brand names to set prices as high as you can. At the same time, however, the cost of each product needs to be perceived by customers as minimal (or, at worst, typical and reasonable) for the industry. This perception of value can be developed on a large scale through advertising and marketing (rather than at the point of customer contact, as would be done in a jungle market).

Customer satisfaction (and the addressing of legitimate grievances) remain important; however, these should no longer be ensured by high customer contact, but by constantly improving systems. The most critical customer issue for airlines, for example, is on-time departure. Most people will tolerate lackluster service, narrow seats, and inedible food so long as they can be at their destinations on time. (This is why airlines, and airline pilots, are so insistent upon pushing away from the gate at precisely their departure times.) This is clearly a system issue, rather than one that can be addressed through a bevy of well-trained customer service representatives.

In your new warrior organization, decisions and plans must now be made at the top, then rapidly, efficiently, and consistently carried out. At every contact point between top management and your customers, there needs to be a culture based on the carrying out of orders and a willingness to go forward without questioning or changing those orders. These orders may sometimes seem to go against common sense, but they must be followed to the letter nonetheless.

The airline industry gives us a classic (and common) example: because of bad weather, several of an airline's feeder routes into O'Hare will be delayed; yet the connecting flight to New York will leave the gate on time (and two-thirds empty), temporarily stranding dozens of connecting passengers who arrive at the gate a minute or two later.

A warrior organization should not have many levels of authority, since each level eats up time and energy, both on legitimate activities and on internal politics. This means that most managers will need to have very wide spans of control. For example, literally 200 sales representatives may answer to a single local or regional sales manager. These supervisors will primarily need to organize and monitor activities, rather than build personal relationships and facilitate cooperation. This is an enormous change from a hunter culture, which typically operates with small teams and managers who function more like coaches.

Perhaps the biggest change of all will be that much of a person's organizational life will now be fixed and in the form of orders. Individuality should be permitted (and in certain situations encouraged), but only in how orders are carried out, not in how relationships are created with customers. Highly innovative and highly relational people will not thrive in these conditions, so it is in everyone's best interest to identify these people, encourage them to go elsewhere, and provide them with reasonable severance packages and strong references.

Common Difficulties
Allaying the suspicion of competitors-turned-allies
When hunter organizations are consolidated into a new warrior corporation, longtime rival companies suddenly find themselves on the same team. This can be seriously disorienting for some managers and employees, especially those with highly competitive natures. At first, these people's natural inclination is to be on guard, and to continue to compete with their old opponents.

In some cases, this will be played out in terms of previously-competing organizations which have now become sister units or divisions. More often, however, this competition focuses on people's counterparts in one or more of these new units. This is especially common among leaders whose units or divisions will eventually be merged with other parts of the company in order to create efficiencies. Everything else aside, these people are in danger of losing their positions, and will naturally compete against each other to keep them.

This can create a situation in which, despite directives from top management to consolidate and remove obvious redundancies, leaders of parallel divisions dig in their heels, resist all attempts at redesign, and expend much of their energy trying to preserve their power domains. In such a situation, any redesign concept will have to come from the top; in addition, it may be necessary to oust or reassign some (or even all) of the division leaders. This can be agonizing for everyone involved, but it must be done in order to replace redundancies with efficiencies. It can take a great deal of time and energy to get rid of the power domains and competitive cultures that were necessary for survival back in the jungle. While these tend to be most visible at the top, they may exist at virtually any level of an organization. Sometimes these residual power groups manage to maintain a kind of underground coalition that survives for years, working to benefit its hidden membership in terms of promotions and policy development.

Shifting the type of talent needed
People in hunter organizations have developed a variety of skills which are necessary in the jungle. Typically, these include locating, selling to, keeping, and satisfying customers, one at a time. Each hunter organization thus develops its own collaborative customer service unit (either official or unofficial) that relies on people at transaction points to make case-by-case decisions that heighten customer satisfaction. In fact, it is fair to say that in hunter companies, the focus of all company systems is on customer satisfaction through case-by-case modification of products and services. Small banks, for example, modify their services for each customer by being open to their special needs. When these banks merge (or are taken over), creating a huge national or international warrior organization, this high level of customization becomes a drag on the new company.

To compete in a battleground market, such individual customization must fall by the wayside. Instead, systems themselves must be redesigned so that most of the needs of most customers are fulfilled most of the time. There is a tradeoff here. Customers will have to forgo some of the services that were provided by the small bank. In exchange, they will be offered lower costs, other services, and/or more access points (more branches, more ATMs, more ways to bank in person and online, etc.). Those who demand the old array of services will be forced - and expected - to go elsewhere. Once a company has jumped out of the jungle into a battleground, it needs to let these customers go without a backward glance.

The most difficult aspect of this change actually has to do with managers and employees, not customers. A different set of skills and talents now needs to be nurtured and rewarded. Customer service people now need to stop catering to customers' whims and individual needs. This will surely mean some retraining, as well as some personnel changes. You will also need to bring on board people who can analyze current systems for delivering products and/or services to customers, and redesign them to create as much customer satisfaction as possible for as many customers as possible without customization.

Reconfiguring the entire organization
Back in the jungle, each organization's hierarchy was fairly flat, and information generally moved through it sideways, from one unit, function, or team to the next. A warrior organization, however, cannot function efficiently with such a structure. A traditional top-down hierarchy needs to be established, though for the sake of efficiency it should have as few levels as possible.

Systems that are useful in the jungle are built to react to customer needs and problems. The whole organization is oriented toward the outside so that it can fight to gain and retain each customer. The people who designed and built these systems were asked to work from the outside in (i.e., from customer needs and desires) when designing them. These systems give a great deal of authority to the people who work with and most clearly represent the customer.

Warrior systems, however, must be designed from the inside out, beginning with system needs and then working toward the customer. The intention is still to create a positive customer experience, but the primary force behind the system is to make it efficient and speedy. As a result, the customer gets the product as easily and quickly as possible, and as close to the way they want it as the system can provide. However, the organization must now produce as much of the product as possible, as quickly and efficiently as possible.

Normally this means a complete overhaul of internal systems and how they function and interact. However, in some cases managers with a hunter mindset may be able to lead the way toward "mass customization," which uses warrior-style systemization and automation to produce each product unit to the individual customer's specifications. Dell Computers, for example, has pioneered a system that allows the customer to specify what characteristics they want in their computer - and receive a finished product off the assembly line within 48-72 hours.

Learning to do business side-by-side with competitors
Survival in a jungle market is usually a zero sum game: the more you gain, the more your competitors lose, and vice versa. In a battleground, however, you will need to learn to do business side-by-side with many other large consolidated companies. Indeed, in battleground markets it is often true that the only way to survive is through collaboration with the competition.

A sports bar chain, for example, needs to be able to offer a variety of major beer brands, not just one; yet for each beer company, the chain offers many important points of distribution. No major brewery can afford to give up this market, nor can the chain afford to offer only a limited selection of big-name beers. Furthermore, each big beer manufacturer has a stake in the chain's success. Instead of trying to fill this niche alone and keep competitors out, it is to the benefit of each big brewery to share this piece of the market.

In practice, this is usually more of an accommodation than it is a collaboration. Rarely do the competing organizations actually work together, or even talk with one another.

Sometimes this accommodation is nothing more than a process of feeling out the competition. For example, an airline may raise prices on certain routes to see what its competition will do. If other airlines follow suit, the company will keep its new prices. If its competitors do not, however, the airline will usually reset prices at their former levels.

Solutions
Change the focus from customer satisfaction to speed, volume, and efficiency
In a battleground, speed, volume, and efficiency are paramount. This applies to the movement of products, but it applies just as much to making changes to the organization itself. An organization-wide reinvention initiative must be quickly established and communicated to everyone in the organization. The nature of the required change must be presented clearly, unequivocally, and in multiple ways, so that people can quickly sign on or make plans to leave. Managers and employees need to very quickly understand the new structure of centralized decision-making, the new driving forces in the organization, and the reasons behind them.

Changing the targets to speed, volume, and efficiency helps in a number of ways. It becomes a rallying point (and a source of buy-in) among managers and employees; it enables systems to be redesigned to eliminate anything that slows down (or adds unnecessary expense to) any process; and each of the three targets becomes a potent and tangible symbol of all that is new about the organization.

Change efforts, and any discussion of them, should focus on process rather than structure. As will eventually become evident, as you identify the key processes in each business and redesign those processes for speed, volume, and efficiency, the issues of decision-making and management will automatically be confronted and dealt with.

Change the leadership immediately to a council of generals.
The most powerful way to illustrate any major change desired by management is to appoint people who understand and epitomize the behaviors and attitudes needed in the new system. This is particularly important if your company needs to make the difficult and drastic change to a warrior organization. Key decision-makers (including, in many cases, some or all of the people at the very top) need to be replaced as soon as possible. The new leaders must be comfortable making decisions, giving orders, and taking full responsibility for their results. They must also understand that the big picture is crucial, because the company now operates in a realm where survival is predicated on selling large volumes of products that earn small margins.

Cut off any movement toward anarchy
When hunter companies come together to form a new warrior corporation, there is a natural tendency for the individual business units to try to retain and exercise most of their autonomy. This can become very destructive very quickly, and can even lead to something very close to anarchy.

To keep this from occurring, top management must move very quickly to build linkages among groups, units, businesses, and their leaders. Strategic leadership needs to be provided as soon as the warrior organization is created, so that there is little or no disruption in business, and a firm foundation is created for the new warrior culture.

Adaptation Issues
Doing business in the jungle has meant continuously cutting costs while at the same time maintaining or improving the level of customer service. This provides excellent preparation for the kind of cost-cutting discipline needed in a battleground. In fact, because it is no longer necessary to focus as much attention on the customer, more energy and attention can now be directed toward reducing costs to their absolute minimum.

Thus the transition from a jungle market to a battleground market is not as difficult to make as many others. There will, of course, be some redundancies in any merger or acquisition, and these will need to be eliminated. Infrastructure systems - e.g., inventory control, order entry , and accounting - will need to be aligned; this can be a complex and difficult task when the systems are very different and must be totally redesigned.

During the realignment of key systems there will need to be a change of power. In part this means that many top managers will need to be replaced. It also means that the locus of informal, everyday power must change as well, from marketing to operations and finance.

This repositioning needs to be led by the new CEO, who will probably be the only person able to supercede the top managers from the old systems. The CEO's central dictum should be that the old rule ("the customer is king," an external measure) no longer applies; in its place is a new rule ("highest speed, most volume, lowest cost, and highest quality," all internal measures).

The Human Resources department also needs to be very active in pointing the way for the new culture, especially among management. Hunter-style managers must be asked to leave - and should be given severance packages appropriate to their contributions in the jungle. New positions will need to be created, and new people with battleground experience should be brought in. The new culture must be defined and disseminated to all the consolidated parts. New reward systems need to be put in place as well.

The new culture needs to be clearly defined, and widely understood and accepted. (GE, for example, has a massive training program that inculcates managers with the principles and values of the company's culture. The CEO spends time with each group to help them understand how the culture functions. This indoctrination - and it is truly an indoctrination - resembles military training programs; its purpose is to help people understand how important following orders is to the survival and profit of the company.)

HR will also need to be involved in most of these consolidations in other ways. It will need to handle any layoffs, and to complete and manage any due diligence efforts required prior to the merger or acquisition. HR should also be involved in defining the likely effect of the consolidation on the culture; predicting the kind of resistance that will take place; and devising programs that will help make the transition as smooth as possible. This strategic activity should continue for quite some time - from the initial due diligence reporting through the organization redesign, and all the way to full implementation of the plan.

Becoming a warrior organization also means learning to co-exist in the market with other major players like yourself. It means letting go of the win/lose model of competing for customers in the jungle. In a battleground market, all of the major players are winners - it is just a question of who wins the biggest.

You must now make sure that your products are differentiated in some way from those of all the other major players in your market. Then you need to construct marketing and advertising programs that win the attention of the customer for awhile so that you can experience a volume increase.

Your competition will do the same when your program hits the field, so there is a kind of tug-of-war here. To get a sense of how this works, observe the marketing and advertising activities of companies like Nike, Reebok, Pepsi, Coca-Cola, Burger King, or Wendy's. Immense marketing attention is paid to the customer, yet in no case is a substantial new benefit provided. The key is simply that the customerâ€™s attention is drawn to the company in a positive way. Some customers will be sufficiently attracted to change whom they do business with, at least for the duration of the program.

Your new warrior company, following the strong lead of its CEO, needs to very quickly establish to management and employees that it is no longer operating in a jungle environment. People throughout the organization know who their customers are, where to find them, and how to get to them. But now they must also be taught that they cannot capture the entire market - or, in most cases, even half of it.

In a battleground market, there is a tacit agreement that the market will be shared - and, in many cases, that the very same customers will buy from two or more competitors. How many of us are truly loyal to Fed Ex over UPS, or one brand of computer discs over another? Consider the video tape market, in which the difference between competitors' products is effectively zero. Each major producer controls about ten percent of the market. A lot of hoopla is created around each brand name and each level of quality, but the average consumer will never notice any actual difference in performance among the different brands or levels.