There’s a lot going on in that big bad business world of mine. Most prominently is the present penchant by ambitious leaders to leave a lasting legacy by taking over someone else’s business. It’s sort of like a leader’s right of passage to pay through the nose to gobble up a rival’s business, do the macho media thing, and then sit back and watch the whole thing collapse.
It is a known fact that more than 80 percent of mergers and acquisitions fail within three years. B-schools are packed to the rafters with tragi-comedic case studies. Yet, still otherwise sane, successful CEOs persist in giving it a go.
My old friend, Charles, has done more mergers than anyone I know and he seems to make them work. Has a practically unblemished track record. So what does he do, that others don’t? Why does he get away with it every time against the odds?
We were sitting in the departure lounge in Frankfurt airport, (the one place where it is odds on if you pass through enough times you’ll eventually meet everyone you know) waiting for a plane that seemed reluctant to take flight.
I settled into my comfy chair hugging a Virgin Mary, (vodka can wait ‘til I get airborne) and asked Charles the secret of his uncanny success.
He thought for a while, then turned to me and said. “Really it’s very simple; it’s all about who you fire in the first 24 hours. Stick to that formula, no matter what and you’ll be fine.” Then he smiled, and added, “There are four people who’ve just got to go right away. In fact, the first 60 seconds isn’t a bad idea.”
“Four?” I said, isn’t that a lot of disruption, so quickly?”
“Yes, F-O-U-R” he countered, with added emphasis.
So who are they?” my curiosity peaked.
Charles held up his fingers. “ONE, The President, MD or founder, goes right away. His or her attachment to the business is just that, bad for business. Remember, you bought this company for its potential, you can’t be all goo-goo about history and people that want to leave a legacy.”
“OK, so who’s next?” By this time I was getting into the spirit of the game, brutal as it all sounded.
“TWO, is the marketing guy. Why? Well he or she wanted to be the next president, so they will be a major barrier to anything you want to do. Get in there and get them out, day one, then we can all get back to doing business with a clear sense of purpose.
THREE, the CFO, he can just mess you around, if he’s bitter can screw you with the analysts and the rest of the financial community. You don’t need him, do you?
“FOUR, and this may come as a surprise, the head of sales. Has to be at the top of my list always,”
I was surprised by his choice, and told him so. “But don’t you need the top sales guy to be on board? Isn’t that about retaining continuity?”
“No, you keep the second best sales guy, but always fire the best one otherwise he’ll tell your customers and suppliers the wrong stories.” Charles looked about him and added in a whisper, “Sales people always know everything because they are out of the office every day talking to everyone. You want them talking UP the business, not talking it down.” Then he quickly added, “Scratch a great sales guy and under the surface they always want to run the business, think they can do it better than anyone else. Have in-built zero loyalty as a default setting," he sighed, sounding like he was recalling past encounters.
Anything else, I queried?
“Well if you are still into killing off potential troublemakers you can throw in one more. Your legal counsel will always revert to type and be more loyal to their profession than the business. They love building barriers and explaining why you can’t do things. So do you need them?”
Just then my flight was called. I made my excuses and got up to leave. “Sure about those four on the list?” I said as I walked out.
“Absolutely,” said Charles, waving me goodbye, “that’s what I’m doing first thing tomorrow morning.