In 2006, Grant Thornton India had released survey results of 200 India businesses and found that 81 per cent were exploring merger and acquisition options. Harish H V, head of M&A, Grant Thornton India, reported that the main driver is the demand for faster growth. "M&A has been rising in India, but it seems it will only get bigger and better in future."
India's M&A activity was at $12 billion in 2004, $18 billion in 2005 and is predicted to exceed $25 billion in 2006 (these rates are very low compared to the West). While most M&A activity has been in new economy sectors such as IT, telecom and biotech, with Tata Steel having initiated the take-over of Corus Steel, a company more than three times its size, future activity will include old economy sectors such as banking, paper, media and entertainment.
When two businesses or enterprises merge, the formal and legal structures might be in place but how should the leadership build one team from two groups who used to compete with each other?
The traditional management response to change of this magnitude is to create an exclusive planning team, develop major new 'teamwork', make the big announcement, launch with all the flourish they can afford, and then expect the change to happen.
Too often after the fanfare nothing is different. The same negativities of gossip, back biting, divisiveness and lack of cooperation can continue between two groups who perhaps never wanted to work together in the first place – and the anticipated business growth from the merger or acquisition starts to fray.
I can give you an example of an alternative leadership style that worked in the merger of two leading consulting practices, one with 150 consultants and the other with a team of 70. These were highly professional but also highly competitive individuals, who had competed with each other over a long time. Now being asked to work together was too hard for most of them, who took the natural step of seeking refuge with their former work colleagues rather than build teams with the new - expected growth did not materialise.
Things had stalled through lack of leadership, because in most mergers, the task of building teamwork has to work alongside further management planning and decision-making as the merger is put in place.
Some simple things wok wonders
Instead of the conventional approach, we developed a simple strategy that we called "managing via the art of conversation" - and it worked beyond expectations.
First, the CEO and the management team agreed that their highest priority during the merger phase was to have informal conversations with as many people as possible, as often as possible. To do this, we trained managers in the art of conversation, so they could achieve a natural flow of discussion while also making the key points they needed to make.
We met as a management group every three days, deciding upon the next conversational theme.
For some of the managers this meant a dramatic change of personal styles. Those at the top had to lead by example. Previously, most of the line managers had spent most of the day in their own office, rarely walking the floor, instead sending emails, asking people to come and meet, and so on. Under the new regime, they were encouraged to spend most of their time out of their own office, in the tea room, in the filing area, at the water cooler, in other staff work areas and to generally walk around.
Second, to support the informal flow of information via conversations, we issued a regular flow of "update" style announcements, generally keeping within the limit of one side of a sheet of A4 or even shorter for emails. Mainly we chose a sheet of paper approach, because emails had been "over done" in this office.
Each of these information sheets contained the latest information on the merger, where we were, what was next and even advised on those areas that we were still to make decisions on, with an indication of when the decision would be made. For some, this was seen as a risky strategy, but our view was that in most cases the staff knew or speculated about our plans, so why not put them on paper to make accurate information available?
Another leadership communication principle behind this approach is that people react best when they have played a part in the decision making, or at least been taken into confidence and had an opportunity to communicate feedback. Acceptance levels from this approach are way higher than from the "keep it secret and make a big announcement later" approach, so common in modern management.
Third, we developed many ways of saying the same thing, so the management could keep talking while also keeping the content fresh. It could reinforce a key new message with an inspirational quote, or key statistics, perhaps via a short anecdote, or make a strong personal statement of commitment, and so on. This stopped the target group from getting bored with the repetitive nature of the conversations they had to have.
We also had to train the management team in better listening. Many of them were used to being under so much pressure that the first thing to go from their conversations was their own listening - they just felt they did not have the time.
This art of conversation as a leadership and management tool is ailing. But this "declining art of conversation" argument has been around for a long time -Indian philosopher Krishnamurti (1895-1986) lamented, "If we try to listen we find it extraordinarily difficult, because we are always projecting our opinions and ideas, our prejudices, our backgrounds, our inclinations, our impulses; when they dominate we hardly listen to what is being said."
The true art of conversation is the ability to say the same thing in many ways. For example, if there is a key management point to be made, and there always is, then one time set it out in simple language, another time tell a story that illustrates it, then use a quote from a famous person to reinforce it, then use a sporting analogy to back it up, then be casual about it, and so on. The same point can be made as many as half a dozen times without you becoming boring.
Listening: The real communication
But none of this is very effective as a leadership tool unless you are capable of listening to the people you want to convince. In our case of the merger of two businesses, this listening became a key management tool because the feedback was quick, generally sincere and provided guidance for us on what to do next.
My Grandmother was a great listener. She used to say a gossip talks about others, a bore talks about himself and a brilliant conversationalist talks about you. To encourage us six siblings to listen, grandma would say: What are those things on the side of your head for? Why do you have two ears and one mouth? She was the first person to ever point out to us that the words "listen" and "silent" are made up of exactly the same letters.
Why does the art of conversation matter at all? In a business leadership context conversation is vital because it is the key to relationship between leader and follower. Conversation is one of the great ways we develop relationships; and it is through relationships that we can define ourselves and find meaning in this strange thing called life.
Relationship grows through understanding, something we all want whether as individuals or leaders. A paradox is if you seek to understand, you will more easily be understood. These truths apply to life in general, but become even sharper in a leadership context.
The key, therefore, to getting started on the path to better conversations, is better listening. Christopher Morley, the American writer, put it so well, "There is only one rule for being a good talker. Learn to listen." This learning includes the ability to put thoughts aside as they arise and to thereby increase our awareness and openness to what is being said.
Krishnamurti again, "I do not know if you have ever examined how you listen, it doesn't matter to what, whether to a bird, to the wind…to the rushing waters…in a dialogue with yourself…One listens and therefore learns, only in a state of attention, a state of silence, in which the whole background is in abeyance, is quiet; then, it seems to me it is possible to communicate."
In the case of the merger I was consulting on, we also used the art of conversation to have a positive impact on the critics of the merger, on those who were not behind the change, disliked it, did not want to help us or even were doing their best to upset the moves to better teamwork.
The key strategy was to get each manager to identify the problem people, and then via the art of conversation, demonstrate empathy with them, show that they shared their concerns, give weight and value to their fears. Our logic was that only by first doing this could the manager then begin to change the negative employee.
Learning from animals
I used the story of our family pet - a basset hound, named Freda. Like most bassets, she had a slobbering mouth, all enthusiasm, large and hopeless but eager. Like most bassets, Freda was a slow learner and some things she never learned.
For example, she never learned that when she walked on one side of a light pole, and I walked on the other, we would come to a screeching halt, with the leash half choking her. All forward momentum would stop, and Freda would look at me. What's next, she asks?
I could tell her all day to back up, but she wouldn't. I could encourage, I could shout, I could even use food in encouragement but she would not back up. She would not do it alone. See, she's looking to me for the key, the solution.
So, once I back up, she follows. This is a key leadership strategy for troublesome employees - only when you join them by backing off a little and accepting their concerns, only then can we disentangle ourselves and move on.
Most managers put troublemakers into a corner, most managers hit back at any person who raises a question or a concern, or ultimately blame these people for the failure of the M&A. Our approach was different – when the negative came out, we got alongside it, analysed it with them and started again from their starting point, working through the issues to create teamwork.
Too often, in M&A situations, our staff and we are on other sides of the metaphorical light pole, we've taken rigid positions and we can't go forward. Too often we hear managers say, "if only the staff would do such and such we could get ahead". But if the managers step back from the situation, disentangle the impasse, then together we can move on.
Finding how to back up, to re-enter open space, that's a big part of the art of persuasion. For us, it was just part of the art of conversation, an art that built one team from two - that gave people the space to join in the new era and have fun in the process.
*Communication consultant, professional speaker and trainer. Stephen is the author of You Can Communicate (Pearson 2002). He is on the management committee of the Australia India Business Council.
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articles by Stephen Manallack