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A Holiday Wish List for Successful Mergers and Reorgs

Posted by Tobi Laczkowski on December 2, 2015



iStock_000043588994_Small-1The end of the calendar year is upon us, and with that comes the season of giving. For many medical products companies, it also becomes the season of reorganization. January 1 seems to be a magical day to flip the switch on organizational redesigns, merger integrations and other similar company actions. 

Wish lists are also common around this time of year, whether it’s the children’s list for Santa or, for that matter, the parents’. With that in mind, I have a wish list of my own, having seen a few reorgs go well, and probably more that could have gone better. Companies that follow these wishes will have a much higher likelihood of success going into next year:

1. Develop cross-functional teams. A field reorganization should not be executed within silos. The combination and coordination of sales, sales operations, marketing, HR and finance are required for a well-executed transition plan. On a related note, ensure that your team includes one or more members from the field. The initiative should be collaborative, rather than being positioned as “HQ versus the field.”

2. Balance the “merger” versus “conquer” mentality. For those companies combining multiple legacy organizations, a spirit of combining to form the best of both worlds is key for developing and maintaining a positive vibe during these stressful times. However, there will be some key decisions that may not be conducive to groupthink. In those situations, it’s important to have a clear decision maker providing crisp guidance to avoid the team spinning in circles.

3. Utilize transition mechanisms. Too often, there is a belief that a switch can be flipped on January 1 and the field organization will align to the new world by January 2. The reality is that you’re affecting people’s lives and it takes some time for them to adjust. Also, some specific mechanisms need to be put in place to encourage the appropriate behaviors and outcomes. For example, transition compensation likely is required for a variety of reasons. First, you want accounts and relationships to be handed off in a positive way. This won’t happen by itself, and it requires some combination of processes, templates and compensation to increase the likelihood of success. Second, you want to avoid reps “loading the channel”—or encouraging accounts to order more than usual prior to the company switching account assignments, setting up the new rep for trouble. Since commissions or compensation are in play, this may require some amount of “double pay” to motivate the appropriate behavior.

4. Transition rapidly. Nothing kills a reorganization’s momentum like stagnation due to complacency or the inability to execute the plan. Create a sense of urgency, and catalyze actions wherever possible.

5. Identify strong leaders. Somewhat connected to points above, strong leadership is required to push through uncomfortable times. Too often, I’ve seen organizational hesitancy when it’s unclear who the key leaders will be. Announce them early and get them focused on moving the organization forward.

6. Embrace certain field leaders as change agents. Reduce the feeling of “HQ versus the field” by engaging one to three well-respected field managers as agents of change. They add enormous credibility, and can help to shape both the design and the communications.

7. Execute a process for identifying and adopting best practices. Legacy organizations can carry negative baggage, but more importantly, they can bring with them tacit best practices. These need to be surfaced and encouraged. You can find best practices within many dimensions, such as people, processes, tools and systems.

8. Focus on the customer. All too often, companies get twisted in knots dealing with internal dilemmas. If the customer orientation is considered, the decision in question typically becomes much easier to resolve.

9. Apply the best available expertise. Expertise can come from a variety of sources. Internally, this can include a diverse team of well-respected change agents, as mentioned above. It also can include external partners who specialize in such matters. In the same way that medical device sales reps add value to physicians during surgeries, external partners can add value to companies undergoing change. External parties also can cut through internal politics and organizational baggage, serving as the central hub to move the process along. Go with those external parties who see it the most. They will have the most war stories and tacit pattern recognition.

10. Communicate, communicate, communicate. One would think that this goes without saying, but we consistently see organizations withhold communication far too much. In many cases, this is unintentional, with the companies thinking that the unofficial channels will suffice. In other cases, leaders intentionally hold back information under the impression that communicating anything about the future state will take the field team’s focus away from the short-term priorities, such as pushing hard to finish out the current year. News flash: Your field team is already distracted by it. The absence of information just encourages rumors because the sales force is bound to fill in the vacuum created by the lack of formal information sharing. Often, organizations end up spending even more time unwinding the speculation than they would have spent discussing the actual facts.

Reorganizations are already stressful. Those at the end of the year add the holiday component on top of that. Follow the above wish list and you increase your odds of success. Just remember, head toward the spiked eggnog if necessary.

As Clark Griswold eloquently said (among other things), “The most enjoying traditions of the season are best enjoyed in the warm embrace of kith and kin.” Happy holidays, everyone.

Topics: medical products and services, medtech, Tobi Laczkowski, mergers

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AUTHORS
Brian_Chapman_thumbnail
Brian Chapman
Principal,
ZS Associates
Tobi_Laczkowski_thumbnail
Tobi Laczkowski
Principal,
ZS Associates
Will_Randall_thumbnail
Will Randall
Manager,
ZS Associates
Matt-Scheitlin-London_thumbnail
Matt Scheitlin
Associate Principal,
ZS Associates
Andy-kach_thumbnail
Andy Kach
Associate Principal,
ZS Associates
Bhargav_Mantha_thumbnail
Bhargav Mantha
Associate Principal,
ZS Associates
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