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Andy Kach
Principal
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Brian Chapman
Principal
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Eating the Elephant of Commercial Integration

Posted by Brian Chapman on August 3, 2015



iStock_000047580490_SmallFrom the moment an integration is announced to approximately a year after Day One when a new status quo is finally settling in, an enormous amount of work needs to get done. Marketing plans, processes, organizational and reporting lines, sales structures, territories, compensation and quotas, branding, international and country reporting, tender and contracting, revenue reporting, rebating and GPO fees, value propositions, metrics, measures and messages … the list is endless. An acquisition made to get a product or intellectual assets is simpler than a full-fledged integration of equals but the to-do list is staggering either way. Like any task that is broad and complex, the approach is always the same—the only way to eat an elephant is one bite at a time. But where to start?

Whenever we speak with executives about integration, our advice is always to step back and prioritize. You can’t possibly do everything right, nor can you do everything right now. Some things, like communication, are critical regardless of the specifics but other considerations will depend entirely on the reasons for the deal to ensure value is realized. We believe the first step is to triage the list of all possible activities by two hierarchies: criticality to the integration value and relevance for Day One. We will consider each of these separately.

Criticality to Integration Value

The first key concept is to determine why the company decided to make the deal in the first place. This critical insight allows leaders to figure out where to put their energy. The table below, while far from exhaustive of all the reasons for an integration, should begin to illustrate how the criticality to integration value can help shape priorities.

If the value of the integration is expected to be …

… then focus on …

… but don’t forget …

Sales

Access to key stakeholders, overlapped call points

Sales force design and integration

Culture, communication and preserving leaders

Something new to talk about

Sales and product training

Existing customers or users, compensation

Portfolio

More “in the bag” of a similar or complementary procedure

Prioritization, sales process, stakeholders

Compensation, marketing org design

A new, stronger value proposition (“infection control,” bundled procedure offering, etc.)

Messages, programs, metrics and measures

Sales force design and competency

Scale

A bigger seat at the table

Key account management, portfolio programs, sales roles and competencies

Reporting and customer data management

More for rebates and contracts

Key account management, contracting tools, pricing support

Pricing and crediting processes, compensation

One-stop shop for a department

Combined value propositions, selling roles, business unit design

Marketing roles, sales and marketing management structure

Global expansion

Country reporting structure, distribution or channel design, expansion infrastructure

Culture, operating mechanisms, opportunity assessment, regional resources

Financial

Taxes or other financial engineering

Site closure, shared infrastructure, back office

Eventual customer synergies

Predictable cash flow (e.g., remove reliance on capital)

Global structures, branding

Top management metrics, common understanding of business health

 

Relevance for Day One

The most important date to define for building an integration plan is “Day One,” the day when the new entity will go live. This will become the defining moment when at least a minimum number of things need to function. Our rallying cry then becomes, “Does it need to be done before Day One?” Often, although not always, the most important things that need to function on Day One are customer facing. Often the ERP can be integrated later, accounts payable can wait, long-range planning and forecasting can use a workaround, etc. So a critical decision facing the plan is what exactly needs to be ready on Day One and what can wait. This is the other important filter to apply to prioritize.

In the end, the elephant must be eaten. But getting the priorities right is critical to building a plan and that sets up the organization for lasting success.

Topics: medical devices, medical products and services, medtech, Brian Chapman, commercial integration

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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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