One of the most interesting sports stories of the last 25 years involves the rower Ben Hunt-Davis, who led Great Britain’s eight-man rowing team from a relatively low world ranking to a gold medal at the 2000 Sydney Summer Olympics by asking one simple question over and over again in light of every key decision: Will this make the boat go faster?
The remarkable effectiveness of this guiding principle goes far beyond rowing or indeed any sport. For example, in the recent spate of mega M&A deals in entertainment and media, there will be unparalleled potential for substantial sources of value and growth in the post-merger integration phase. But in most cases, these deals will also bring substantial sources of complexity and high-stakes decision making that will set the course for success or failure.
In normal times, this simple form of question might not seem like the obvious approach for the directors of a multi-billion-dollar global media company. But these aren’t normal times. And cutting through complexity and creating a unifying goal for post-merger integration should be seen not only as a driving objective, but as the difference between winning and losing, as well.
Simple Questions, Complex Situations
Of course, the question may take on a different flavor with each deal, but the simplicity in its sentiment remains: Will this make the boat go faster? Will this support future growth? Will this deliver against our strategy? Will this help us differentiate in the market? Will this improve margin?
Today, global media companies are re-integrating into even larger entities as they face off against equally formidable competition – from established players treading similar strategies to new entrants with deep pockets and big plans. Yet, chances are good that despite world-class talent, valuable intellectual property, a growing base of subscribers/viewers and increasing market/territory presence, some of these organizations will fall behind. Meanwhile, those that can stay focused on “making the boat go faster” will build their new multi-billion-dollar media juggernaut into something even bigger, better and stronger.
Five Guidelines for Post-Merger Integration Success
So how do you satisfy your organization’s need to bet on the right post-merger integration strategy? Based on what we’ve seen and advised in the media industry, it pays to follow five rules:
- Look for outsized synergy opportunities. A big merger is a big bet. Often, however, the nature of the integrating companies leads strategists to focus on the wrong areas for value creation and throw away the biggest (and not always obvious) opportunities. In this case, fortune often favors the brave. Prioritize those areas where you see opportunities for disproportionate value return, such as top-line growth (market strategy, business models, IP, rights and content ROI, business structure, genuine areas of differentiation) and cost-out (technology rationalization, service contracts/sourcing arrangements, infrastructure, human capital, operational efficiency, efficient seamless workflows, use of automation and artificial intelligence).
- Don’t lose sight of value. A major merger is a drastic and often life-changing event. Keeping up confidence and morale is crucial to the existing entity. This requires strong leadership and clear planning in order to maintain a fine balance between value protection of the core existing business with the aggressive value creation opportunities provided from the deal. Plan to make the most important changes as soon as possible and use them to build trust and momentum, as well as deliver value. This is particularly important if aggressive targets/payback are required by corporate.
- Don’t over-analyze. In a rapidly evolving industry and ever-changing market dynamics, the right action taken today beats the perfect choice enacted six months too late. If it looks and feels like a “no regret” change that drives value, then make the change.
- Build one company. You need one business model and one culture, not more; in other words, pulling the oars in different directions won’t get you where you need to go. This may be especially true for a media company, where, to a surprising extent, vision is value.
- Communicate. Once you have a clear post-merger strategy, you should communicate early and often about what you plan to do and how that plan fits into your larger aims. Even high-performing teams and business functions can become mediocre if the post-merger communication is lacking – and this under-performance can spread rapidly.
Rules of a New Game
Why does this matter? Global media companies are on the verge of a new phase in their competition: a long-term struggle between vast media and entertainment players and their ability to vertically integrate their content production/ownership, profitably and predictably monetize their intellectual property, and win the battle for the living room and beyond. It’s been talked about for many years, but now the bets are being made.
Like the rowers’ carbon shells, these high-performance machines are designed for speed and power; they’re also surprisingly delicate – just ask anyone who remembers the sobering number of failed media mergers over the past two decades, often due to ill-thought-out post-merger strategies and their subsequent execution. Getting post-merger integration wrong can leak value from the deal rapidly.
As with the Olympic rowing gold medalists, the winners will be those who find the best answers to deceptively simple questions.
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