The Empowerment of Mistakes – 1

Mistakes in the business place are all too often shoved under the carpet or patched and passed on.  Here at The Merger Verger we think that is the wrong strategy altogether.

A company was holding its quarterly divisional managers’ conference call and asked me to participate.  The CEO did his thing and then all the division guys reported on the quarter just ended. 

After the call was over the Chairman/owner asked me what I’d thought.  I told him that I was highly skeptical of the whole thing.  Ten divisions each reporting on three months of activity and not one thing had gone wrong?  That’s the equivalent of one business functioning for two and half years without a single problem.  No.  No!  That’s not what happened; that’s just what got reported.

When a manager reveals a problem or a misjudgment, he is opening the door to his colleagues and saying, “I don’t want you to experience the same problem I did; learn from my situation before it happens to you.”

This practice of encouraging error-sharing enters the realm of acquisition integration at two levels:

Building an Open Culture

  • The revealing of mistakes, unforeseen problems and dropped balls takes courage.  It has one and only one upside: learning potential. If you want to maximize that potential you must build a culture that supports it.  People fundamentally want to be honest but although in the wrong environment their self-protective instincts will quickly override.  An error-sharing culture may take seed by itself but it must be fed and nourished continually from the top in order to multiply.  
  • If you already have that culture in your organization, remember that it will face doubters in an acquisition target.  You must vocalize the policy and its importance frequently to your new employees.  More importantly, you must spotlight examples that model the behavior whenever they occur. 
  • If the target brings to you an environment of openness and error sharing that you do not already have, put it high on your list of things to back-build into your own company… or at least take concerted steps to see that any close-to-the-vest attitudes at home do not squash the constructive example coming in from outside.

Stopping the Dominoes

  • From the angle of a mistake as a learning opportunity, you should think of them as tools, as assets.  Like any tool, the more it sits on the bench or in the warehouse, the lower your return on it.  Put the tool to use.
  • This is particularly true for companies that are consolidating industries, say, through a roll-up or geographically diverse bolt-ons.  The problems or missteps experienced in one unit have a high likelihood of emerging in other units if you don’t empower your managers to share those errors and the lessons learned from them.  It may be that no distinct lesson has been learned other than to watch out; that alone is a useful observation.  If you don’t share operational miscues, you are setting yourself up like dominoes to have the problem befall you again and again and again down the line.

Do I need to add here that the integration team should also be learning from its mistakes?  This is particularly true for companies where the acquisition activity is not constant or where the integration team may be run by a different leader the next time.  All kinds of studies show that the companies that learn from both the ups and the downs of their previous acquisitions and codify that learning in a written Integration Handbook are more successful at making deals work.