How to connect and integrate after any acquisition is always a challenge. But when the acquisitions have been made across international boundaries, then this challenge multiplies. Connecting previously separate, geographically dispersed businesses, with different market environments, makes any attempt at building an integrated business that much harder.
Global organisations realise their integration ambitions beyond the ‘Hub & Spoke’ approach of managing them as separate entities, through various forms of management control, from loose co-operation to full-on centralisation. What management control option is best for you? In our experience, the answer is often a mix of more than one approach. The diagram below illustrates the more typical range of solutions.
The brief explanations below indicate our views on the pros and cons of each of these:
Collaboration – Bringing the mix of regional general managers together, to look for shared opportunities & threats, to trade on strengths and weaknesses and share experiences and best practice, starts to create some sort of common identity and enables some degree of learning. However, back in their respective businesses, their immediate local challenges take over. Without a shared and equally valued sense of purpose, being out of sight forces the global perspective and its expectations to become out of mind.
Distributed Centres of Excellence – Each region may be best-in-class in a particular aspect of the business. So a specific regional general manager can take the lead on a particular service. At best, they provide this service on behalf of or to the rest of the business. However, often the lead general manager still has the primary objective of delivering the profit targets for their region, and so, when the pressure is on, the decisions they make may not be in everyone’s local or collective interests.
Professional Lead – Establishing an expert in the centre gets over some of these previous challenges, as the professional has the purpose and focus to support all businesses. So best practice is spread and developed. However the risk is that the role can be seen as interference and a distraction from the local problems a general manager is experiencing. Lip service to global goals or standards can still be the order of the day.
Matrix Management – Providing some strategic decision authority at the centre, with operational decision authority remaining with the general managers is one way to balance power. The challenge here is for the centre to really understand the issues on the ground sufficiently to provide sensible but stretching targets and standards. Otherwise the daily operational issues will swamp any grandiose strategic ideas.
Centralise – Here the centre seeks greater control over delivering functional targets with the regional functional heads reporting directly into the centre. Get it right, and you will reap dividends such as more effective marketing programmes and aligned, professional sales forces. Get it wrong, and the customer experience at a local level can deteriorate, as the various centralised functions pursue their own goals and start to diverge from each other. And the loss of local identity can then trigger a loss of good people.
So where to strike the balance? Each business will discover different, blended solutions. In building your solution, remember to tackle both the hard and soft aspects of organisation at the same time:
- Ensure clarity of accountability and decision authority
- Align targets and objectives to a set of common goals
- Establish an executive team of central and regional managers who collectively build the strategy and plans to deliver against it
- Define the leadership capability that fits your business model
- Ensure that you have both capability and motivation in the executive team to operate a global business that requires the sharing of power and collaboration between peers
- Optimise diverse strengths and perspectives (see article by Martyn Sakol) and factor in cultural differences
- Use the right tools to appoint the right people for key roles (see article by Paolo Moscuzza)
- Recognise that you are on a journey and not necessarily creating a final solution (see article by Ann Gammie).
Work on these aspects, and you will increase your chances of realising those global benefits you have long been promising.