The Power of Empathy in M&A

I'm Kisam Patel and you're listening to M and A Science, where we talk with deal professionals and learn valuable lessons from their experience. This podcast focuses on stories, strategies and what actually happened during M and A deals today. I'm here with Mark Goldstein, an international best selling author, thought leader, seasoned executive, serial entrepreneur and corporate consultant. Some of Mark's most popular books include Just Listen, Talking to Crazy, and get out of youf Own Way. Mark's expertise in applying psychiatric principles to inform organization, growth, leadership and success make him uniquely qualified to discuss the growing need for empathy and change management in the M and A industry. How are you doing today, Mark?

I'm doing great. Glad to be with you, Kisung.

Yeah, maybe if you want to start off, just give me a quick little background about yourself and I can run right into some questions.

Well, my background is I was trained as a clinical psychiatrist and one of my specialties was intervening with suicidal people. For about 20 years, universities and other psychiatrists would refer people to me and I've been trying to figure out what the heck I did so that I can teach it to other people. It's come together and I'm actually a co creator and moderator of of a documentary that's won a couple awards already called Stay An Intimate Conversation about Suicide Prevention and that's available at Amazon Prime. And I interviewed the young man, he's not that young anymore, named Kevin Hines. He jumped off the Golden Gate Bridge and survived and he speaks around the world and he's been saving lives by doing that because when you save a life, it's everything else is a distant second. And I want to help more people do that.

Absolutely. And I think this correlates with your book. Just listen when you describe the importance of understanding and empathizing with your workforce in order to motivate them and increase productivity for successful outcomes. So I see that aligning really well in terms of how that would fit in an M and A context because there's a big transition that happens and I feel like a lot of that gets lost where it's really understanding the other party, aligning everybody around those changes.

Improve their culture and after a post, M and A, how to make it a success. And this is a very daunting exercise, but it is so revealing and I'll just share it. It's one of the many tools and techniques that we offer. This probably shouldn't happen immediately after the merger because people from the acquired company are all worried about am I going to be laid off? And et cetera, Et cetera, once the eventual company settles in and the layoffs have been made and the consolidations have been made, if you really want to motivate your workforce, here's the exercise. The CEO says to everybody, and this is especially true if a workforce has a lot of millennials, because a lot of millennials just jump from one company to another because there's a talent shortage. And what the CEO says the workforce is, I have a hypothetical for all of you. If you were out meeting with some of your friends and you were talking about your company, they're talking about their company and you ask them, so how's your company? And if they said, I won the lottery, you'd say, what? And if they told you how amazing their company is, you'd probably then ask them about your department in their company, the people who do the work that you do. And if that person were to say they've got it the best, there's a good chance that your people, if they didn't feel that way, would say to their friend, are you hiring? And so what the CEO says to the company, because a lot of the people, especially the millennials, will just track with that immediately could say, here's the deal. I want us to be a company where when people ask you about us, you say, I think I won the lottery. So going forward, and this is going to be anonymous and candid, don't finger point particular names, but going forward, I want to hear from all of you, what positive changes would we need to make and keep with them consistently? And what negative things do we need to eliminate immediately and permanently so that, that you too could say to the people you meet, I think I won the lottery. It's very daunting because if you can do it, you're going to get feedback about your company that makes Glassdoor look like a virgin.

That's an interesting point, because your company culture continues to evolve. And even for our company, we're always talking about some of these things in terms of ways to improve the work experience and so forth. As you go through a transition such as an acquisition, a lot of that gets lost. The focus is so much on keeping things intact and preserving things and just very task oriented versus having that thought around what the culture is like and that individual satisfaction for people's contribution to their work environment.

Well, you just triggered something else. So here's something that I've advised CEOs of mergers and acquisition. After the company's merge, I said, there's a lot of anxiety in the workforce, especially in the acquired company, and they need to hear something from you and it can't sound like generic bs. And often when I coach, I think you'll find this funny, I hope. Often when I coach CEOs, I'll say, how often do you use the word goals in meetings and presentations? And they say, all the time. And I say, and I say, and you anticipate it. I said, how often are the people you say them to, you know, salivating that they can't wait to sink their teeth into those goals? Oh, they can't wait to hit the ground running. And all these CEOs laugh. They say, what, are you kidding? As soon as I say it, you know, a quarter of them are on their, you know, they're checking their emails. And I said, that's because goals are fine if you're at the top, but if you want to get through to people, your people, you have to get into their thinking. And a lot of people don't really think about goals. They'll think when they have to sit down, and these are my numbers. But when you ask, if you ask a person suddenly, what are your goals? Most people, unless they're in a leadership position, are going to stammer. They're going to. Because that's not how they think. They just try and get stuff done. And what I've coached a number of CEOs to say is, with your people, never use the word goals again. You can use it maybe with your executive team, because not everybody has goals, but everybody has needs. So tell me how this sounds differently to you. Where it's a merged company, there's a lot of anxiety going on. And let's say I'm the CEO and let's say you're in the acquired company. And if I were to say, well, this is a great acquisition, there will be some changes. And these are our goals for the year. We see we're going to be able to cut costs and we'll work around that as best we can. We know that's an always awkward thing. And we see that because of our companies coming together, the quality of our products are really going to be great. Also, we have some ideas about how to, while pulling everyone together to make this really just one of our goals is to make this really a happy culture. Now, if you're from the acquired company, you're already thinking, God, this person is full of crap, right? Tell me how this lands. You're in the acquired company and they don't use goals. They say, we've come together, this merger is complete. And I need your help. And here's what we need. And I specifically need. At the end of the day, this company's got to make money. We have investors who don't even know that we're in their portfolio. And all they care about, even if they buy our products, is they want a return on their investments. And that's the nature of the business. At the end of the day, it's got to make money and it's going to make a lot of money so that we don't have layoffs, so that we don't have to tell you that you're not getting a bonus. And also we need money for product development so that we can stay innovative. Second thing we need is we need to create products and services that consistently exceed people's expectations. Because in a crowded marketplace, we can't just be better than, because everybody's better than. We've got to be different than in an excellent way. So we've got to find a way to trigger in investors and customers and clients the reaction that Apple used to do every time they came up with a new product. So that's the second thing is we've got to create amazing services and products that exceed people's expectations. The third thing that I need your help in is we can't do one and two unless you really want to be here and make it work. You know, if this merely feels like a job until you can come up with something better, and we know you're under pressure, it's not going to work. But that's going to be up to us to figure out how to do that. And everything we do is going to feed into those three things. But does that sound differently than the first CEO? It does.

It sounds like a much better approach to get alignment around what those big picture goals are across the company. And I think that's a key thing. And I often hear it from other podcast interviews I've done where it gets lost very often and easily because I.

Think, see, when you invite, when you reach out for help, and the point is it's honest. I mean, if you have so much hubris, you know, you're thinking, why don't anyone's help? Because I got a parachute. Even if it goes south, I'm going to leave with X millions of dollars when they brought me in, you know, so you've got to have a capacity for humility and really believing that. And one of the other things that works so well about, and you're not being pathetic, you're not saying, oh, I Need your help. You're just saying, as a matter of fact, you know, we, and I especially need your help. Make everything work, not just for the company, but for you and for me. And so when you invite people that way and bare your neck, you enable people to choose to be involved. Whereas when you try to hammer people with some pitch, it's like they feel they have to agree with you, but they're being pitched. It's really interesting. Kisan. Another thing that my company and I do, a lot of technology companies will approach us and say, we have a technology that works 100% of the time, but we can't get anyone to try it for free. In fact, we can't pay people to try it for a month, no obligation, and have them try it. And what I found with a lot of technology companies and a lot of left brain people and a lot of analytic people is they know how to be convincing, but they don't know how to be compelling. And so right out of the gate, they're convincing, convincing, convincing. And the problem with trying to convince people right out of the gate is you're taking away their ability to choose to say yes. Instead, you're pushing them, trying to convince them so they feel they have to say yes. And most people resent that. And so they lose a lot of deals, a lot of engagement because they're acting too convincing without being compelling. And compelling is a way of drawing people towards it. It's like pull marketing. Whereas convincing as push marketing.

Just listen. Begins with a very interesting analogy surrounding your experience as an FBI hostage negotiation trainer. You explained that hostage negotiators must be first class noticers and listeners. Then compare this as an effective business strategy. Can you elaborate on this comparison?

Yes. I had a mentor named Warren Bennis, and it's amazing how siloed people are because a lot of people who are in M and A have never heard of Warren Bennis. If you talk to anyone in leadership who has a passion about leadership, they'll say he was the inventor of it. He's in the top five leadership gurus. I mean, he died a few years ago. He mentored David Gergen from cnn. He mentored Howard Schultz from Starbucks. He's advised presidents. And it's fascinating because if I bring this up to an M and A audience, I'll say I never heard of the guy. And he's the one who told me the expression be a first class noticer. And what that means is that when you look, watch and see, you're an observer, you're not connected to what you're necessarily looking, watching and seeing. So you're passive. But if you're a first class noticer, you're really connected to it.

And I see fundamentally this would apply well when it comes to negotiations and ma Because a lot of times you're overcoming either a valuation gap or some kind of terms in general. Yeah. I'm kind of curious what your thoughts may be in applying a similar approach in those circumstances.

In any of those circumstances. And again, you have to get comfortable. You can't be snide, you got to be respectful. But if something makes sense and you're getting pushback, you're getting pushback because you're reminding them, at least unconsciously, of a bad decision they make that they don't want to repeat. So the more that you can surface that and get that out without really just trying to maneuver them, you know, the more inclined they are to trust you. If you get someone to open up and trust you, you better not take advantage of them, you know, because these are ways of getting the other person to be more candid and lower their guard. But if you get them to do that and then you take advantage of them, you don't deserve the sale.

In a previous conversation, we talked about strategies of engaging talent to complete an organization's two main goals of revenue growth and exceeding expectations. What are these strategies and what are their expected outcomes?

Well, we've covered some of the strategies. I think one of the strategies is to tell your talent to reach out to them and say that you need their help with at least two things. One is revenue growth, because if it goes the other way, then people are going to have to pay, not necessarily money, but they're going to have to pay with their jobs and job security. And also you don't want to disappoint your market. What's the saying? Disappoint someone and they'll tell 10 of their friends and please them and maybe they'll tell one. So it's a very fickle environment. And also top talent, when they realize they can go anywhere, they're very poachable. I think employee loyalty is a unicorn, so you need to do everything you can to ensure it, especially in top talent, that you don't want to leave. And a lot of times what will cause them to stay is they feel that they're being adequately compensated, that if they do check with any of their friends, what's happening, that those friends aren't getting paid substantially more than they are. It seems that given the job market, if you're technically skilled, it seems like most people are getting pretty well compensated. So I think people also, when they have an opportunity to learn and develop themselves and their expertise, especially in the company's dime, I think that's especially valuable rather than treating the employee as a function or appliance and you don't want to develop them. So the more they can feel I am learning things that I've never learned that are going to help me become more successful, that really increases gratitude in employees because they feel that they're making progress and it's relevant to their success.

Right. I think it makes a lot of sense for that whole post close strategy when you acquire a company to get that alignment.

Yeah, absolutely, yes.

How about some of the other techniques? I know you mentioned in just listening being vulnerable was a big part of that.

Well, I think being vulnerable is that when you say to someone I need your help again and you say it, it's what I call assertive humility or assertive vulnerability. When you bare your neck in a way that's self respecting as opposed to whining. People are really drawn to that. Here's another technique. Give credit to Marshall Goldsmith, who's the top executive coach in the world and actually I've refined it. So it's actually a great technique when you're trying to create collaboration between generations, between genders, between different ethnic races. And it goes like this. You meet someone from a different generation, culture, race or from a different department, you're in sales and they're in it and what you say to the person that you meet. So imagine I'm doing this with you, Kieson. We're about to sort of start working together and we don't know each other and we're clearly different. I mean we're different generationally. In fact, I could say this to you as kind of a baby boomer to you who's much younger. I'll try it out on you and tell me how it works. I would say, Kisan, you may have noticed that we're different ages. You may have even noticed that we're different backgrounds. Going forward, if we work together, we're going to be entering into a relationship. And I know there are things that people of my generation, my age and my background that we say and we and do and we fail to say and do intentionally or unintentionally tick you off. And one of the last things I would want to do is interact with you when you're around your people and do one of those things or fail to do One of the, you know, the respectful, polite things and put you in a position where you have to explain to your people who's the jerk you just spoke to. So going forward, what are things that I must always do and what are things that I must never do so that I don't put you in that awkward position? And so that just even between the two of us, as we work together, you don't have to leave and you start drinking. So do you follow me? It's a way of you can say, well, you know, nothing personal, but I've noticed people of your generation do this too much sometimes they have these old war stories and you just want them to just finish already. Now, Mark, I'm letting you tell war stories because I'm interviewing you and you're getting away with it. You know, if we were working together, I probably would have cut you off, you know, 15 minutes ago. But do you see how that might be helpful? And then whenever the person says that. So if you were to say to me, mark, if we were to work together, try not to be long winded, try to be really specific and concise, try not to educate me about anything, to be honest, I don't really care how or why what you're telling me works. I just want to know kind of the bottom line about how it fits into what we're trying to do. Now if I'm curious, I'll ask you, Mark, I'll say, that's pretty interesting, Mark, can you explain that? So I'm speaking as you, but Mark, I find it sometimes frustrating and distracting and sometimes exasperating when someone goes on and on about something and I have to cut them off and it's really irrelevant to what we're trying to do. So do you follow me? And so the more that you can focus on the future. But then if you say to me all those things and we get together and we're working together and I slip into being long winded and all the things you told me not to do, that's going to tick you off even more.

I feel like this ties well with when you talk about transactional versus transformational conversations.

Yeah, absolutely. So a transactional situation, I don't know if win win really works. I mean, you aspire to that. But when push comes to shove, transformational questions are ones in which you're sincerely curious as opposed to opportunistic. So a transformational question would be being curious. And that's when instead of just focusing on the bottom line, you might say to someone in a Complementary way. How the heck did you come up with that? What was your thinking? That's amazing.

I think it's really important, especially when you're working with new teams, new people, to have that type of approach and mindset to make the conversation more inviting.

Oh, yeah. And I'll tell you. And the more specific and curious you can be about something positive that they did and how they came about it, that's another way to build increasing loyalty in your talent. Oh, and here's, here's another insight, by the way. If you're a genius at something, because silos are so narrow now, and people live in psychological silos where. Where I'm competent is hardwired to where I'm confident is hardwired to where I feel in control, and you take me six degrees to the left or the right of where I feel competent, everything falls apart. And that's why a lot of people in silos will try to pull you into their thinking. Because six degrees to the left or right of their thinking, they go off a cliff.

Sounds like how MA works. It's all conducted through highly functional and technical silos.

Absolutely. And the point is. And they will resist being pulled into a different silo because they don't want to be drawn into something where they feel less competent, less confident, and less in control. So that's why it's especially important to do whatever you can to go in to their silo in the way they think. Which is why we go. We circle back to something that's very helpful that the other person will appreciate is how did you come up with that answer? How did you solve that problem? You know, what did you first notice? Because I'm not just fascinated by the solution you came up with. I'm really curious how you came up with it, because, boy, I'd love to come up with great solutions. And can you share with me? I mean, just how did that happen? They will love telling you that story because no one's curious about. So here's the takeaway. If you're highly specialized and you're talking across silos, the other silo only cares about the bottom line for them. Unless they're curious, unless they want to be educated, all they care about is what's immediately relevant to them. And you need to be sensitive to not trying to educate someone who couldn't care less.

What would you describe as the harm of the silos?

Well, the harm of the silos is I did a webinar with the Medina Institute of Leadership and Entrepreneurship in Saudi Arabia. So I did it with slides from my home desk here, and it was called Overcoming Resistance to Change in Others and yourself. And my whole hypothesis was resistance to change doesn't exist. What exists is non rational, non functional self preservation. Non rational, non functional self preservation. And it goes back to what we just spoke about is, is that you're talking to someone in a narrow technical or functional silo. Their self preservation is they want to stay in a silo where they feel competent. And so what you feel is resistance to you is their need to keep feeling competent in whatever they're doing so they can feel confident and in control. So instead of seeing them as resistant, if you go in there and you're complimentary and hopefully there's something they do that's worth complimenting, and you say, help me understand how you came up with that, that sincere curiosity will cause them to lower their guard. Why? Because they feel so appreciative and grateful that actually someone cared to find out when nobody else does.

So that's a goal of this podcast, was to bring a better understanding about empathy and really try to get the audience to be more conscious and focused about putting it in practice. As they go through large transitions, specifically with acquisitions of companies, there's a big magnitude of change order that happens with it. Are there any other tips or advice you would give Mark in terms of practicing empathy and really being able to reach with people, in terms of achieving goals and just having a good work environment where people are aligned and things can come together? Well.

Well, something you can say which is along the lines of what we talked about. When you're crossing cultures and generations, you could say to a person that you're working with across the lines. Again, I want to give credit to Marshall Goldsmith who said, focus on the future before someone has screwed it up. Because once someone screwed up something, people get defensive and critical. So what you can say to people is, going forward, I'd like our collaboration to not only run smoothly, but be something that both of us look forward to from your end. In your past experience, how should I be going forward so that you look forward to working with me? The last thing I would want is to become someone or be someone that you couldn't stand to see and you had to work together. And then, by the way, when they give you the answer, say, this is too important for me to ignore. So I'm going to repeat it back to you exactly as you said it to make sure I got it right. And see, when you do that and you repeat it back to them, that causes them to listen to you. Because when you say to someone what you said is too important for me to get it wrong. So I'm going to repeat it back to you. When you repeat it back to them, they're actually going to listen to you because you're talking to them about them and you're being complimentary. And then when they say yes, make a point to remember what they said.

That's exactly right. I think that's one of the bigger lessons I learned from your book is how to approach conversations on more of like a lateral or mutual approach. So it's a very inviting conversation versus talking at somebody. So I 100% agree.

And I think a capper to put on that is when you have that conversation because you can't have much confidence that it's not going to stray. What you say to them is, I'd like your help with something. I'd like to check in with you every month. You know, we'll have it as a lunch or dinner. And I just want to ask you, are we on track? We're working together collaboratively. There's not private stuff, you know, upsets and disappointments that are getting pushed under the carpet. Are there anything that either of us feel frustrated or disappointed about that we're not addressing? And with your permission, you know, I'd like us to do that every month. And I'll do my best to not be oversensitive when you tell me what it is I did or didn't do, you know, that kind of bothered you. And I hope you'll be the same when I bring up things like that. And let's just formalize that because, you know, we can't assume it's going to just stay on the rails.

Any other tips?

Wow, I'm getting tipped out here, man.

I have. I have one. I've been teaching my daughter. She's 8 years old, and I'm. One of the lessons I've learned from you is about the power thank you. I've been teaching her that because the sorry and thank you are such transactional words that alone don't really have any meaning to them. Maybe if you want to share a little bit about how the power thank you works.

Okay. So the power thank you is this. And I'm going to give you one Kiesun. It has three parts. The first thing is you thank someone for what they did. So I want to thank you for scheduling me to be on an interview. The second thing is you acknowledge the effort or sacrifice that it took. So I want to thank you for trusting your audience to me. Because you're always wanting to bring value to them. You're wanting to exceed their expectations. My guess is historically you've interviewed some people and afterwards you said to yourself, I can't publish this. It's unpublishable. I mean, I can't post it. There's no value. It was all ego. And I have to go back to the person and say, you know, either we redo it or I can't use it. Sorry, I don't take lightly that you reached out to me and you're entrusting your audience to me. The third thing you've wanted to keep on track in the interview and we've wandered a bit and you've given me a long leash and you've allowed me to do that. You didn't scold me and say, you know, can we cut to the chase, Mark? Can we go back to, you know, the questions we had prepared? And you had a wonderful way of guiding it so that you got most of your questions asked, but you allowed me to be free and tangential, which is how I am, you know, without making me feel like I was just too all over the place. I probably was too all over the place, but. But you didn't make me feel bad about it.

Thank you, Mark. That means a lot to me.

Well, it means a lot to me, so thank you.

That's a great example.

Here's something else for your 8 year old, although she might be if people listening in and they have young children and many people do this already, but if you're reading your young kids a bedtime story, before you read the story, you ask them, and they probably have to be a minimum about five years old, you ask them, what was the best thing that happened to you today and what was the most upsetting thing? And you don't. And no matter what they say, you just respond back to them like, the best thing, you say, wow, that was great. Did that excite you? Yes. And when they talk about the most upsetting thing, say, oh, how upset were you? And they talk about that, say, oh, did you, were you able to sort of get through your class? Or whatever? Did you get upset? Did it make you cry? And you don't give them advice unless they ask for it. And then you say, what's the thing you're most excited about and nervous about tomorrow? And they tell you whatever it is, and then you seal it with the story. And what you're teaching them is perspective, that good and bad things happen every day and we all get through it. But you're also giving them the sense of how just talking about it, sharing those things actually makes you feel close to another person. So I think that exercise helps teaching them how do you get close to people and how do you develop perspective?

Can we do that with adults?

I think you can. I think you can get along. You can try that with your husband or wife, but you probably have to do half a bottle of wine before that.

Mark, I really appreciate your time today. I know we covered a lot of grounds and this has been helpful and hopefully we give some unique perspectives to the listeners on empathy and how it could complain in some of the transactions we work on.

Well, I hope it's helpful.

If there's anybody, I'll make sure we add Mark's contact in our show notes. So if you need to reach him with some further insights and questions, he definitely has a good website with the list of his books and resources as well. I highly recommend checking out.

And if you're listening, as I mentioned, it seemed almost hours ago at the beginning of this thing. If any of you know of conferences that might be open to having someone come in and speak on how to break through to a suicidal mind, we're all in this together. If I could give that presentation and one person in the audience of thousands uses it and saves a person's life, it'll all be worth it.

Thank you for taking the time to explore the world of M and A with our podcast. Please subscribe for more content and conversations with industry leaders. If you like our podcast, please support us by leaving a five star review and sharing it. I enjoy hearing feedback and connecting with our listeners. You can reach me by my email. It's Kisan K I S o n@dealroom. M&A Science is sponsored by Deal Room, a project management solution for mergers and acquisitions. Additional educational content is available on Deal Room's blog@dealroom.net blog. Thank you again for listening to M and A Science. See you next time.