Virtual Summit Recap: Post Merger Innovation - Don't Just Integrate, Innovate

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Julia with Deal Room on our Client Success team. Here to introduce our next session which is Post Merger Integration. Don't Just integrate, Innovate. First speakers for this session we have our own Kisan, CEO and Founder of Deal Room. And we have Toby Tester, Senior Consultant and Project Manager at btd.

Thank you very much Julia. I appreciate that introduction. I have a pleasure of being here with Toby Tester, Senior Consultant and project manager at BTD. Toby has nearly 20 years of experience delivering strategic, financial and operational value from dozens of M and A deals. Just having several conversations with Toby. We've done interviews in the past. Our original sort of tied together was while I was actually writing this book, gathering ideas about different ways to look at the M and A process, how some concepts from Agile would apply to M and A. Really having some great conversations to flesh out some of the concepts I was working on with Toby. He was actually kind enough to write the forwards for my book. So he's been a big advocate and promoter supporter of the initiatives that we've been working on here to improve the M and A approach. Toby, would you like to kick off with a brief discussion on what we're going to talk about today?

Thanks for the introduction there Kieson. Post Merger Innovation we'll go into the slides. By the way guys, there's not that many slides. I had about 30. And then Kirsten said, no, no, no, no, you're not going to go through 30 slides. So he was pretty ruthless and he said, chop them all out. So he's got me down to about 10 or something. But yeah, post merger innovation, sure that a lot of people who are listening in, who are watching this now, have felt that more could be done. That you do the work, you go through the deal process and that sort of thing, then you go through the closing, then go through the integration process and you think to yourself, we did a lot of good things, but there's more that you could have done. We didn't take the opportunity to go that extra step. And I call it innovation. It's basically finding out new ways of doing things that you could do to transform the organization. This is the big thing about M and A. It is the most dramatic thing that can happen in an organization. There's nothing bigger than a corporate event wise. And so it's an incredible window of opportunity to do things. And so I think that you should exploit that opportunity to not only integrate but also innovate.

I like it. I think it's a great theme. So with that I'd love to hear about what are the current issues M and A practitioners face today.

I've been involved in this for about 20 years. When I first started going back in time, there was quite a traditional way of going about things and people will be familiar with this. I call it M and A as transaction. There's a definite approach to the way you do this sort of work. In other words, you do the deal, you negotiate, you close and you integrate an integration occurring sort of 60, 90, 100 days and that sort of thing. I call it transaction because it's got a very specific focus. In other words, you do the work, you get in there quick and you get out. When I look back 20 years ago, all the deals were very much about. I call it value capture. It's very short term focus almost exclusively on cost synergies. It's like cost synergies. We zero in like nothing else exists. Just zero in on those cost synergies and limited business model change. And that's the way when I started working on MA deals, that's how it was. But progressively over time, a lot of the deals I've worked and I'm sure a lot of people as well, and it is an increasing trend and that organizations are not doing this just to capture scale or to increase efficiencies or grow in their particular Industry, they're looking at M and A as a means for transforming, in other words, changing what they do. Now it's interesting, I was reading one report, I think it was Bain and they said, for example, in 2019, 60% of all large deals, what you call scope deals. In other words, they were about changing what they do and they were about revenue synergies. There's an increasing trend across the board for M and A to be more focused on scope, looking at M and A as a means for transforming what they do. That means changing their operating model, changing their business model. And that's just an increasing trend what it means. And again, it's a repeating theme that's come across. You have to change what you do, the way you approach this and that's the reason why, Kiso, we were talking about this last year when you wrote the book Agile M and A because it does capture that notion that the modus operandi, the way we go about it, needs to change to basically cater for M and A as a means for transforming what you do, not as a transaction. So there you go. That's a fairly long answer and that sort of thing.

Oh, I'm going to follow our slides here and balance that with my notes in front of me too. But that was a really good definition of what the challenges are and the very nature of our deals are prompting a reason to change and rethink things as we know it. Getting a little bit more into that, what do you see as the difference? I know we've brought it up a handful of times about agility in the M and A process and contrasting between traditional M and A and agile.

Before I literally approach this slide, let me just go back on the earlier slide. There was something I wanted to say and it's really just make that definition about transaction. This is really the key point. It's a bit of a mindset thing here. When you approach M and A, there needs to be a shift away from looking at M and A as transaction to looking at M and A as transformation. And that means that your focus is not on business continuity or all that that's important, but you should also be looking at opportunity playbook wise. Again, there is not a standard playbook to this sort of thing. I know that they're often seen as playbooks, but there isn't a standard playbook. That's something you come up with for that particular transaction. There's a long term growth focus. So in other words, what we need to do is always shift away from just looking at what you need to do in the short term towards something that's in the long term. When it comes to risk management, it's taking a lot more sort of opportunistic view towards risks instead of avoiding or minimizing risk. Recognize the fact you are taking risks, small irrevocable risks, but that's what you're doing. The other thing is that when it comes to value, value is often defined pre deal because often that's part of the process you do through due diligence evaluation. But often that value in actual fact is there to get the deal across the line. But there's a lot more value that could be realized and so significant pools of opportunity. And again, I've heard this is a repeating theme by the way. We tend to blinker ourselves and not see the other opportunities for value. There could be a whole range of things, but we tend to shut ourselves off a bit. And that's important that when you're looking at M and A and transport, you need to widen the aperture and have a much broader view of all the opportunities that are available. And then it comes to innovation, creating new ways of working motivation instead of being driven by time and tactics, having basically been driven more by purpose. Now I'm not talking about deal purpose, but I'll tell you what, having purpose is such an important thing. I remember the book by Simon Sinek always start with why? Always say why are you doing this deal? And that's such an important thing. And that whole way of thinking, having that mindset is what M and A as transformation is all about. A transactional approach to M and A will not deliver transformational results. So there has to be a mindset change to shift away from transaction to transformation.

Now we can talk about the difference.

It's interesting Kisan, because I've actually worked agile and I've used agile practices as part of an M and A deal. And I did it quite some time ago. It's about 13 years ago. When I did it, it was for a digital service business and it worked incredibly well, really good. But it doesn't work all the time because as I've done on deals after that there's a need to have more of a dualistic approach. There's a sort of a traditional view, in other words, that's usually the waterfall approach and then there's the agile. Often the best approach I find, especially if you want to introduce agile, is to take more of a hybrid approach. It's a kind of a best of breed, traditional, often scale deals, that is that's the deals you're geared towards cost efficiencies, that sort of thing. You would actually use those tried and tested practices because they work. I'm talking for examples here. So if you're integrating back office systems, integrating assets, looking at functional integration, the traditional approach works well because it's deterministic, where you have a high degree of determinism, you know what you're doing, you've done it before, it's a process you've been through, then a traditional approach works well. The thing is, if you're looking at capturing revenue synergies, then there's a certain degree of uncertainty and ambiguity. It's not clear cut. Revenue synergies is a good deal harder. And there's a different approach that you take and that's where I'd recommend you take that agile approach in the way you work when it comes to those revenue synergies. For example, if you're looking at doing some product changes, you're looking at how you might improve your customer engagement, looking at how you can tweak your profit model. All of these things work together in terms of delivering sort of revenue synergies. But that begs a different approach to the traditional. And that's where agile would come into it. You can do the both take a best of breed approach.

Let's talk about the team structures.

This has been spoken before. I tell you something, I was listening to some of the previous presentations. I think everybody's hit on the same one, haven't they?

To a degree. But this is new thinking for a lot of companies. You know that hey, we should have took a poll. How many people are actually approaching integration without a pure functional way of structuring their approach? I know where it's primarily cross functional teams focused on specific value drivers.

The funny thing is that a good deal of deals I've worked on take the functional approach. We've seen it before. You have a post merger integration team and it goes along the traditional sort of functional line. So you have an HR team, you have a marketing, you have sales, you've got product, you've got technology, you've got legal and it works on those sort of functional divisions. That's almost the default mode. The challenge with that is it is silo wise and this is, I think part of the problem is that M and A by its very nature is actually cross functional. The way value gets delivered is cross functional. The way revenues work, revenue synergies is cross functional. We're taking a vertical view of an organization but naturally what we're Delivering is actually cross functional, it's actually horizontal. It makes sense to change your team structure and to align your team according to what are the key drivers. Now every MA deal you're going through, they're part of the whole integration strategy. There'll be just a few major drivers. One might be around cost, perhaps reducing cost, maybe it's back office or whatever. Another one would be around product perhaps, or the customer experience. But the thing is that whatever those key drivers are, you arrange your team's across accordingly to those drivers. Here's the thing, this is where I come back to the agile thing before is that you may say, look, the modus operandi for a couple of those teams may be the traditional approach because that makes sense. Because what you're delivering is perhaps cost, the work is deterministic, it's clear you've done it before and there's reduced ambiguity. The less risky approach is to take your traditional path. But for one team perhaps, or maybe two, you may take the agile path. For those revenue synergies that are with a certain degree of ambiguity, there's a certain amount of discovery, a certain amount of experimentation, but also there's a degree of complexity here as well because revenue, it works differently. If you want to be able to track, manage and deliver revenue synergies, it is a different way. And so it lends itself well to the Agile approach. And that's cross functional team approach is a good way of working. And what you can do of course is have one of those teams actually have the way they produce their deliverables, where they manage their work. They can indeed use the agile processes that I'm sure many people will be familiar with.

You know, people are stuck on their ways. I'm curious on your thoughts about how you would actually get a company that follows a traditional, very functional driven approach to their team structure to look, experiment or shift in this direction.

It's a hard one, this one. It's interesting. Let me tell you a story here because I had great success using the Agile approach on one particular organization and it worked fabulously. And then I went to work with another organization, similar acquisition. We were integrating and I wanted to introduce the Agile approach. I said, look, no, no, no, no, we're not there, this is not for us. We have a particular approach, this is the way we do things, this is the way we're structured. And pretty much the answer was no. And so you need to be careful here that if you're going to take the Agile path, it needs to have endorsement, it needs to have support from the senior executives. It's something that certainly needs a lot of leadership but also coaching as well. So you do need to have that strong level of coaching to staff and the executives to help promote this way of working. But often it's a case of actually taking just a few steps, just doing a few things. We're not talking about the whole thing about burn down charts, sprints and scrums. You can just take little steps, some that are acceptable, that people are ready to follow and make it fun by the way and I'll get onto fun later on because I think having fun in this is such an important thing. Take those small steps but it's often like a case, like give it a go and what I'm saying here and this diagram really shows that you can actually say let's arrange some teams here. We'll do the work. The major bulk of the work. We can follow the traditional path, follow your tried and tested practices but we're going to create a little team over here and that's our team who are going to capture those additional opportunities that perhaps this deal has this full potential that it has to offer. Let's see how this team works and try it out and see it because there's nothing like doing it.

Basically augment your existing approach with a cross functional team. Test it out. If it looks like it's turning disastrous, disband it, go back to the way things were. Otherwise maybe you see some success.

One thing I wouldn't recommend you do it all at once and go fully agile. That'd be a recipe for disaster.

Right? Right. As you see some success then you can continue to tack on and sort of build more cross functional.

Absolutely. Try it out. It's like a lot of things you got to do it and there's nothing complex about agile. In a way culturally it can be a little bit challenging but I think in many ways people fall into it quite well.

Tell me about this book and why is my name on it?

Have I seen this book before? Game plans and plays. You know Kisan, we were working on this one together last year reviewing the book and it was great to write the forward.

Yeah, I think right about this time too, just when it started we were in the editing phase.

That's right, that's right.

I needed somebody to write the forwards and pulled your name out of a hat.

It's timely. I think that we are talking about agile because it is important I think in M and A particularly as I said earlier on before that we are using M and A as a means for transforming, as a means of innovating. We are in a time where this pandemic is going to be the great catalyst for change. We know that there's going to be a heck of a lot of change. Business models have been weakened by this whole pandemic. Balance sheets need to be cleaned up. If organizations are looking to fix themselves up, get themselves back onto the growth path, well, the shortcut to growth always is M and A as opposed to the organic approach. If you're going to use M and A, well then we need to go about it a bit more intelligently. The good thing about Agile is that it creates the environment through which innovation can occur because it's much wider in the way you think about the work that you need to do. And it embraces a way of working, a way of thinking and a way of doing whereby you are thinking about what can we do, what are the opportunities that we can be exploiting here and, and give them a go. The big benefit of course of Agile is that because it works on these short term cycles and this notion of experimentation or the sort of build, measure, learn type approach, you can quickly iteratively go through looking for what those value opportunities are and actually see if you can deliver upon them. And it works well with revenue. And that's the big thing. Agile and the revenue synergies goes well together. Now the two big things in the book I liked was game plans and plays. Those are two interesting sort of features and I can go into that.

So you had some criticism for me too. I'm open to it. I like taking the shots, use it as sort of a means to improve.

Remind me what criticism? Because I did make a few. So give me.

I left out leadership and a lot of change management stuff and.

Yeah, yeah you did. And I think that the issue is. So if I was to do a critique, I think he's on. I hope you can take this one.

Well, I'm fine. Not that anybody else would notice or care.

Let me put it this way. There's a holy trinity for M and a success. There's three things that you've got to get right. Number one, which is the most important one of all is about leadership. It is fundamentally a leadership thing. If you don't have the leadership, you haven't got anything. A failed deal, a failed merger is a failure in leadership. Okay, the book didn't talk about that. But it's important to do this because if you don't have the leadership, nothing else follows because leadership is all about mindset. It's about having those people, having those adopting certain behaviors that promote this agile way of working. The other big thing, of course, is teams and the way teams work. I'm sure a lot of people who are listening on this when they look at what was successful, what was the defining thing that made that particular transaction, integration, so successful. I bet you a lot of people will say it comes down to the teams. When I look at the things and other deals I work in, I think, oh my God, that was a successful M and A deal. And I'll put it down to the people, the teams, they just clicked. They work together so well. I think it comes down to that leadership and it comes down to teams leader, follower, and also followers are great leaders. And that's the other thing, is that leadership is not something that's contained within one individual right up there. Although having said that, and I've heard before, having a really good integration manager who embodies all this mindset of behavior is absolutely critical. Having said that, though, everybody are leaders in their own particular way and they can take that leadership view, which means adopting those sorts of behaviors that embrace this more agile way of working. So there you go, Holy trinity of success. I've done leadership, I've done team, and then we come to process. But you've got to have the leadership and the team and the process. And I think in respect to Keystone, I think the book was very good. He was very process focused.

I appreciate that. And I think Toby's absolutely right. Those are some areas that I didn't get into. We really focused more on the project management aspect. But the model is definitely expandable and that's what we're currently doing. We're open sourcing the whole thing. We're putting it online, freely accessible. Toby's writing some plays.

Yeah, absolutely.

Seems like we're almost up to a dozen different practitioners that want to contribute.

Yeah, this is the exciting thing and this is the good thing because I said this to you before, Keith, I was thinking of writing something like this and I said, darn it, he's doing it. Oh God. You know, I thought agile M and A, it was good. You wrote the book because someone had to. The great thing is it's a starting block. You can build upon this and create that movement. To say, here's something, here's some set of processes, here's a sort of way of going about it. The book goes very well in terms of the origins of agile, which is really important by the way, where it all came from. Because we talk about Agile, but for example, when we talk about Agile, it all comes back down to Harvard Business Review article that was written back in 1986. I think it was called the New Product Development Game. Maybe Agile has an earlier origins, but that for me was a defining article. It's an excellent building block from which we can go forward through and actually build more capability around using Agile in M and a next slide. Game plans and plays.

Walk me through this and how they work together.

Two big concepts, not complicated. And I know this has been touched on before. Game plans. What we got to do is we've got to move away from the standardized, scripted sort of playbook approach, because I think playbooks are inherently, they're good in running. If you knew if every transaction was going to be the same and everything works the same way, then having a standardized playbook is good. But what we all know is that every transaction, that's probably the reason why we do this. Every transaction is unique. It's different. Different challenges, different people, culture, ways of doing things. And so the standardized sort of playbook approach really starts to break down. It's important then to have an alternative approach that actually replaces the playbook. The game plan is that alternative. And a game plan, you don't have one playbook, for example, like a playbook might cover the entire deal cycle, but you can have a number of game plans. It's very much determined by the transaction itself. You can see on that diagram, I got four, may not be four, maybe it's two or three. The deal will determine that. But what the game plan is is a collection of plays. So you go from the bottom up from having done a number of plays. You then go ahead and produce the game plan which effectively has the plan in it and the approach in terms of where you're going to execute that game plan. The interesting. And this way is different. A game plan, by virtue of the fact you didn't play this before, game plan becomes an implicit way of working. In other words, it's in the people's minds as to why they're going to approach the work and do that. It doesn't need to be spe out in detail, much like a playbook does, like a cookbook, do this, do this. It's not quite like that. For example, a great game plan will be up on the wall and it could be just something that's drawn up on a big wall and say, here's our game plan. It's something that's a living, breathing way of working, which shows you the plans. It shows you the sprints perhaps you're going to be doing. It shows you the retrospectives that you might be doing as part of that game plan. But it's something that's living, it's dynamic, it's up on the wall, it engages people better than, say, the more traditional playbook approach.

If we want to get a little deeper here and break down the actual mechanics of what an individual play looks like. Can you walk me through that, Toby?

I think with a play, I do like plays and they're interesting. Perhaps if I can explain to people what a play really is. A play really is like a structured conversation. It's a way of making observations, pulling together ideas and coming up with plans for delivering value. You can almost think of it like a workshop, but it doesn't have to be a workshop. It could be just like a five minute get together. It could be a 30 minute get together. It could be a full day exercise. It's essentially an exercise where you people come together and they're there to achieve a particular purpose. A play can be something that can follow a familiar and repeatable script. In other words, what's the purpose of this play? When do you use it? How many people get involved? If you're going to run this play, how much time do you need to prepare for the play? What's the degree of difficulty? Some are easy, some are hard. And then there's a process, steps in terms of what are the steps that you go through if you're going to run this particular play and then what's the output? And at the heart of every play there's a tool or a technique. One of the things in M and A is that there are multitude of tools and techniques you can apply. The challenge is knowing when to use it and how you use it. And that's what the play does. It really encapsulates a tool or technique and gets people involved in it and say, ah, okay, so this is how we go about. These are the steps. It's funny, keystone. I know you've got a lot of templates. This is much more than a template. You're actually saying, here's a script, but here's a tool and this is how you do it. So it's a much more comprehensive way of following a particular process.

Now, couldn't the templates fall within the script?

Yes, you can use the template. So you can have a template inside it. It could be a tool.

Got it.

The whole idea of the play is how do people come together, go through and whatever the challenge they're trying to overcome or what exercise they want to do. And I'll come into examples that will all become clear, and then you go through those steps and then there'll be maybe a template inside it or a tool.

Dig into some of these examples and see what it actually looks like.

This is it now. I thought I'd come up with the easiest one of all, and I don't think anybody hasn't done a swot. It's the most popular thing out there. The idea here is, if you can just imagine it, you may say, let's go ahead and do strengths, weaknesses, opportunities and threats. Fantastic. Well, wouldn't it be great if, say, for example, you had a play around that to say, here's a swot? Who should I invite? How long do I need to prepare for it? How difficult is it? What are the steps you've got to go through to make sure that you're doing this properly? And what's the purpose of doing this? What. So going through all of that, and the idea is to have a play that's scripted in a way that shows you in a systematic and disciplined way how you might run something like a swot, instead of just drawing something up and, you know, getting a bunch of people in the room actually going through a very deliberate, focused, structured way of doing a swot. And that's the easiest one of all, by the way. There are plenty of plays, and I know that in the book Agile M and A, you've got some plays listed. So this is an example of a very simple play that you could do. A lot of people will want to do this to help get some innovation insights. In other words, you may have a particular innovation objective you want to achieve out of this. It will be driven by a particular purpose. It's one of those first things you might want to do to help develop some insights, create some ideas that then would lead into potentially another play. I hope people follow this, is that we're talking much more than templates here. What we're talking about is lots of little plays that in aggregate come up with an overall game plan and what the idea is. As you do each play, it creates an additional level of insight. It gets you those aha moments. Ah, we need to be doing this or we need to be doing that. And that helps develop the plans. It helps understand where your risks are, where your opportunities are. And these are collaborative team exercises. You're always doing this with the team. Here we go. Here's another one. Develop the operating model. I Always try and do an operating model. It's always important to understand where you're currently at. In other words, what is the operating model, how you're currently working, and then perhaps at the end, what's your target operating model? So when you have the integrated businesses together, what does that target operating model actually look like? This is something that I encourage people to do. It's important, it creates an extra level of insight into what you want to achieve. And I should say that an operating model is a lot more than say an organization chart. It brings together a lot of things. Again, if you take the operating model approach. And here by the way, is the, it's called the operating model canvas. Don't we all love canvases? Eh? The great thing about canvas is it's all done with post it notes, the whole idea. It's highly interactive. You can put all this up on a wall, one big wall, and start mapping it. You might have tickle focus. Say, for example, you just want to look at the value chain and that's a key one. For example, you want to map out the order to cash process. So map that out because that might be the area that you want to change. There might be a certain level of innovative change you want to go through, and that might be the area. Or it could be in procurement, it could be in the way your organization is structured. But it's important to understand that the organization and the way you structure your organization is there to support the value chain. It's important to have that. And then finally with the operating model, this is why I like the operating model. It comes back down to value propositions in terms of what are the value propositions you're delivering to the customer. Again, it follows a particular script. How many people you need to get involved, how much time you need to spend on it, what the degree of difficulty. This is a more difficult exercise. So definitely it's the sort of area that needs a certain element of coaching and strong facilitation. And there's a certain degree of preparation for this. This is something that for play you might want to repeat a few times perhaps, but it's an essential play. I encourage people to look at the operating model in terms of where we are now, what's the target operating model and where the potential gaps are. Because this is an excellent means of actually gathering additional insights, opportunities. Also risks, but also defines potentially what the plans, the output from this becomes the input to another player. Okay, now this one's another play. Again, these are all examples of plays. The title of this session is called Post Merger Innovation. I wanted to introduce other plays that really are geared very much towards creating those sorts of innovation insights. And so here I'm using a particular, based on a particular tool or a book that people might know called 10 types of innovation, which is a very popular book about innovation and how you might introduce innovative changes in your organization. Again, M and A is such an incredible opportunity to deliver innovative changes in the organization. It's not something that you do later on. I always encourage people to bring it forward because the opportunities are in those innovations, those revenue synergies, far more than potentially what the cost synergies are. This is another important play and it can be a precursor to more detailed innovative thinking about certain areas. So very simple, look at your key innovation areas and then start going through the process of looking at your profit model. For example, what your profit model is, describe it, your potential gaps or issues, and perhaps what it could look like in the future. And this process helps define your capabilities as well in terms of what are the things that you want to be really good at that distinguish you from your competitors for getting those sort of capability insights. This is a very good play. Again, it's another example. That's it. And uses something called the Innovation Canvas.

We look at details on when and where to use these plays. If you wouldn't mind taking us there now?

Yeah, now, Kirsten, we talked about this a while ago and this goes on extending beyond the book, which has some plays in it. I think for me, what this is, that there's essentially a play for every occasion. If you can think of it as a game plan, as being a collection of plays. That's what your MA deal is. It really is a collection of plays. And when you do a play, what you're really doing is you're saying, what are the transformational innovation hotspots that I really want to go for? In which case, whatever that deal is, what are the unique characteristics of the deal, you choose the certain plays that are going to work for that particular transaction. In other words, we need to get some more insights. We need to start some deeper thinking. And that's where these players come into it. The idea is that you take an a la carte approach. This is where it's so different to a playbook. A playbook. You just do this, you do this, you do this, you do this. What we're saying is. No, no, no, don't do that. Just choose the plays that you think are going to be relevant for your particular transaction that are important and Go ahead and run those. And so I'll give you some examples here. Strategic management. There are certain plays, for example, the acquisition rationale, there's a play around that. Competitive, complementary, mapping innovation, mapping opportunity, mapping strategic intent, defining your deal purpose. These are so important. That's a play again, because again, you're gathering people around to find out what that deal purpose is. Target business model. So important. There's another play around that. These are strategy management plays. Then you have transaction management plays. Again, there are standard ways of things. If you're going to go ahead and say, for example, kick off due diligence, that's a play you can go through, There's a script, there's certain things you can do around due diligence that sets it up and kick off the whole due diligence process. I've got people, leadership, culture, program management, deal value, which is so important here. And I think that perhaps we often don't delve into this hard enough. When we look into value and the opportunities that MA deal have to offer, we tend to rely exclusively on spreadsheets, which is a good way of doing it. But we don't go deeper and look into the operating model. Look at the value chain in terms of the deal levers and how they work together in terms of delivering real value. Again, a number of techniques, they're out there, they're known. What I'd love to be able to see, and I haven't done a lot of them, but I'd love to see it, is have plays around each one of these. And this is where I'm building upon the book. Kison is to say here's a bunch of plays you could do so around target operating model, Value chain mapping capability mapping, value lever mapping. These are all particular techniques. Again, it's a play team management teams are so important. And then there are a number of team plays you can do. And then I've got product and customer plays. Customer journey mapping, value proposition mapping, product road mapping, customer interviews. Each one of these is particularly important. I'll mention customer interview because that one actually triggers a thought in my mind. Is that so often in deals we talk to shareholders, we talk to staff, we tend to sometimes forget about the customers in terms of what a deal might have for customers. And they're actually the final arbiter of any kind of MA deal, they're the arbiter of success. So customer plays are really important. In other words, actually going out and interviewing, talking to customers about a potential deal that you might be making or using them as A sounding board before inking any kind of deal. These are important. Having customer interviews and actually having a play around that. So important. What I'm saying here. A la carte selection. There's a play for every occasion.

This will be the next conference. Just review plays, play sharing.

The thing is, and what I wanted to do here was to make this sort of deeply practical. We can talk at a high level about raw things we want to do. And what I was keen to do is make it quite specific to say there are some serious things you can actually do, practical steps you can take. If you're doing any kind of looking for additional insights, looking for a particular innovation in a certain area, there's a play for it.

Let's talk about all this stuff comes together and ties back to our topic of breeding innovation.

Indeed. This is it now. I talk about plays, but I just wanted to put an extra spin on this one. And it's a leadership thing again, and it's the one about facilitation. Plays are innovative ways of creating business breakthroughs. That's what they are. If you're looking to be more innovative in what you do, then plays are an excellent way of going about it. But there needs to be four, I call them advantage points or frames. It's a way of framing the work you do. If you're running this sort of thing, there's two broad approaches. You have the left brain approach, you have the right brain approach. We all understand that. In other words, we know that there's an art and a science to everything we do. Let me look at the right brain first. Theater and culture. Innovation is theater. The idea here is that when you approach this sort of work is that if you take this vantage point of thinking about what you're doing as being theatre, it has a way of breaking down the defenses. I think theatre is very important because when you're doing a deal and you're emerging to organizations, there's going to be a certain degree of cultural dissonance that you're going to have. In other words, people are concerned about their own jobs, their own future. You're not going to sometimes get that participation that you need from people. A good way to get over that is to take that more theatrical way of looking at what we do. It's funny, we call it a play. I call it a play. It's a script. And the people who are doing the work in the team are actors. They're the ones who actually are acting out these roles. Acting out in terms of what we could be doing differently as part of this particular deal. So it's like a bit of an improv thing as well. The idea is to make it fun and interesting that this is something about a show and we're getting this show on the road. And so it's capturing that notion of theatre. It has a way of breaking down defenses, ways of making it fun, engaging. People are meant to have a good time. It really is. If you approach plays in that sort of theatrical approach, you're going to get a good deal of engagement from that. It's fun, it's enjoyable. And the whole idea is to make it an engaging exercise where people can play their part. Now, if I get onto the culture side, what we're here for, and I think it plays, again, good for this, is to promote that innovation culture. And that means that what we're really here to say is that innovation is not something that occurs from the CEO or comes from senior executives. It doesn't come from the R and D lab, it doesn't come from external consultants, it comes from the individuals themselves. The incredible thing is, I'm sure a lot of people listen to this, will agree the best ideas always come from the coalface. Don't go to the senior executives. They have understand that some ideas. But you talk to the individuals whose job it is working at the coalface will have the ideas and the thoughts. What they need is they need the permission to come out and actually say, well, what about doing this? Or what about doing that? And that's about creating that sort of culture whereby people are invited, and that's what these plays are about, invited to actually come up and say, what about this? And how about do we do that? And be given that kind of permission to actually come up with those ideas and. And make sure they're being listened and heard and that those ideas are being captured. And that's that sort of more cultural aspect. So you can see there's that right brain thing if I go onto the left brain side. And this is the important thing about plays. Plays are systems thinking. In other words, the idea here is to always get down to the nuts and bolts of what you're doing and actually making those system connections. And that is always looking at value breaking down value down to the individual levers or the drivers of value, and to see the way they connect together. For example, revenue synergies actually can be quite complicated, understanding what are the levers that you need to be pressing on to actually deliver that value. And that's where systems thinking comes in. So it's a different mode of thought and a way of facilitation and engaging to help break down everything down to its essential nuts and bolts. And the final thing is science. Science. I'll just break out here because one of the best books on innovation is by Eric Ries and the Lean Startup. But if anybody ever reads the Lean Startup, they know that really what it is. In actual fact, it's just all about the scientific method. It's that build, measure and learn. What we're doing here is we are exploring, we're experimenting, we're building, we're learning to encourage that sort of way of thinking, of being very logical in our approach and always measuring what we do. And that's what plays need to be. In actual fact, these plays could be occupying anywhere in the scientific method. They could be framing ideas, it could be around planning, it could be about measuring, or it could be learning effectively. It's following that scientific method. So operate plays from those four different vantage points to help get the maximum benefit from this. Wrapping up?

Yeah, we'll wrap it up. What are the takeaways for companies looking to make their M and A process more innovative?

Use M and A to transform, not transact. Focus on revenue. There's always the pools of opportunity are far greater. Don't look at the here and now. Those simple. Well, I'm not saying you don't look at them, of course you look at them, but don't look at them exclusively. Always look at M and A as transformation. That's the better way. It's a much more enlightened way about creating things. Use plays to innovate. Plays are an incredible way of actually engaging, getting participation and making something that's interactive, engaging and fun. Game plans, not playbooks. And this comes down to the whole agile concept that is that the playbooks are replaced by game plans which are more dynamic. It goes up on the wall, post it notes. It's not something you write in detail and they represent the collection of plays and the big, final, biggest one of all. It all begins and ends with leadership. Everything I've said, to be honest, one way or another is about leadership and having those mindset, the behaviors to help sort of encourage a new way of working, a different way of working on deals. Doing the post merger integration and calling that post merger innovation.

That was awesome. I don't have a lot of Q and A. I have one year about how integration budgets are determined for transformational M and A. That's almost a topic of its own.

Well, that's a big topic the funny thing is about budgets is that sometimes it's good to get a budget, right? We'll say oh by the way, you've got $10 million budget for the integration phase. Sometimes you don't even have one because there's actually what's even budget before, which is terrible.

I would put that out there. If anybody wants to cover this topic, I'm really interested in it for our live weekly podcast.

It's an interesting one. I think there's a couple of answers here. One is obviously there's a budget which you fix on what I call the traditional. So like where there's the functional integration, you really do need to do that. When it comes to the more the innovative work I was talking about and looking for gaining benefits from revenue, there's a certain self funding element in that. And so in a way you need to start getting the returns and reinvesting those returns into further innovation. So I think there's a mixture of a bit of both there.

Hey Toby, I appreciate the conversation. Thanks for helping us support this event.

I hope that what I've been saying has been interesting. Look, I'm passionate about this by the way guys. Anyone want to LinkedIn with me, talk to me about this further? These are a bunch of ideas I've discussed with Kisan before. I think there's a lot of opportunity here to develop the practice and to develop the notion of plays that you can use in any area where you want to delve into certain transformational innovation hotspots.

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