Making the soft stuff hard

Posted: April 7, 2013 by Ian Gee in Change, Human Resources, Leadership, M&A, OD

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By Ian Gee:

For the past few weeks I have been wondering how as an OD practitioner I can help make the soft stuff hard? No, this is not my changing career and starting to peddle a snake oil cure for male impotency problems! What I have been mulling over, is how to help managers and leaders make use of the kind of data we, as HR and OD professionals, seek out, understand and know makes the difference between good and bad decisions?

I have decided to explore this by looking at the world of M&A’s, though I think the issues around ‘soft data’ are present in much of our work. About a month or so ago I spoke at an M&A conference about the challenges of using Western OD processes to integrate businesses in the emerging markets. The person who spoke before me shared data on why so many M&A‘s fail to add value to the business and in many, many cases destroys value. This reminded me of a similar M&A session I attended ten years ago when I worked in the OD team at Shell International. I checked my notes from the earlier session and was disheartened to find that the reasons for failure are by and large the same. Not a lot has change in ten years. Lets have a look at what’s at the top of the list:

  1. Incompatible cultures
  2. Inability to manage the target
  3. Unable to implement change
  4. Clash of management styles/egos

To my mind, all these issues fall within the remit of our trade and tend to be seen as the ‘soft stuff’. Here we have a good example of where the consequences of not taking account of soft data end up being hard on the business and on the shareholder we know this is the case and yet very little has happened to make a difference.

As the presentation progressed, there were a lot of head nods and sighs of recognition from the senior HR folks present. I asked a few questions and the overriding response from those present was that it is almost impossible to get CEO’s and other C suite executives to take these issues seriously as they are seen as too soft and fluffy. I felt sorry for the HR folks, who had that tired look you see in people who know they can make a difference, but feel like they are banging their heads against a brick wall.

To explore this further and from new angels I have been having some really stimulating conversations with Tara Swart, (formerly a psychiatrist and neuro scientist and now a leadership coach) and Ruth Stenholtz (formerly a legal general counsel and now a business ethics consultant and executive coach). We have been looking at the issue from a psychological, neuro scientific and business perspective. Here is my initial take; in an M&A situation leaders and managers revert to an almost Neanderthal stance. It’s all about the hunt and the kill. Something goes on in their brains that stops them from taking account of the subtle signals and makes them scoff at any data they don’t consider hard and factual. They want to be seen as winners, bringing home the saber tooth tiger so everyone around can look on in awe!

Tara, Ruth and I taking this work forward to see if we can put something together to help folks like us make the soft stuff hard. Our initial focus is on the M&A space. Our aim is to find a way to help companies not lose value through M&A activities but make them truly transformational to the organisation. Our work is in its early stages but if you want to find out more then let me know.

M&A’s are just one area where we struggle to give true voice to the soft stuff. It would be great to hear from you about how you have been able to convince executives that even if the data is not hard and factual, it is still valid and can have a positive impact on critical business issues that drive top and bottom line results, and therefore warrants their time, focus. Lets get the discussion started!

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Comments
  1. Asif says:

    Right on Ian. Of course it is always the soft stuff (not the one you mentioned on the second line). It gets down to what you can measure and what you can’t. If it gets measured, it gets counted. Business leaders make decisions (M&A or otherwise) on what can be counted. This is where my brothers and sisters in HR has a great opportunity to make the important stuff “count.” I hate to sound negative but my HR friends are too busy justifying their existence instead. We, the HR, want to have a “chair on the table” but don’t even have the clue what to bring to this table. What I’ve experienced and observed, more resourceful the HR is, the more impact it has making itself count, the soft stuff. But unfortunately, most HR need some of their “stuff” hardened themselves (pun intended)!

  2. mrhibbert says:

    M&A is an interesting place to begin, given that a merger/acquisition is the single moment in the entire corporate life-cycle where intangibles (in this case, “goodwill”) can currently be admitted onto the books as a quantifiable asset, according to international accounting rules. Once there, we can book impairments to it, but not enhancements …(!).

    In the final analysis, if we’re to make the soft stuff hard I think we need to find a way to redress this gap in the decision frameworks we provide for organisations. We need to be able to audit a business and provide an estimate of its “intangible” value, internal and external. And we need to track and report on enhancements and impairments to that value, year on year. Defining a robust and comparable way to do that reliably across companies of all sizes, without exposing accounting rules to more balance sheet chicanery than they’re already exposed to, is 9/10ths of the battle. Research shows that shareholders and boards would jump at the chance.

    PS. I would urge you to go easy on the neuro-whatever. It has deep credibility issues that aren’t immediately obvious but can undermine your otherwise well-founded ‘hard facts’.

  3. Phil Carter says:

    Hi everyone, it’s Phil Carter here. I’ve led over 30 deals in Shell International and agree with Ian that there are certain human factors which if not carefully managed can lead to the deal not working as intended. To overcome this in Shell we did a number of things – 1. We had a dedicated HR professional on each deal. 2. This dedicated HR professional was engaged from the very beginning of the project and at all levels i.e. with the sponsor/s and the counterparty/ies and was in the core project team along with Finance and Legal professionals 3. This HR professional developed “best practice” processes and templates and took them from deal to deal, developing and honing them.

    The overall key learning is that it is an absolute MUST to have a dedicated HR professional on the project in the beginning and all the way through the project until completion. Even post-completion, we would continue to monitor the company and the HR professional would be engaged in this. This HR professional has the role to manage ALL the HR, communication and change management processes within the sponsor and target companies. They would often have a sub-team of HR people on terms and coinditions, pensions, communications etc to lead.

    I hope this is helpful!

    • Timo Ropponen says:

      Hi Phil, thanks for sharing your experience. The idea of having the dedicated HR professional participating from the very beginning of the M&A project sounds simple, even trivial. However, this simple, yet impactful idea is so often ignored, and the costs can be huge afterwards, as Matt Nixon states below. Maybe your best practice process conveys the wisdom to a new eager M&A project manager. At best, it may help in avoiding the costly mistakes that are looming in disguise.

  4. Nice blog Ian – stimulating and on-the-button as usual!

    Esther from Integral Change here – working as a change consultant for many years now….

    I know it’s a bit obvious, but maybe it’s worth saying that in my experience M&A work is hugely challenging, and systemically extremely tricky to pull off – like the most complex marriage/partnership (!) – so no wonder it’s often done badly. But as you say, you’d think we would be improving over the years!

    I’d love to hear more about your M&A explorations with Tara and Ruth as you progress – as I think you maybe onto something there. Maybe we all enter partnerships with the same skewed sense of the possibilities versus the difficulty…i.e. that “ambition is blind’ in the same way that “love is blind”!

    From my own perspective, I feel interested in two areas…

    The first, is how – as internal or external consultants – we support leaders well by gathering and presenting ‘soft’ data in a way that really engages them and allows them to wrestle with the comms and intervention choices ahead. This is an area that we’ve been exploring recently, with some success (we think!) – mapping interview findings onto a more structured template, collecting and coding stories, and looking at ways of automating/scaling this data collection up.

    The second is how to help senior managers – particularly those at the sharp end of M&A work – to learn/integrate ‘softer’ skills in a way that compliments their fiercer, ‘harder’, cut-through skills that they often demonstrate so impressively – and encouraging them to match behaviour to intent (a simple push-pull model of influencing can help). A recent blogpost of mine says a bit more about a specific case of this which might resonate for some…http://integralchange.co.uk/integral-change-blog/2013/01/10/fear-of-fluffiness/

    Hope that adds to the discussion in a useful way…

  5. Matt Nixon says:

    The list looks rather familiar… I suspect it was Towers Perrin data someone was quoting! Truth be told we rarely got many people to accept they needed the focused consulting help the list implied. Where one can do the work, I am pretty sure you get better results, though you cannot ever quite prove it. But the counter examples are everywhere. BP are still paying the price for not taking care of proper integration of Amoco and Arco. We still deal with issues at Barclays related to the Lehman takeover in 2008 and what one colleague calls PTSD for those whose wealth and status were wiped out overnight (compare Enron, Arthur Andersen, Worldcom…..lots of shame and regret too). I think where endings are not allowed/celebrated (Bridges) you leave people feeling with very conflicted feelings about “failed” organisations they once proudly joined. They never get to process their thoughts and feelings. And acquirers miss out on really knowing what is treasure and what is baggage about the acquired organisation’s past. The enemies are haste and hubris. Haste, because it seems there isn’t time to do this integration work properly. Hubris, because we won, right? Both are mistakes, IMHO. And you pay years later…sometimes with money, sometimes with people’s health or even lives. So this is not trivial stuff.

  6. Great article, and my view based on experience and observation is that there are 2 factors for gaining traction with organizational leaders and senior management on the “soft stuff”, namely personal exposure and hard financials:

    (1) Focus their minds on failure – the high likelihood of it – and I would seek to find ways of “grinding out” the personal impacts that failure will have on them – what it will cost them personally how and where they will have personal exposures if/when the initiative fails. In my experience, nothing focuses UK corporate senior management like the fear of a personal exposure! The bigger the exposure the more engagement/action you are likely to see!

    (2) Show them how what they perceive to be “soft”/fuzzy people issues are directly and inextricably interlinked with hard financials – their hard financials – thus their personal engagement with the people side (the so-called “soft stuff”) in integral to the successful benefit realization of the overall change process and is thus essential to their personal interests.

    As a resource, I particularly recommend that you look at (UK based) Peter Duschinsky’s work which is over-viewed here on my one of my websites http://www.strategies-for-managing-change.com/change-equation.html and which links to Peter’s site and related resources.

    Peter has pioneered some services and tools that directly address this and expose senior execs to the likely/inevitable fallout of a failed initiative and he gives an assessment of the likelihood of this happening. (I should just add that I have no commercial relationship with Peter.)

    • Natalia Bogoyavlenskaya says:

      Thanks for opening such a wonderful discussion Ian!

      I would define our problem here as Lost in Translation. Do we speak Business? Or do we rather expect business managers to speak HR? Well, at the times of peace and prosperity it’s an honourable effort to develop managers ability to ‘speak HR’, but admit it, it will remain a foreign language for the absolute majority of them. Now, what language do we speak in a life threatening situations when, yes, we may reduce our communication and behaviour to the very Neanderthaler’s basics? It’s our native language, when not essentially reduced version of it. If we want to be heard in the critical situations of decision making we’d better master that very language. How? That exactly becomes the real challenge, real development opportunity for OD and HR in general.

      There is an additional aspect that contributes to our being/not being listened to. It is true that OD/HR are often called in rather late when crucial decisions have been made already. But why is that? Isn’t it because largely speaking we have not been proving ourselves valuable in business decision making? Thus, it’s not only language skills that we are lacking but also the guts to use it at the business table. Would be happy to look into the ways addressing these using any science that would offer insights 🙂

  7. Arun Kaimal says:

    Great thoughts and worth introspection / reflection .

    Having much less experience , what i have kind of realised is that for an M&A ( or for that matter any other venture ) to be successful it is important that we invest significantly large amount of time and energy in getting the ‘Chemistry’ part right . By this i am referring to the soft aspects of human relationships ( trust , collaboration , feeling of unity of purpose etc ) .

    Once this is in place , we must only then focus our energy and efforts towards putting the ‘Physics’ part i.e. the processes , structures and other enablers in place to make the business work .

    A lot of times we begin with the physics in place and may or may not focus on the Chemistry ..

    This is a sure formula for a chemical reaction that may not be in the best interest of all stakeholders involved in the enterprise.

  8. Xavier Delhaise says:

    I have read your blog, and have little to comment on it as I have not worked on M&A cases. My only comment is that the acquirer will tend to impose its views on the target. After all, if there was a rationale for buying the target, it has to be implemented, right? Not necessarily. A case springs to mind where it did not happen like that, and where the target got its culture, its market focus and most of its management team in control of the acquirer, when Boeing bought McDonnell Douglas in 1997. The more military-focused McDonnell redefined the focus of Boeing, and some say that this cost momentum to the aircraft manufacturer at a time when Airbus was betting the farm on the A-380. Fifteen years after it was in conception, the Dreamliner is not yet out of troubles, as you have probably noticed in the news.

  9. Timo Ropponen says:

    Hi Ian, great insights regarding OD practitioner’s role in M&A projects. I think that a wise and mature business executive doesn’t label things as hard or soft. They know by experience what is needed and what works. The bad news is that these executives are not around when needed or there are too few of them. More often there is a young lion (manager) in hunting mode (“hunt and kill”) eager to make a shortcut. The casualties follow with some delay.

    In the past, high mutual trust between the business owners made the execution of the M&A (and other) deals a quick process. It was agreed with a handshake. Nowadays, you need an army of lawyers and a truck full of printed documents. Could the OD practitioner nurture and increase trust within the M&A ?

  10. Martin Crook says:

    Ian,

    Great blog which cuts to the heart of the challenge of how we influence effectively in OD.

    You talk about the effect of managers reverting to an “almost Neanderthal stance”. I think that the dominant Western individualistic and determinist thinking almost inevitably creates a winner / loser dynamic in any M&A situation and that naturally manifests itself in the actions and behaviours of the leadership group. Once this starts to work itself down the organisation then any hope of collaboration, innovation and much desired synergies goes out of the window. What I have experienced is that HR and OD professionals aren’t immune to this and that some of the hardest individuals are working on the redundancy programmes and carving up the top jobs. Any OD person who gets on board has got to look out for this.

    I think the answer lies in fostering diversity, creating working practices that engender trust and relationship and using older leaders who have learned the lessons of M&A to mentor those who haven’t. There has to be a place for analysing the leadership process and noticing and reflecting on what is going in “soft” terms as well as cutting the deal and executing the labour intensive tasks of knitting two organisations together.

    Einstein’s much quoted definition of insanity is doing the same thing over and over again and expecting different results and I’m tired of hearing that 70 – 90 % of these initiatives fail. Can’t we learn?

    Martin Crook

  11. Lisa Trusty says:

    If HR professionals cannot provide the hard data (i.e. numbers), another possible way to get our messages across is through case examples and stories. It’s often more engaging than a PowerPoint anyway, and people take away the main messages without you having to preach at them. A mentor that I had when I was very early in my career did this often, and it was always quite effective. I’ve started to do this more and more in my own HR business partnering.

  12. Peter Leadbetter says:

    Interesting Blog Ian and you raise a number of resonating issues. I find myself smiling with reality of M&A challenges. Again, it might seem an obvious statement but coaching leaders in such situations and asking robust questions around what they seek to build and why, where they see the challenges and areas for acceleration and “call me old fashioned” ….what personal legacy as a key leader do they seek can lead to fertile debate and some stunningly simplistic views – and thus starts the work!

  13. Ken Kuzia says:

    Since much of the “soft stuff” is not included as topics in MBA programs, too many leaders feel it’s not necessary. Additionally, there are too many poor role models that create clones of themselves, and the clones believe they need to be “like the boss” in order to succeed — and the poor philosophy is regenerated. I believe that there are many approaches to skill assessments that will bring to light areas for development. However, getting people to buy into and commit to assessments is a topic in and of itself. Check out the article, “The Case for Leader Development” (downloadable PDF) at: http://www.upyourleadership.com/ReadingList/UYLArticlesonLeadership.aspx

  14. Iasn, generally the way I have ‘made the soft stuff hard’ is by using measurement through psychometric, diagnostic tools and surveys and subsequent feedback.

    It’s a conventional model of analysis and feedback but I have found it powerful particularly with senior executives who want ‘evidence’. I was a physicist before I became a psychologist so this approach comes fairly naturally to me, for better or worse.

    I have found this to be a good way of breaking down broad issues into manageable and understandable chunks and giving some idea of what’s important.

    I got into organisation development like this – I did my PhD on the impact of extremely demanding physical work and environmental ( heat) stress in the steel industry with the Medical Research Council and found I got better results by feeding back the phiological and psychometric data and letting the people interpret it themselves rather than just giving them a report. I sort of discovered this well kinown paradign for myself.

    However in the end people need to have the courage and will to work on the issues, and you need dialogue to understand what’s really happening.behind the numbers. All the hunter gatherer stuff iis recognisable!

  15. […] Once you’ve accepted the ‘complexity frame’, you need ways of thinking and seeing that are less categorical and more open, patterned and emergent.  There’s plenty in the literature that points to ‘story’ as being one of the best ‘units of analysis’ in a complex environment – precisely because stories offer a more multi-layered and open-ended expression of what is actually present.  Story capture and analysis sits at the core of ChangeWeaver – and is one possible response to former head of OD at Nokia, Ian Gee’s challenge to ‘Make the Soft Stuff Hard’. […]

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