Our plan outline went something like this. After the lawyers had inked the contracts (and we had one of the M&A attorney’s on our team), our small band of 3-4 would go out to the acquired company’s headquarters and “introduce” them to the Intel way of doing things. This “introduction” (in many ways a gentle indoctrination), was far more than training them on the nuts and bolts of Intel’s internal systems, processes and structures—it was life changing.
Our work involved: building lasting trust-filled relationships, assuaging hard feelings, answering countless difficult questions, providing the basics of Intel’s internal systems, merging technologies, managing the hundreds of coordinated cross-functional operations. We had to do this while also inspiring them to see how all these changes were beneficial to them while often justifying the re-branding of their beloved products, company culture, services, LOGO and home grown successes they were very proud of.
The Problems To Be Solved
Intel’s meteoric global growth in the 1990’s was enormously successful, in part because, they created teams of professionals selected for their different abilities that, when combined, formed an amalgam of strengths that created leverage far beyond the sum total of their individual capabilities. These teams created an almost exponential business impact for decades. Little has changed in the last 20 years so this case is as applicable today as it was in the late 90’s when Intel was adding to its head count and bottom line daily.
I was most fortunate to be on one of those teams responsible for global mergers and acquisitions. I was an outside consultant lucky to be on the inside. It was our job to help acquired companies, make them feel welcome and accelerate their blending and onboarding into the Intel family—and to do it without them kicking and screaming too much. Our efforts did not always have the desired effect but when it did it was magic for everyone.
Mostly, our efforts centered on calming panic stricken employees and assuring the even more panicked managers that we needed them all to stay and help us lead the transition toward a successful outcome. Their transition away from their own business identity and toward becoming a part of Intel’s identity was always a hard sell. Many deeply resented being “eaten up” by yet another American tech giant. They feared the worse even though Intel treated them and their company with the greatest respect.
It’s easy to see why they were freakin-out—they had just lost their CEO to his new role inside Intel, lost their company name, company identity, company pride, lost their brand, pretty much lost everything…except the people themselves. And of course, people are the lifeblood of any company, especially, and ironically, in this tech-loving industry of ours.
So with threats of massive voluntary separations and what many assumed would be the equivalent of assimilation into the Borg Collective, we dropped in to present our best solutions and beg them to stay the course. We knew if we lost even 20% of the key stakeholders the acquisition would fail—and we would fail too. It was more than just keeping the people from leaving—our job was to engage them and get their willing and enthusiastic support. Simple right? Worse, if they all stayed and yet hated their new managers, company, systems and name, the whole thing might implode even faster.
We knew from sad experience that we had to get to each of them individually first with casual catered lunches, evening dinners with them and their loves ones, and a few casual interviews with selected stakeholders. We asked questions and we listened intently. We absorbed everything they said and would not say, we listened to their hearts and tried to understand with all our hearts. We then formed much of our strategy and content from their list of concerns.
We also know we had to capture their minds and intellect with compelling content, honest answers and intuitive accessible tools. We had to have something exciting enough but straightforward enough to help them see the value to their own lives and professions in the new surroundings called, da, da, da … Intel.
Here’s what we did.
Success Formula³
We knew that replacing and ramping up an individual contributor can cost up to 300% of their annual salary. Lose a seasoned top-performing manager and it can lead to exponential losses in people, clients and net profits. Calculate the financial loss of “brain drain,” influence, morale, cross-functional connectedness, well-oiled systems, manager and leader contributions, etc., and the replacement costs can go much, much, higher. Companies go broke losing these key stakeholders and our job was to convince them to lead the charge and lead the change
Now, imagine the financial disaster of losing an entire company of bright capable people all at once! Replacing even a tenth of them was not an option. Failure was simply not an option. We were frightened much to the time. Our own success was measured by the outcomes brought about by others.
Intel’s explosive global growth and profitability!
Case Study: Though the following case study focuses primarily on developing managers, leaders and teams, the pattern of big problems and great solutions repeated themselves many times over across Intel’s International acquisitions. (By: Dr. S. Brett Savage)
a. We carefully selected people for our M&A team who fit the broad technical understanding needed to juggle all the balls that were constantly threatening to drop (and sometimes did).
b. We primarily chose people with the temperament and desire to calmly collaborate through the roughest seas ahead (and they were very rough).
c. We chose people who demonstrated the kind of deep, calm, genuine Emotional Intelligence we wanted to instill in others. People who can listen to and really understand others point of view proved to be the single most important capability and predictors of success.
d. The “mixture” on our team included a great business lawyer, globally experienced HR generalist, a management consultant armed with research and global experience (who just happened to be Psychologist in case of a real panic), and a brilliant technology expert who possessed warmth and human kindness to spare.
e. With many meetings, simulations, working lunches, dinners, all-nighters, weekend get-togethers (we learned the ‘true way’ to take a sauna in Finland with cut branches to whip yourself followed by a leap into ice filled water or directly into snow), we became a very confident and cohesive group of friends long before we “took it on the road.”
f. As a powerful, “well oiled” but gentle force, we could answer just about every question and panic driven issue and do it playfully or more strictly professional when needed.
g. The combination of skills combined with the common humanity and care between us created exponential leverage on our team but also was infectious to others.
h. It cannot be underestimated how important the combination of professional competencies linked with compassion created success all over the world. Genuine kindness and human caring is the universal language, especially in panic situations!
i. Sadly, it is often the “human element” in these massive business interactions that is often down-played and very often looked on with contempt. “This is business” so many say, we don’t need to be friends.
Success Formula³
The Phases of Performance and Contribution
a. At Intel, developing capabilities in all our employees is second nature, it’s our culture.
b. If you were at Intel for 10 years you would’ve had 8-10 jobs and perhaps as many bosses … not 8-10 projects or assignments, 8-10 different jobs!
c. The idea was never to let employees get bored or complacent by giving them regular opportunities to move, learn and develop new relationships and skills.
d. Though it was a massive undertaking to measure, massage and manage the never ending “internal churn,” in the end you had an army of cross-trained highly engaged people with a tool box filled with capabilities. They knew how Intel worked!
e. This attracted and incentivized the very best contributors who often stayed for decades. Those less interested in continual growth self-selected out. This prevented a multitude of poor performance “external churn” issues and replacement costs. Intel’s developmental meritocracy saved millions annually!
f. Intel also loved to create “home grown” managers and leaders—leadership training and coaching was a “build-in” part of our culture.
g. Developing thousands of people requires fairly sophisticated but accessible career paths, lateral opportunities, great managers who coach and a “common language” that cuts across everything by giving everyone a developmental language to speak.
h. Intel’s “common language” was research that originated at Harvard in the late 1960’s now called the Phases of Performance and Contribution (Phases), currently owned by Next Phase Leadership LLC.
i. The Phases research describes the 4 different ways employees add value to their company and how individuals move within and between each Phase.
j. Because the Phases research captures how all employees can add more value, the Phases provided Intel with a “global data foundation” for all their selection, on-boarding, professional development, performance management, career paths, promotional criteria, manager and leader development, onboarding their new mergers, mergers and acquisitions and much more.
k. The graph above shows how Phase 3 employees and managers add far more value than others. So, we focued broad internal capability to develop all employees yet paid special attention to creating more Phase 3 local leaders across many global cross-functional and aligned teams
l. Moreover, managers who made the treacherous transition to Phase 3 (only about 24% actually make it without substantial help), added significant and measureable value across Intel’s growing global teams. Phase 3’s are the glue that holds everything together.
m. Intel had such great success using Phases to develop all their new hires in Phase 1, technical experts in Phase 2 etc., they built many of their internal performance and evaluation systems directly using their own Phases data collected over many years.
n. Phases of Performance of Contribution become Intel’s cultural foundation.
Summary of Business Outcomes:
Finally—we measured the results of our 3 years together at Intel over against our stated objectives. We found that, while we were not successful with every person, every time, we were in fact very successful from a company wide perspective and the totals added up pointing to the same principles and outcomes every time. Here are just a few business results that remain a top benchmark of success when acquiring small entrepreneurial companies. The principles are as effective at building internal teams for established organizations as well.
1. The acquisition team must have capabilities far beyond their technical, legal and operational competencies. They must be a solid group of genuine friends capable of making friends, building trust and do it all without the slightest internal competition between themselves.
2. They must possess a deep humanity that connects quickly with and maintains relationships over the long haul not just till the initial company acquisition box is checked.
3. The development team must have a “common language” (The Phases of Performance and Contribution) that bridges all the gaps between the immediate systems and people changes as well as giving everyone a better, clearer line of sight into a very desirable future.
4. Attrition of top talent rarely happened but they often came back within a year seeing Intel’s advantages of increased professional development and promotional options.
5. The costs of acquiring new businesses were drastically reduced.
6. The speed to “complete onboarding” of new businesses was reduced by 200%
7. Profits within the first quarter, typically a 50/50 proposition with acquisitions, soared.
8. Employee engagement shot up 40 points on average after acquisition.
9. Intel Corporation built best practices off of these outcomes and installed them in many of their global organizations.
10. Many of the best practices we created were picked up by Microsoft and others.
More research and implementation outcomes are available about this and other similar initiatives. Next Phase Leadership LLC has over 90,000 data points and has developed world-class products and services to help you develop and clone your best employees and managers.