Wounded Leaders: How Their Damaged Past Affects Your Future. Allan Bonner

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СКАЧАТЬ worth to themselves and others. They may also crave the feeling or “high” that frenetic activity brings. It’s known that emotion and ego play large roles in both personal and professional failure. But there is also a financial manifestation to that failure.

      A major bank studied the three decade frenzy of buying that ended at the turn of the century. It revealed that companies throughout the world spent “$3.3 trillion on mergers and acquisitions in 1999-fully 32% more than was spent in 1998. This resulted in a failure to realize expected gains from a whopping $1.6 trillion in investments”. Ironically, almost the entire thirty-year period of buying and merging repeatedly failed to achieve desired results.

      Not surprisingly, business academics and others have enjoyed a field day speculating on why leaders engage in such unproductive activity and why organizations fail to realize their full potential. A lack of effective response to the business environment is one of the most perplexing aspects of organizational behaviour, says one study in the bibliography at the end of this book. Another blames gargantuan egos for causing the demise or continued mediocrity of companies in two-thirds of the cases studied. One author wonders whether some are compensating for dark and complex reasons rooted in childhood trauma!

      It could be that mergers and acquisitions simply appear to be the appropriate way of doing business. Belief in an ever-expanding economy seems to point to the imperative of continuous growth. If new markets and products do not manifest themselves easily from the marketing and production departments, mergers and acquisitions may seem to be the appropriate means of achieving growth.

      Today’s leaders may even be drawing on some celebrated examples from history, such as the consolidation of General Motors by William Durant or the morphing of Wrigley’s from a laundry soap to a chewing gum company. These leaders may be adopting a “world-view” or be putting on rose-coloured glasses by assuming that growth through mergers and acquisitions is not only a valid course of action, but a necessity.

      Winston Churchill once remarked that men occasionally stumble over the truth “but most of them pick themselves up and hurry off as if nothing ever happened”. This may help explain why businesses would engage in flawed mergers and acquisitions, year after year for more than three decades, without learning that there are pitfalls to be avoided. It may sound odd that such stark lessons are not learned by successive leaders, but world views, and biases are powerful agents.

      There is ample evidence that organizations do not learn from the mistakes made by others. There had been several large oil spills in Prince William Sound, Alaska, before the Exxon Valdez ran aground. A nuclear accident similar to the one at Three Mile Island had occurred some months before in the Tennessee Valley Authority. The product tampering that occurred virtually every week in North America did not seem to cause the makers of Tylenol, Aspirin, Ball Park frankfurters and other products to put effective safety measures in place. It is logical, therefore, to assume that the lessons of failed mergers and acquisitions are no easier to codify and pass on to senior managers in other corporations, or down through time, than are any other business lessons.

      The role of “integration managers” in charge of mergers and acquisitions illustrates the unique personality types that may succeed in, or are at least drawn to, such deals. This type of manager may feel aloof from the organizational chart. The command and control chain is foreshortened. He is like a “cop” demanding results from all levels. One such manager says he feels as if he is “the CEO” of the deal. Others suggest that integration managers could be models for the manager of the future.

      Often there’s an emotional high in a foreshortened organizational chart, time line and decision-making loop. It could be that observers and the integration managers themselves are simply describing a fairly typical executive addiction to the adrenalin rush one gets from deal making and crisis management. This is a powerful addiction to control. The return to normal times through the rejection of a potential merger or acquisition would result in a crashing descent from this high. Even if some mergers and acquisitions constitute unproductive or busy work, they are irresistible to many leaders. Thus, the personality of the leader is a fruitful area for investigating the existence and nature of leadership failures.

      In addition to emotion and ego that seem to play such a large role in big business deals, other research shows that quite different cognitive and decision-making powers may be needed to make mergers and acquisitions succeed. Decision-making has been found to fall into three categories:

      •Skill-based (almost automatic, such as driving)

      •Rule-based (following rules or procedures), or

      •Knowledge-based (creative).

      Mergers and acquisitions usually feature a rapidly evolving series of events where decision-making based on skills or rules would not normally succeed. If these types of decision-making skills are more-or-less evenly divided in an executive population, this would suggest that about two-thirds of all senior executives would be unsuited for such work. To generalize, the law, engineering, and accounting are based on facts, research, and rules. Yet senior management teams draw heavily on these professional areas when what seems to be needed are other skills. One researcher describes using inappropriate and unproductive techniques as “active inertia.” In this case leaders and managers rely on their modes of thinking and working that brought success in the past. They simply accelerate the process of failure.

      Traditional decision-making is a laborious process compared with what is needed to take quick advantage of a rapidly evolving business situation. Making decisions involves the identification of the problem, the generation and evaluation of options, and the choice and implementation of options, followed by more evaluation and the modification of more action. This linear methodology will not work well in rapidly escalating situations such as emergencies and the fast-paced world of mergers and acquisitions.

      The technique required in this different environment is described by the experts as “naturalistic” decision-making (NDM). Situations requiring NDM feature fluid and changing conditions, real-time reactions, ill-defined goals, ill-structured tasks and knowledgeable people. Mergers and acquisitions often feature elements of missing data, shifting and competing goals, real-time reactions, real-time feedback to changing conditions, high stakes, time stress, and other factors.

      The technique used by those trained to respond to dangerous emergencies is called “recognition-primed decision-making”. On-the-spot-decisions are driven by recognition of situations and patterns. Those decisions are re-evaluated constantly based on the latest information. In fact, emergency responders tell us they don’t make decisions-they simply take appropriate action.

      In the recognition-primed decision-making model, action is key. Experienced responders usually pick a workable option for their first attempt. Action is modified and improved by a constant assessment of the situation and further potential options. They don’t try to decide which may be the best course, they just react to avoid known or observable dangers and re-evaluate their actions as they proceed. Mental simulations keep the decision-maker in a constant position to act, with the aim to satisfy, not optimize.

      I must acknowledge that there are examples of successful mergers and acquisitions. Perhaps the most often cited is the record of achievement at GE Capital Corporation, a division of General Electric. GE Capital was originally formed to help and encourage consumers to buy appliances made by its parent company. During the 1990s, however, the CEO of General Electric used GE Capital’s financial acumen and muscle to target companies for potential acquisition. From 1993 to 1998 it completed more than 100 acquisitions, resulting in a 33% increase in employees and a 100% increase in net income.

      The CEO at General Electric at that time was Jack Welch. He was described as “feared and confrontational”. He fired more than 100,000 employees in his first five years as CEO (1981-1986). Even when economic times were good, Welch encouraged his СКАЧАТЬ