The success of a major acquisition — or indeed any large-scale business change — hinges on strong leadership by senior management and their ability to communicate a clear vision for the future of the evolved organization.

That was the view of the two keynote speakers — Alan Cook, chairman of the UK’s Highways Agency, and Danny Davis, M&A program director at the Henley Business School — at the latest Fujitsu Executive Discussion Evening in London.

As managing director of the UK’s Post Office Ltd from 2006 to 2010, Cook led a major restructuring program to transform a business losing £3.5 million a week into one turning an annual profit of £70 million. And he is adamant that creating a vision for where the company is headed, and how it’s going to get there, is the bedrock for a successful outcome.

It’s then a question of communicating that vision to the company, he told the audience of senior business and government executives. “If you’re going to persuade an organization to behave differently, you need to give [employees] a reason,” he said. “You have to give them the vision that is going to make them want to change. Why is it going to be better? Why will we go through tumultuous change if we don’t believe it’s going to make life better?”

And, of course, it is not just employees who need persuading. Ensuring the entire management team is on board is also essential, he said. “If you haven’t got senior management correctly engaged then you haven’t got a cat in hell’s chance [of succeeding],” he stressed.

But he added the caveat that not everyone in an organization is going to be prepared to accept change, no matter how well management presents its vision. “It’s very fashionable to think you’ve got to engage the entire workforce,” he stated. Referring to his time in charge of the Post Office, he said he asked himself: “Could I see enough people that wanted to be a part of the new model? They were the ones I had to focus on — not necessarily everybody, because not everybody was going to be there.”

Cook also shared the view that, to be really successful, change needs to be a continuous process, not a project with fixed time limits. “Change just doesn’t stop,” he said. The level of flux faced by every organization in the current climate, he argued, suggests that you have to create a culture where your employees accept a level of volatility.

He explained how, in his first few months at the Post Office, he reduced the headcount at head office by 20%. “But if you promise that when you take out the [initial] 20% that you’ll never do it again, you’ve really set yourself up to fail,” he said. “You can’t lose people’s faith in you. And unless you get an organization to understand that change is a continuous process, I think it will be doomed to failure.”

Budget-reduction was another area that Cook addressed, this time in relation to his current role as head of the agency that manages the UK’s major road network. He argued that taking 20% of cost out of a business shouldn’t necessarily mean doing 20% fewer things.

“It’s the difference between doing less for less and more for less,” he said. “Anybody can choose to spend less money. But can you spend the money that you’ve got more wisely, more effectively, and still achieve the same — or preferably even more?”

Who’s in charge?

Sharing the stage at the Fujitsu event, Henley’s Danny Davis, who is also a partner at M&A adviser DD Consulting, expressed similar views on the key leadership role of senior management in any integration activity — and the need for clear lines of command. “If you’re putting two companies together, firstly you need somebody to be in charge of that process,” he said. “Mergers of equals don’t really work. You need to have somebody in charge who then chooses the management of the new entity. There are two CEOs, two CFOs and so on, and that’s not going to be the case in the near future.”

Retaining both board-level teams can be disastrous, he warned. “There are examples of large mergers of equals where they’ve kept both sets of management in place and that’s very, very bad — all hell breaks loose,” he said.

Davis also highlighted the need for a well-defined integration strategy. “We normally think about A and B coming together to form C,” he said. However, it doesn’t always have to go that far, he argued — as long as that’s clear from the start. For example, two companies may decide, successfully, to merge only their back offices — or only their front offices and keep their back offices separate.

Anywhere along this line of integration can work well, he suggested, as long as you have “thought about where you want to end up and have made that decision before you start — and then have the correct budget and people to go with that.”

When discussing the cultural issues surrounding M&As, Davis argued that organizations should never blame unsuccessful integration projects on the two companies being incompatible in this respect. “We often say mergers fail because we’ve got differences in culture,” he said. “I think that’s complete rubbish. With any deal, anywhere in the world, the companies are always different. You’re never going to have everything the same.”

He advised mapping how the two companies differ culturally, and then leveraging this to maximum advantage. Then management can argue: “We know we’re different. We bought you [for example] because you’re very customer-focused and we love that, we want you to keep being customer-focused.”

In some areas, however, one of the merged businesses may need to change its culture to move closer to the other’s. “But,” Davis warned, “if you were a UK-based company and you bought a French company, you wouldn’t try to turn all the French people into British people. There’s a cultural difference you’re never going to change.”

He concluded: “It is very difficult to decide what you can change in your culture and how to change it. And sometimes it’s impossible to know until you try and fail — or succeed.”