Mergers and acquisitions (M&A) are complex business transactions that can be game-changers for companies, but they also bring about significant challenges in almost every department.
Mergers and acquisitions can be exciting for companies but also bring significant challenges, particularly for product roles. While mergers may look good on a spreadsheet, success in merging two (or more) companies lies in the people: aligning teams with a coherent vision and a common set of tools and processes.
When driving an acquisition, realize it’s not one project but many. You must integrate differing or competing cultures, teams, processes, strategies, portfolios, and products.
I’ve been acquired twice, both times by my company’s arch-rivals. These integrations struggled not due to our products but due to our cultures. There’s always bad blood associated with being taken over by “the enemy.” In one case, the acquisition was a disaster; in the other, strong leadership integrated two teams successfully. Ultimately, you’ll find that people and cultures are more difficult to integrate than products and processes.
To get the best results, form a transformation team of experienced and empowered representatives from all affected teams and avoid communication breakdowns by sharing project status early and often.
Integrating People
People are the most important part of any acquisition.
Look for ways to merge teams rather than eliminate headcount. After all, most product teams are understaffed. And great people are often hard to find.
Product management is crucial for any company that wants to develop and launch successful products.
Product management involves identifying market opportunities, defining product requirements, developing product roadmaps, and collaborating with cross-functional teams to bring products to market. It requires a high degree of coordination, communication, and alignment between different teams within the company.
The late Steve Jobs, a visionary entrepreneur, was involved in multiple acquisitions during his time as CEO of Apple and knew that integrating two companies goes far beyond simply merging products. He believed that people were the most important part of any company and that merging cultures was key to successful integration.
Jobs once said, “We do no acquisition for revenue purposes. We do it for strategic reasons, where we can bring a technology or intellectual property into the company, or where we can bring incredible talent. We never do it for the revenue.”
Companies should focus on acquisitions that help them build additional core competencies, increase their talent pool, expand their customer base, and enter new markets.
Yet the primary goal of a revenue-driven acquisition is to achieve a profitable return; absorb the revenue from another product into the top-line company results. These financially-driven deals fail when they focus more on the revenue than the market and customer needs.
Peter Drucker, the father of modern management, wrote, “The purpose of business is to create and keep a customer.” He added, “Profit is not the purpose of a business, but rather the test of its validity.”
Here’s the thing: Every company is unique. No other company has your people, products, and processes. One company may be intensely customer-focused, while another is more technically oriented.
One phrase that signals danger: “We bought you, and you have to do it our way.”
The right answer is to create a new, blended culture. Create a new company. Take the best of the old and create something new. Invest time and resources in identifying cultural disconnects and finding ways to bridge them. Develop shared values and a strategic vision for the combined company, integrating the best aspects of each culture.
Be watchful of the loss of key team members. During the integration process, some team members will consider leaving the company because they disagree with the changes, feel their skills are no longer needed, or simply do not feel appreciated. This can leave product teams with critical skills gaps and the loss of institutional knowledge necessary to continue delivering high-quality products.
One technique that proves your intention to keep your best people is to train them. Invest in them. Identify critical team members within the product management team and develop a plan to retain them.
An acquisition is also a good time to fill skills gaps by recruiting new team members with the necessary skills and expertise to help. And don’t primarily look outside; look at support teams and sales engineering and designers. There may already be folks with the right mindset to be strong product managers. All you have to do is train them in the techniques of product management. (Hint: Product Growth Leaders can help!)
Integrating Products
Ideally, the acquired company serves the same markets with solutions that complement your existing products. Jointly build a portfolio structure with strategic positioning to help teams align their roadmaps and technology plans, particularly making the products look similar and salvaging value from legacy products.
The team must evaluate each product to determine which has stronger capabilities, lower technical debt, and better market presence. Use the voice of your customers to overcome emotional and political decisions.
A typical—and logical—goal is to move existing customers to one product, the product slated to get the lion’s share of development attention.
Focus on making the customer experience as seamless as possible. If companies say, “We are one company now,” they must show it by consolidating how they talk and engage with customers. Improving the UX for customers can enable quicker cross-sell and upsell for the business.
You’ll want to make it easy for existing customers to move to the flagship product. Convert their old data. Offer financial incentives. Provide implementation assistance.
One company acquired three companies with competing products intending to sunset the acquired products and move all clients to the new platform. Smart. The merged product teams defined a roadmap showing how the best capabilities would be integrated into the flagship product. Because each team put their customers ahead of their products, decisions were made more easily.
Despite aligning the vision and roadmaps of the new products, some salespeople will insist on selling the “old” products instead of the “new” ones. Here’s the answer: stop paying commissions on non-strategic products. Immediately. On day one.
Integrating Process
Align teams with a common language, a common process, and a common set of tools and templates.
Every company has its own product management process—and each believes its approach is best. You’ll find that some of your processes are better and some of theirs are better.
Develop a new product management process incorporating the best practices from both companies—identifying the strengths and weaknesses of each company's processes and developing a new process tailored to the merged company's needs. After all, there are no best practices, only common practices. What makes them “best” is when you adapt them to your products and people.
Adapt Best Practices with Product Ops. We find many organizations benefit from adding a ProductOps function. ProductOps is a specialized role within product or product management that normalizes the function across all products and services, which is particularly helpful when merging teams and processes. The ProductOps goal is to standardize and optimize.
Communicate the new process to all product teams and provide training to ensure everyone understands and can follow the new process.
Mergers and acquisitions can be challenging for all teams but especially product management. Still, with the right approach, they can also be an opportunity to strengthen your product teams and offer a better portfolio of products. By focusing on clear communication, collaboration, and alignment, you can ensure that your product teams continue to deliver high-quality products that meet customer needs and drive company growth.
Finally, celebrate and recognize success within the transformation teams. This means acknowledging the contributions of individual team members and providing opportunities for career growth and development.
The path to success begins with a transformation team of dedicated and respected people. The thoughtful integration of people, processes, and products leads to a successful outcome for M&A deals.
Need help transforming your product teams?
Join our free on-demand program, Assess and Optimize Your Product Team.
This program walks you through a product team assessment process designed to help you optimize your team's skills and processes. After completing this program (seven videos, about 23 minutes), get a bonus-free one-hour consultation with a Product Growth Leaders coach.
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