Thriving in Times of Change With Flexibility in Your Integration Planning

Running a global integration program

It's really important to have a good view of the world and an understanding of different cultures when you're running global integrations.

Ever since I was young, I've been very active in intercultural activities and interacting with different cultures from around the world. That's what inspired me to work internationally, as I enjoy bringing different cultures together and collaborating with them.

Having an understanding of how different groups work and having a multinational team can be beneficial in this regard. In my team of about 10, we have five or six different nationalities. This diversity helps bring different approaches to the transformations that we do, and it plays a key role in global integration, as it's crucial to understand each other.

In the large project I worked on, our integration management office consisted of four or five nationalities working together, which helped us have a comprehensive view of all the countries we needed to integrate into the project. 

Integrating across geographies can be challenging, as you're not dealing with just one specific country's laws and compliance rules. You really have to understand how things work in different places, like HR in China, which is very different from how it works in the Netherlands or the US.

Having a diverse cultural background and understanding really helped me, especially with my knowledge of international business and the direction we needed to go. This understanding makes it easier and more flexible to navigate the complexities of global integration.

Adapting to different cultures

One of the things is that we're a very tight team, so we're very aware of each other's strengths and weaknesses, and we create a lot of psychological safety in our team, allowing us to ask each other anything.

The diverse cultures and working in different geographies also help, as you can ask someone in the team for advice when feeling uncomfortable in discussions with colleagues from other countries, like our Japanese counterparts.

This openness helps me as a leader to encourage my team members to step outside their comfort zones. We're very aware of the different cultures within Philips, as it's a global company. Part of your DNA when you're onboarded is understanding that we work across the globe and have to be sensitive to different cultures and ways of working in healthcare. 

It's even more important to understand the different regulatory environments we face, because that's in addition to the cultural aspects of communication in an integration; you also have to know the rules of the game in each specific geography. I really help the team in learning, being open, and having those conversations when in difficult situations.

Fostering safety in IMO

One of the things I do when onboarding new colleagues is give everyone a copy of a book called The Culture Map by Erin Meyer. It helps set the scene of the differences in how cultures work, and I think it's particularly useful for those new to international ways of working. Reading the book can help people grasp how others work and even have "aha" moments during discussions about specific cultures.

Another thing I try to do is maintain an open and transparent relationship with the team, so they feel comfortable and not intimidated to have those conversations. I strive to be encouraging, direct, and sometimes even admit when I've said the wrong things. This approach fosters a sense of working together.

We also engage in continuous improvement and learning, with deep dives into how things were done and sharing tips on alternative approaches while remaining respectful of everyone's journey.

When looking at integration management offices (IMOs) specifically, I try to provide the tools needed for the team to work in intercultural environments. However, many people at Philips already have international experience, or they're expats, and they may not even know what it's like to work in a domestic company.

Continuous Improvement

Continuous improvement, or continuous learning, is essential for being flexible and agile. As a team, after completing a significant deliverable, like the integration readiness deck, we hold a deep dive meeting where program leaders present the process they used to get there, including the challenges they encountered and how they can improve moving forward. After each of these deep dives, we usually adjust our process, templates, or approach based on the learnings.

These continuous learning sessions give new team members the tools they need to develop quicker, as they hear about experiences from others. This approach makes the team more agile and flexible in delivering integration or separation strategies.

Delivering integration outcomes

Regarding delivering on outcomes, there has been a shift from merely completing projects and checking boxes to focusing on delivering the acquisition’s intended value. We now concentrate on value creation, which involves agile integration planning and capability building aligned with value drivers. 

We identify value drivers earlier in the process and assign owners from a business perspective, driving value creation through releasing capabilities within the planning that enhance those value drivers.

This approach ensures that we create value first before completing all the checks in the boxes, allowing us to deliver on our promises more quickly. By focusing on value creation earlier in the process, we hope to achieve the intended value sooner than the traditional three to five years often observed in other cases.

We focus a lot on the numbers and we measure value creation very differently. We use NPS scores for our customers, for example. We’re not as good at capturing things outside of monetary value yet, but we do know that we should be putting more focus on all of the other value creation that should come out of it. 

Dealing with uncertainties during integration planning 

The integration readiness deck is an iterative process built from the ground up. We have a template and decide which parts are most important to present for approval. The deck goes into a lot of detail, including legal entity roadmaps, and it is not just about the first 100 days but rather our approach to making the integration a success within Phillips.

The process is agile, as we change, edit, and recreate the deck as we go through. We consult business leaders, owners of value creation targets, and markets to ensure feasibility. This involves tweaking the deck or raising red flags when challenges arise. The deck remains fluid during its creation, and once it's completed, it's not set in stone. We continuously adapt the deck as we move forward in the integration.

It's essential for the team not to be afraid of making mistakes. Since we can't know everything, we must leave room for adaptation as we progress through the deliverables.

Threshold for mistakes during integration

Let me explain our process. In building the deck, there's a timeline because you have a certain amount of time that you need to deliver before signing the agreements with the target. So, you have a defined end time, and you know how long you have, often involving long nights right before that.

Once we've acquired the company, we have the first 100 days for kickoff planning and checking our thinking with the target. We ask if our thought process is accurate. This is something we've improved upon as a learning experience. Then, we conduct replanning workshops, which we do pretty much every quarter. The furthest out a mistake can go is a quarter because we look back and assess if everything is on track or if we need to recalibrate.

We are constantly recalibrating, realigning, and making decisions based on what we now know. As you know, you never have complete information. You're making many assumptions when taking over a company or even when separating. 

There are countless assumptions until you actually meet with the buyer or the seller and discuss what you've thought of. Then, you realize the accuracy of your assumptions, whether it's 10%, 50%, or 80%, and you have to shift accordingly as you move forward. That's how we adapt to the ever-changing acquisition of knowledge.

We also conduct retrospectives. After a year, we do a retrospective, and sometimes we do one after three years as well. It's fascinating to go back to the diligence documents because it often makes us wonder what we were thinking. That happens all the time because, as I mentioned earlier, you don't know what you don't know.

Regarding psychological safety and the team, the crucial thing is not being afraid to make mistakes. No one has all the answers, so you have to work with these assumptions. Many of us in this field are perfectionists because we're good at detail and getting things done. However, there's a way to be a perfectionist while embracing fluidity and adaptation in response to what you're learning. By applying all these learnings, you're making the process better instead of having the perfect answer at the beginning.

That's how I also try to encourage the team. In this job, you're going to be wrong most of the time, so learn to appreciate the process. This approach also helps build confidence in making those tough decisions that have to be made. We might go with plan A, but we have plans B, C, and D worked out just in case. Then we'll adapt as necessary.

Using reflections to run integration

We began implementing one-year reviews a couple of years ago to help us improve our processes for future acquisitions. This has been especially helpful in the last two years, as it enables us to learn more and assists with the learning process for new team members. The one-year reflection was also born out of a need to answer questions about why certain things happened during acquisitions and to validate our ideas with business leaders.

Longer reflections, such as those spanning three years, are usually conducted at the request of business leaders or when evaluating the value creation of past acquisitions. These reflections can help us understand where and why things deviated from the initial plan. In my opinion, a two-to-three-year period is a suitable time frame for conducting a comprehensive retrospective that can help improve the diligence process.

You mentioned post-mortem, which reminded me of a project where we conducted a pre-mortem during the sign-to-close period. We had an extended period for antitrust review, which allowed us to sit with the business team and discuss potential issues that could arise during the integration. This exercise proved beneficial when we encountered challenges, as we were able to apply the insights gained from the pre-mortem.

Looking back at the pre-mortem while writing the three-year retrospective was an interesting experience, as it provided valuable information for the analysis. The idea to conduct a pre-mortem came from one of the business leaders, and I found it to be a powerful approach.

It’s all about scenario planning. This involves considering what to do if a certain event occurs, and having alternative plans in place. Scenario planning isn't a license to fail or an excuse for things going wrong; rather, it helps leverage the experience and insights of business leaders to predict potential challenges and develop strategies to prevent them.

Some may argue that being too organized or over-planning could be counterproductive, and that simply going with the flow might work better in an integration. However, I believe that planning, being prepared for potential failures, and being ready to reassess and move forward with a new plan is a much more effective approach.

Not being prepared for an integration can lead to numerous unforeseen challenges. In my opinion, preparation is essential to successfully navigating the complexities of the integration process.

Deal sizes affecting preparations

We certainly consider the level of preparedness needed for specific acquisitions or separations, and tailor our approach according to the impact. The impact doesn't always relate to the price, but can also involve the effect on the customer base or the overall business. We aim to address all important aspects during the preparation process.

In healthcare, it is crucial to have clinical quality and regulatory aspects thoroughly addressed, ensuring that everything is in order. This level of preparedness is especially important when dealing with an acquisition involving pre-FDA approval, as it requires running a tight ship and having everything well-organized. However, for less intense cases, we may adopt a lighter approach in terms of preparation.

Upskilling scenario planning

I believe learning from experience is important, but understanding the "why" behind different scenarios is crucial. One book that helped me grasp the significance of scenario planning is "Synchronicity" by Joseph Jaworski. Although it's a leadership book, it discusses the author's experience with scenario planning at Shell and its importance.

Comprehending the "why" behind scenario planning can shift one's perspective and assist in understanding how to plan effectively. When you grasp the reasons behind it, you can better evaluate the inputs that lead to different outcomes. This, in turn, contributes to critical thinking when approaching a situation.