The Three Strands of Post-Merger Transformation (or “Don’t cross the streams”)

We were talking to a client recently who had merged with another organisation.

They were trying to move forward with transformation but were finding it increasingly difficult to align resources and get things done. There was confusion over ownership, lots of people seemed to own strategy, priorities were competing with one another, and the same people were being pulled towards today's problems, integration activity and the future organisation all at once.

It reminded us of something we see quite often after a merger: everything becomes transformation. But it isn't. We tend to think about post-merger change as three separate streams:

1.    BAU & fires — keeping today's organisation running

2.    Tactical integration — making the merged organisation work

3.    Transformation — designing and building the future organisation. 

Or, because We like the Ghostbusters movies, we often advise: “don't cross the streams.”

Okay, technically the streams do need to connect. Information needs to move between them and decisions in one will inevitably affect the others. But they shouldn't become indistinguishable. Because they have different purposes, require different decisions and compete for the same finite pool of people and resources. And when everything gets bundled together under one enormous heading of "transformation", things can get messy very quickly.

 Stream 1: BAU and fires 

The first stream is about running today's organisation. The organisation still needs to operate. Customers still need services. People still need managing. Performance still needs monitoring. And after a merger, there will inevitably be fires. Some will have been caused or exposed by the merger. Others will simply be the normal problems that happen in any organisation.

These are the things that need dealing with now.

Your existing management teams will usually carry much of this responsibility. You may have Continuous Improvement champions helping teams solve problems and improve today's processes. You might even assign project or improvement resources to particular issues. That's fine. The important thing is to recognise what this work is. It isn't necessarily transformation.

It's about protecting performance, delivering services, continuously improving the organisation you have today and intervening when something needs fixing.

And although I tend to think of this as the short-term stream, that's not really what defines it. A particularly difficult operational problem might take 18 months to resolve. 

It's the purpose of the work that matters.

Stream 2: Tactical integration 

Then there is the middle stream, and this is the one I think organisations can struggle to define. This is the tactical work required to make the merged organisation operate effectively.

You might need to align two processes because you're moving onto one system. You might standardise ways of working across the two legacy organisations. You may need to consolidate teams, remove duplication or restructure because there is an immediate requirement to reduce costs. 

These can be substantial changes. They may affect hundreds of people and take several years to complete. But that doesn't automatically make them transformation.

The question we would ask is:

Are we doing this because it is part of our deliberately designed future organisation, or because we need the two organisations to work together effectively now?

If it's the latter, we'd call it tactical integration.

And organisations can make very different choices about how much they invest in this stream. One organisation might deliberately do relatively little tactical integration. It may allow the two legacy organisations to continue operating largely as they are while it concentrates its resources on designing the future.

Another might decide rapid integration is essential and put considerable resource into aligning structures, systems and processes quickly.

Neither approach is inherently right or wrong. The important thing is that it is a conscious choice.

Stream 3: Transformation

The third stream is where you ask the much bigger question: What organisation are we actually trying to become? This is your longer-term transformation.

It's where you establish or revisit your purpose, vision, mission and values.

It's where you understand the outcomes and services you need to deliver, develop your process hierarchy, design your target operating model and then create the transformation roadmap that will move you towards it. 

But again, "long-term" doesn't mean nothing happens for three years.

A transformation decision might need to be made next week. The distinction is its purpose. Integration changes something because the two organisations need to come together. Transformation changes something because the future organisation requires it. That distinction matters.

Moving two organisations onto one existing finance system because you can't sensibly continue running two might be tactical integration. Replacing both systems with something fundamentally different because your target operating model requires new capability is transformation.

They might look like similar projects on a programme plan. They're not trying to achieve the same thing.

Sometimes you need a temporary answer

This is one of the reasons we think separating the streams is particularly useful after a merger. Not every decision you make now has to be the answer forever. Imagine the organisation needs to reduce costs quickly. You might need to restructure before you've had time to fully design your future target operating model.

People can understandably resist that. Why redesign the structure now when you're supposedly designing a completely new organisation?

But the conversation changes if you're able to say: "This isn't our final destination. This is the structure we need for the next phase. It gets us through the next two or three years, delivers the savings we need and allows the organisation to operate effectively while we properly design the future."

That gives people permission to make pragmatic compromises. You're effectively creating a transitional state. And because everyone understands that they don't have to pretend today's answer is the perfect answer forever.

The streams connect — but don't confuse them

There will inevitably be dependencies between all three streams. A fire in BAU might expose a fundamental design problem that needs feeding into the transformation work. The transformation team might make a decision that means it makes no sense to spend significant money integrating a system that will disappear in two years. And tactical integration might create data, capability or infrastructure that the future organisation will eventually depend upon.

So the Ghostbusters analogy isn't entirely perfect.

The streams should connect. What you don't want is for them to become confused. Every significant piece of work should have a clear primary purpose and therefore a clear home.

A useful test is:

→   Would we need to do this now even if we hadn't merged? It's probably BAU or a fire.

→  Are we doing it primarily because the two organisations need to operate effectively as one? It's probably tactical integration.

→   Are we doing it because it's necessary to create our deliberately designed future organisation? It's probably transformation.

There will always be grey areas. But even then, give the work a primary home and identify its dependencies rather than allowing it to float between three programmes with three different owners.

And then there's the bit above the streams

There's one final part of this that I think is really important. You can't simply create three streams, allocate people to them and expect everything to work. There needs to be one strategic direction across the top.

Someone has to decide what the organisation is trying to achieve. Someone has to allocate resources. Someone has to understand the dependencies between the streams. And someone has to make the call when all three streams need the same person at the same time. Because they will.

If BAU has a serious operational problem, tactical integration needs a critical process redesigned and the transformation programme needs the same subject matter expert to help design the target operating model, which one wins?

That's not a decision the individual should have to make. It's a strategic portfolio and governance decision. And this is where clarity over who actually owns strategy becomes so important.

A simple place to start

If an organisation feels overwhelmed after a merger – and you don’t have a master schedule - We'd start with something incredibly simple.

Draw three columns on a whiteboard:

BAU & FIRES Run and improve today's organisation.

TACTICAL INTEGRATION Make the merged organisation work.

TRANSFORMATION Design and build the future organisation.

 Then put every significant piece of work underneath one of them. Give each one a primary home. Then add the people and resources responsible for delivering them. And finally look across the whole thing:

·      Where are the same people appearing repeatedly?

·      Where are priorities competing?

·      Where are supposedly temporary decisions quietly becoming permanent?

·      Where is integration activity being called transformation?

·      Where is transformation continually losing resources to today's fires?

And, perhaps most importantly, who makes the call when the streams compete? You may suddenly understand why everything feels so difficult.

Because successful post-merger transformation isn't just about having the right projects.

It's about being clear about what you're trying to do now, what you're doing to get through the transition, and what you're deliberately building for the future.

The streams need to talk to each other, but they need to inform each other.

But whatever you do... don't cross the streams.