by Jack Welch
There is no real trick to avoiding overpayment, no calculation you can use as a rule of thumb to know when a sum is too much. Just know that, except in very rare cases of industry consolidation, if you miss a merger on price, life goes on. There will be another deal.
There is no last best deal—there’s just deal heat that makes it feel that way.
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The seventh pitfall afflicts the acquired company’s people from top to bottom—resistance. In a merger, new owners will always select people with buy-in over resisters with brains. If you want to survive, get over your angst and learn to love the deal as much as they do.
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In October 2004, there was a glowing article in my hometown paper, the Boston Globe, about a “thriving survivor” named Brian T. Moynihan. Brian started his career at Fleet Bank in its mergers and acquisitions division, then over fifteen-plus years, rose through the ranks to run its wealth management business, which is what he was doing when Bank of America bought Fleet in April 2004.
In the months after the merger was announced, many executives at Brian’s level were shown the door—not Brian. He was promoted to run Bank of America’s entire wealth and investment management division. In fact, Bank of America was so committed to Moynihan, it moved a hundred or so of its wealth managers from North Carolina to Boston to accommodate his leadership.
“It remains precisely unclear why Moynihan emerged on top while colleagues fell,” the Globe said.
It wasn’t unclear to me. All you had to do was look at a quote in the same article from Alvaro de Molina, Bank of America’s president of global corporate and investment banking.*
Brian, he said, “was an immediate partner.”
Which brings me to the one huge pitfall common to people at acquired companies: resistance. Resisting a deal, no matter how scared, confused, or angry you are is usually suicidal for your career, not to mention your emotional well-being.
Now, I don’t know if Brian Moynihan ever felt scared, confused, or angry about the Fleet–Bank of America merger. And in a way, it doesn’t matter because he clearly didn’t show any of these emotions. Instead, he showed exactly what you should show if you want to survive a merger—enthusiasm, optimism, and thoughtful support.
Why? Because for an acquirer, there is nothing worse than laying down a boatload of money for a company, then walking through the front door to be greeted by a bunch of sour faces and bitter attitudes.
Who needs it?
Yes, some resistance to change is normal. But if you want to keep your job in a suddenly bigger talent pool, and frankly, if you want to enjoy work, don’t act like a victim! Get behind the deal, think of ways to make it work, adopt the biggest, most can-do attitude you can muster. Tell yourself the good old days are over—and the best are yet to come.
I understand that not everyone can get their heads around this notion, but there is a price to pay if you don’t.
Bill Harrison recalls meeting with a very talented manager from JPMorgan Chase who was one of the premier “sour faces” after the merger.
“For Christ’s sake, man, you’re so good, we really want to keep you,” he told him, “but if you can’t act in a more positive way and embrace this change, you’re not going to make it.”
The inevitable ending to this story is that the manager was, as Bill puts it, “like most people—no good at hiding his feelings.” He left within a few months.
In mergers, managers will always pick the people cheering for the deal, even if they are not as talented or knowledgeable as the people pouting. When there are two people to do the same job, if their abilities are anywhere near each other, the upbeat, pro-merger candidate wins.
I have an old friend who worked for almost his entire career at a large insurance company, ending up with the top job in marketing, PR, and community relations. This executive was very close with the company’s CEO, a relationship that afforded him all sorts of entrée into the executive decision-making process. He was the CEO’s right-hand man, confessor, and sounding board, even though his title wouldn’t suggest such impact.
Then, a few years ago, my friend’s company was acquired by a financial services company halfway across the country, and his pal the CEO was “promoted” to chairman, with a two-year exit strategy.
I wasn’t completely surprised when a month later, my friend called and asked to meet me for a drink, the sooner the better. When I saw him a few days later, he was completely forlorn.
“I am of no value to the company anymore. They kicked my boss upstairs; he’s out of the game. My new boss is far away at headquarters, and he and I are not clear yet about just who is going to do what. I hate the situation I’m in.”
To make a long story short, I advised my friend to befriend his boss and find as many ways as possible to make the merger a success. If he was as good at his job as he claimed, the new CEO would notice soon enough. In the meantime, it would be dumb to get booted for sulking.
My main message was, I suppose, “Swallow your pride, prove your worth, and start again.”
A year has passed, and my friend has never been happier professionally. He carved out a new position for himself overseeing the integration of three overlapping businesses, took on the responsibility of advising the new head of marketing, and finally found a great, high-impact role working with the organization’s new advertisers on a branding campaign.
“I don’t know why I took it so hard,” he said recently. “I’m always telling people that change is good, and then I let change freak me out. The hardest part was talking myself out of the hole. In truth, I had to fake it for a while, but one day I finally got over myself and stopped being a pain in the ass.”
That’s good advice to remember next time you want to bitch about the deal, your new bosses, and the tragedy of your fate. You and your bad attitude can be replaced—and will be if you don’t learn to love the deal like the acquirers do.
Mergers mean change.
But change isn’t bad. And mergers, in general, are very good. They are not only a necessary part of business, they have the potential to deliver profitable growth and put you in a new and exciting strategic position at a speed that organic growth just cannot match.
Yes, mergers and acquisitions have their challenges, and all kinds of research will tell you that more than half don’t add value. But nothing says you have to fall victim to that statistic.
Don’t let deal heat get you, and avoid the seven pitfalls—then reap the rewards of what happens when 1+1 = 3.
Six Sigma
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BETTER THAN A TRIP TO THE DENTIST
IN THE PREVIOUS TWO CHAPTERS of this book, we’ve looked at one of the more exciting aspects of business—growth—both through starting something new and through mergers and acquisitions.
In this chapter, we’re leaping to the other end of the spectrum to talk (briefly, I promise) about what can be one of business’s most dreary topics, Six Sigma.
Now, I am a huge fan of Six Sigma, the quality improvement program that GE adopted from Motorola in 1995 and continues to embrace today.
Nothing compares to the effectiveness of Six Sigma when it comes to improving a company’s operational efficiency, raising its productivity, and lowering its costs. It improves design processes, gets products to market faster with fewer defects, and builds customer loyalty. Perhaps the biggest but most unheralded benefit of Six Sigma is its capacity to develop a cadre of great leaders.
Simply put, Six Sigma is one of the great management innovations of the past quarter century and an extremely powerful way to boost a company’s competitiveness. These days, with Six Sigma being increasingly adopted by companies around the world, you can’t afford not to understand it, let alone not practice it.*
And yet, Six Sigma causes enormous anxiety and confusion.
Over the past several years, in virtually every Q & A session in country after country, someone in the audience has asked me a tortured Six Sigma questio
n. You can see the interest level in the audience plummet and eyes glaze over, as people brace themselves for a long-winded technical lecture, complete with several graphs and charts.
I’m exaggerating a bit, of course, but it is fair to say that for many people, the concept of Six Sigma feels like a trip to a dentist. But Six Sigma couldn’t be less like a root canal or any other awful procedure. Done right, it is energizing and incredibly rewarding. It can even be fun.
You just have to understand what Six Sigma really is.
There is nothing technical in what I am about to say. If you want to learn about the statistical premise behind the concept, or learn what it takes to become qualified in Six Sigma, an industry of books, videos, and training programs eagerly awaits you.
But for our purposes, I’m going to be very simple about what Six Sigma means and what it does. I call this “Six Sigma for Citizens,” meaning those people—like myself—who’d like to hear the “elevator speech” version of what Six Sigma is all about and why it matters so darn much. This explanation is not meant to satisfy scientists and engineers, who actually do need to know about the statistical basis of Six Sigma in order to incorporate it into the design of experiments and complex equipment.*
Here goes:
Six Sigma is a quality program that, when all is said and done, improves your customers’ experience, lowers your costs, and builds better leaders.
Six Sigma accomplishes that by reducing waste and inefficiency and by designing a company’s products and internal processes so that customers get what they want, when they want it, and when you promised it. Obviously, you want to make your customers more satisfied than your competitors do, whether you run Upper Crust Pizza or manufacture the most powerful jet engines. In the strategy chapter we talked about customer loyalty, and we used the word sticky to describe what you want. Well, a huge part of making your customers sticky is meeting or exceeding their expectations, which is exactly what Six Sigma helps you do.
One thing that is sure to kill stickiness is inconsistency in services or products.
Consider this hypothetical. You make spare parts and promise ten-day delivery.
Over the course of three deliveries, your customers receive their parts on day five, day ten, and day fifteen. On average, ten-day delivery.
Over the course of the next three deliveries, they receive their parts on day two, day seven, and day twelve. An average of seven days, a seemingly big improvement in the customer experience. But not really—you might have had some internal process or cost improvements, but the customer has experienced nothing but inconsistency!
With Six Sigma, your customers would receive all three of their deliveries on day ten, or in the worst case, on day nine, day ten, and day eleven.
Six Sigma, in other words, is not about averages. It’s about variation and removing it from your customer’s interface with you.
To remove variation, Six Sigma requires companies to unpick their entire supply and distribution chains and the design of their products. The objective is to wash out anything that might cause waste, inefficiency, or a customer to get annoyed with your unpredictability.
So, that’s Six Sigma—the elimination of unpleasant surprises and broken promises.
SIMPLE, COMPLEX, OR NOT AT ALL
From 20,000 feet, Six Sigma has two primary applications. First, it can be used to remove the variation in routine, relatively simple, repetitive tasks—activities that happen over and over again. And second, it can be used to make sure large, complex projects go right the first time.
Examples of the first kind of application are a multitude. Call centers from South Dakota to Delhi use Six Sigma to make sure the phone is answered after the same number of rings for each incoming inquiry. Credit card processing facilities use it to make sure people receive accurate bills on the same day every month.
The second application of Six Sigma is the territory of engineers and scientists involved in multipart endeavors that sometimes take years to complete. If you’re spending hundreds of millions of dollars on a new jet engine or a gas turbine, you cannot afford to figure out process or design inconsistencies late in the game. Six Sigma is incredibly effective in discovering them on the drawing board, i.e., the computer screen.
Obviously, the amount of Six Sigma training and education required depends on where and how you intend to apply it.
For the first application—simple, repetitive activities—the level of training and education is certainly manageable. In order to discover the root causes of inconsistencies, people need to know what kind of information to gather and how to analyze it. The rigor of this type of training has a terrific side effect. It builds critical thinking and discipline. That’s one reason why we noticed that every time a business dove into Six Sigma, not only did its financial performance improve, so did its management ranks. They all became better leaders.
The second application is different. It involves a sophisticated level of training and statistical analysis. I myself have never had this kind of training, but I know from GE’s very positive experience with jet engines and turbines that it works.
Make no mistake: Six Sigma is not for every corner of a company. Jamming it into creative activities, such as writing advertising copy, new marketing initiatives, or one-off transactions like investment banking, makes little sense and causes a lot of wheel-spinning. Six Sigma is meant for and has its most meaningful impact on repetitive internal processes and complex new product designs.
SO WHY THE PANIC?
At this point, you might be wondering: if Six Sigma is so straight-forward, why does it cause so much anxiety and confusion?*
Probably because of the way it is initially presented to people. In many cases, senior management hires outside experts—scientists, statisticians, engineers, or Six Sigma consultants—to preach the new gospel. These experts, well-intentioned though they are, proceed to freak everyone out with complex PowerPoint slides that only an MIT professor could love. To make matters worse, they often present Six Sigma as a cure-all for every nook and cranny of a company. No activity is spared.
Several years ago, the CEO of a well-known consumer goods company visited me to get my take on Six Sigma. “We’re off to a good start,” he said. “We’ve hired several statisticians from places like Carnegie Mellon, and we’re looking for more.”
I thought to myself: This poor guy has really drunk the Kool-Aid!
Not using those words, I told him as much. The statisticians might be great, I said, but for the relatively straightforward projects he was looking at, he needed everyone in the company to understand Six Sigma. The brand-new experts were only going to scare people.
He said he’d think that over, but I think he was just being polite. He saw Six Sigma as the purview of experts, not in the blood of his company.
In time, most people come to understand Six Sigma and where to use it—and not use it—in an organization. Most of all, they also come to appreciate its competitive power after they’ve seen it in action for a few months. At which point, they usually become Six Sigma missionaries themselves.
So next time you hear Six Sigma mentioned, don’t run for cover. Once you understand the simple maxim “variation is evil,” you’re 60 percent of the way to becoming a Six Sigma expert yourself.
The other 40 percent is getting the evil out.
YOUR CAREER
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16. THE RIGHT JOB
Find It and You’ll Never Really Work Again
17. GETTING PROMOTED
Sorry, No Shortcuts
18. HARD SPOTS
That Damn Boss
19. WORK-LIFE BALANCE
Everything You Always Wanted to Know About Having It All (But Were Afraid to Hear)
The Right Job
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FIND IT AND YOU’LL NEVER REALLY WORK AGAIN
IT’S SAID that you can only live life forward and understand it backward. The exact same thing is true about careers.
; Every time I ask successful people about their first few jobs, the immediate reaction is almost always laughter. The chairman and CEO of Procter & Gamble, A. G. Lafley, thought he was going to be a professor of Renaissance history. That career plan evaporated when he dropped out of grad school to join the navy for two years, and then spent six more running grocery and specialty stores near a navy base in Tokyo.
Or take Meg Whitman. She started her career as a management consultant, then joined Disney to open its first stores in Japan, then moved to Stride Rite to revive its Keds brand, then took over the ailing floral company FTD, and then moved to Hasbro to run its PlaySkool and Mr. Potato Head divisions.
It makes perfect sense that Meg Whitman would end up as the CEO of eBay, the retailer of absolutely everything, doesn’t it? But you know there was nothing specifically planned about her career. EBay didn’t even exist until a few years ago!
The point is: it is virtually impossible to know where any given job will take you. In fact, if you meet someone who has faithfully followed a career plan, try not to get seated beside him at a dinner party. What a bore!
Now, I’m obviously not going to tell you to let fate take its course. A great job can make your life exciting and give it meaning. The wrong job can drain the life right out of you.