Growth Insights for CEOs

How to Create a Stronger Market Position in a Post-Merger Atmosphere

Posted by The Chief Outsider



 

create-a-stronger-market-positionIn healthcare there are few environments that are more competitive and emotionally charged than those that are created when teams are forced to coexist in a post-merger scenario. With the ink freshly dried on the healthcare acquisition, you now have twice as many employees in key functional roles – most likely, two chief counsels, two vice presidents of human resources, and, of course, two senior-level marketing people and teams they manage.

As the CEO, it is a top priority to establish a cohesive executive team. There will be many challenges and obstacles that will impact who will be selected to these coveted roles. And likely, the atmosphere will be charged with politics.

This is especially true with the marketing departments, who have been charged for years with creating go-to-market strategies that have, if successful, created a competitive advantage that has worked AGAINST the other company. 

As a fractional Chief Marketing Officer, I often have been called upon to help determine a way forward in this antagonistic type of scenario. As an agnostic, objective, apolitical observer, I’ve been able to cut through the emotions and campaigning and focus on the “difference-makers” in determining who should make the cut. 

In my view, there are four immediate tasks to be accomplished by the person chosen to whittle down the ranks: 

  1. First and foremost, work with the executive team to understand the new company’s direction. 

It is critical to the long-term viability of the marketing and communications team to get a deeper appreciation of how the organization intends to grow and compete in this new era and marketplace. How does the executive team want to move forward and what are the short, intermediate, and long-term goals to get there? Additionally, are they considering refining the values and mission that reflects the new company? All of these factors will be critical for the marketing and communications department so they begin to incorporate the new thinking into the market strategy.  

  1. Determine who is best qualified to lead the team.

If both executives are senior in expertise, it will be difficult to decide who earns the CMO role. As I conduct my assessment, I’ll first look at the scope, breadth and depth of the market; the scope of the incumbents’ responsibilities; their managerial skills; their communications skills; and, most importantly, their social intelligence. It’s tempting to evaluate candidates based upon academics, but if they cannot communicate effectively in the new organization, or are not well liked, it will be hard for them to earn the trust of the combined division. The selectee has to understand the dynamics of a good leader in order to help grow and manage the team. 

To determine this, I like to conduct a 360 – meeting with superiors and subordinates, as well as “customers” – in healthcare, meaning those who deliver services to patients. As an example, if the new entity has a large cardiology department, I seek to meet with the head of cardiology as a means of understanding his needs, and how the incumbent has managed to do so in the past. 

Of course, it’s possible that neither candidate truly has the experience to manage the rigors of the combined role. You have to be prepared to recruit from the outside in order to move the combined entity forward. 

  1. Ensure this can happen in a bipartisan way.

Unfortunately, it’s a reality of the situation that can’t be underplayed – positions will be eliminated. Even more so, it comes at a time when M&A activity is at a frenzy, which means such thinning of the ranks is a trend of which most of the marketing team is keenly aware. 

It’s important to clearly explain the types of roles that are needed in the new marketing environment – for example, if traditional advertising is being swapped for a larger digital footprint; or if there’s a need for content marketers to write blogs as a means of helping the combined entity to become a thought leader in the community.

This is a great time to encourage all team members – regardless of from which team they originated – to demonstrate their appropriateness for the new roles, learn new skills, invest in their future, or, possibly, bring to your attention some latent skills that could be useful in the new regime. Encourage the team members to apply for these new roles, or happily provide them with a recommendation, so they are able to showcase their skills to potential new employers. 

  1. Determine the optimal number of team members to lead the department forward. 

In considering the right size for the surviving team, it’s important to have a handle on the current, and expected, market share. What is it that they want to own in their segment? What are revenues to date? What are the biggest opportunities for growth? And, what mediums are needed to effectively generate and grow business in this environment?

It may be that it is an appropriate time to consider the right mix of employees versus contractors, to ensure that the organization is functioning most efficiently. During an M&A, everything is under review – contracts, media buys, vendor relationships and the like. This is a great time to do a 360 on the inner workings of the department – a marketing “due diligence,” of sorts, and to ensure that the department size and resources are tied to the trajectory of the new company. 

Of course, open communication with the staff is critical in this time – it would be hard to move forward if this was a protracted process where everyone felt that their livelihood was in limbo. Ideally, you would complete the assessment of the marketing department’s resources and roll out the new plans within a four-to-eight-week period, if possible, post-merger.

A healthcare merger represents a sensitive time for all employees – in particular, those who hope to be a part of the new entity. If you haven’t given much thought to how to blend the cultures and teams, don’t let this important responsibility be the last task on your list. An objective, experienced fractional Chief Marketing Officer can help you to assess the existing pieces, recommend a way forward, and ensure that the best team carries your flag to the goal.

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Topics: Mergers & Acquisitions, healthcare, Private Equity

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