Blending disparate organizations and people effectively is very hard to do, and few do it adequately (much less well). It’s hard enough to get human beings to build decent relationships in personal life. But it is doubly hard within and between organizations, especially since those relationships are expected to produce value.

M&A is one of the biggest sources of relationship problems in business, both in the relationships it creates and the relationship it destroys. As we consider what it means to “commit to the relationships,” we’ll dig into what makes these difficult situations work –or not.

The work of every organization relies heavily on relationship- relationship with other organizations (joint venture partners, manufacturers, distributors, vendors, and suppliers) or with others inside our organizations (project teams, problem-solving teams, creative teams, interdepartmental or inter-business-unit collaboration and normal daily work-flow interactions).

In an organizational setting, leaders need to make strong effective relationships a high priority. Committed relationships lead to high performance because new ideas emerge wherever two or more skilled, passionate people are working together. They commit to the relationships and expect high performance to follow. In most M&As today, the commitment is to a shared interest (often a short-term interest), even at the expense of thousands of relationships.

Professional relationships depend upon two very high-level, make-it-or break-it factors:

• Compatibility of the two sets of expertise and assets
• Compatibility of cultures and people.

In my consulting with teams and on M&As, I’ve observed that the leaders always seem to consider only the blending of complementary skills, assets, talents, and competencies.

For a successful M&A to occur as a leader you need to focus on the right things:

1-       How this new relationship will benefit the customers and clients. All too often during a merger, leaders fail to manage and promote the interests of customers and other key stake holders. It’s too easy to focus on the internal loose ends, distractions, disruptions, that are typical during M&A.

2-       The second key element of successful M&A activity is the blending of cultures and people. Often, leaders lack of “due diligence” in regards to assets and competencies pales in comparison with their lack of consideration about culture and people. “Of course we’ll all work together and get along” they say. “Why wouldn’t we?”This is a fatal illusion

Organizations mired in unproductive activity, complaining, and turf battles strongly indicate an absence of powerful reasons to collaborate. Nature abhors a vacuum. If nothing valuable fills the “space” between us, nonsense will inevitably pour in. It’s easy to become so focused on sorting out of all the cultural disconnections and challenges that the real goal is also lost: to maintain and enhance performance and productivity during the transition. Leaders know that there can be no breaks from excellence in serving the market.

Building a human venture that works well is a rare occurrence. The physical merger may make sense, but only if there has already been integration on less visible but more substantial ground. Think about building on intangible ground- shared vision, mission, values, and strategies- rather than only thinking of the tangible elements you can see and understand.

Have you gone through a merger or acquisition? What was the impact on the culture in your organization? Did one entity dominate and force their culture onto the other, or did a truly new culture emerge?

Formulating a strategy is not an everyday activity for your business or unit, and some firms drive along for years with the same strategy and address that strategy only when there is a problem.

So if you are not highly practiced at formulating strategy–or you want to give a helping hand to someone on your team who is tackling strategy for the first time–here are steps to follow. They involve looking both outside and inside the organization, since the market to be served is outside the organization and the capabilities for making the strategy work are within it.

1.     Identify External threats and opportunities

At the highest level, strategy is concerned with the external market and how the firm’s resources should be allocated to create an advantage

There are always threats: macroeconomic trends that may reduce your customers’ ability to pay, demographic changes, substitute products that could undermine your business, new entrants, and suppliers who might cut you off.

There are always opportunities: an un-served customer base, a new-to-the-world technology, a failing competitor and so forth.

Thus, the first job of strategists is to scan the outer environment for threats and opportunities.  Form a team of executives, a department manager, and individuals with special insights.

A strategy must be able to cope with these threats as they will always remain. The team’s job is to identify the core threats and opportunities. Avoid having anyone on the team who appears complacent or wedded to the status quo.

Gather the views of customers, suppliers, and industry experts. These outside views can be powerful. It’s the team’s job to find anything that could threaten a firm’s current business or point toward new directions in the industry or market.

2. Identify internal capabilities, practices and resources

Resources and internal capabilities can constrain your choice of strategy.

These internal capabilities–especially the human ones–matter greatly and are too often overlooked by strategists. A strategy can succeed only if it has the backing of the right set of people and other resources; these must be properly aligned with the strategy.

3. Address threats and opportunities

Develop strategies that focus on each core threat and opportunity:

• Look for missing information;. Determine what data you need to better assess a particular strategy. Then get it.

• Check all facts, and question all assumptions.

• Create many alternatives. In some cases, two different strategies can be combined to make a stronger third strategy.

• Seek advice on the leading strategy choices among the wisest heads you know.

4. Build a good “fit”

Michael Porter, has stated that strategy is more than just a blueprint for winning customers; it is also about combining company activities into a chain whose links are mutually supporting and effective in locking out imitators.

Competitive advantage comes from the way an organization’s activities fit and reinforce one another.” Each activity should support the other activity, involving a whole system, not a collection of parts; targeted towards a higher goal.

5. Create alignment

Alignment is a condition in which every employee at every level understands the strategy, and understands her role in making the strategy work Once you’ve developed a satisfactory strategy, your job is only half done. Now you have to create alignment between the people and the activities of the organization and its strategy. As a manager, your role in creating alignment is twofold:

• Communicating. You must help people understand the strategy and how their jobs contribute to it. You want to create a situation in which even the lowest-ranking employees can articulate the goals of the organization and explain how what they do every day furthers them.

• Coordinating work processes. You must align people’s activities with the business’s strategic intentions.

Recognize the need for change

Strategy formulation, then, is an ongoing requirement of good management. It is, to quote Michael Porter, “a process of perceiving new positions that woo customers from established positions or draw new customers into the market.” This is a process you must permanently embed in your organization. Unfortunately, many management teams cannot recognize when their strategies have become obsolete.

  How often does your company re-strategize? If it doesn’t, who would be the people to conduct this duty?

You can tackle these tough questions with your team or with more senior managers. What is your experience with trying to change organizational structure?

A lot of organizations start culture change by changing the managers or bringing on new staff and others start through reorganizing, but is that where the process of culture change should start? Single-fix changes, such as the introduction of teams, or knowledge management or Lean, or some new process, may appear to make progress for a while, but eventually the interlocking elements of the organizational culture take over and the change is inevitably drawn back into the existing organizational culture. Organization culture is a reinforcing system where a set of goals, cannot be accomplished except through a compatible set of roles, processes, values, attitudes, communication practices and assumptions. Hence, changing of the elements of organizational culture without the rest of the elements compatibly fitting generates rejection.

Culture change is one of the most challenging tasks for management, and requires interaction of all parts of the organization. Change attempts often fail because of the assumptions made from the entire organization. The start of organizational change comes from a clear vision for the organization from management, but a clear vision can’t stop within management’s circle on the contrary a clear vision means that the entire organization needs to be inspired by the same vision. Inspiring your entire organization to create a culture change occurs when the organization is committed to a purpose clearly outlined in their vision, as purpose allows individuals to move forward through fear of change.

However the order in which management deploys cultural change has a critical impact on the likelihood of success. Inspiration to change the minds of those within the organization is the most fruitful strategy; inspiration can be implemented in the following manner:

1-    Vision

2-    Storytelling

3-    Conversations

4-    Persuasion

5-    Role Modeling

6-    Strategic Planning

7-    Decision Making

8-    Learning

Solidifying the change conducted through inspiration requires management tools such as role definitions, measurement and control systems. Beginning with a vision or story, but failing to put management tools that will cement the behavioral changes leads to failure in change. A lot of organizations believe what will allow organizational change is intimidation tools of correction and punishments, but the matter of fact  is that they are used as a last resort when all else fails. These lessons are evident in successive efforts to change the organizational culture. We have recommended some clear steps to help in organizational change:

• Don’t start by reorganizing. First clarify the vision and put in place the management roles and systems that will reinforce the vision.
• Don’t parachute in a new team of top managers. Work with the existing managers and draw on people who share your vision.
• Generate a clear vision of where you want the organization to go and broadcast that vision rapidly and forcefully with leadership storytelling.

• Identify the core stakeholders of the new vision and drive the organization to be continuously and systematically responsive to those stakeholders.

• Define the role of managers as enablers of self-organizing teams and draw on the full capabilities of the talented staff.
• Develop and put in place new systems and processes that support and reinforce this vision of the future, drawing on the practices of dynamic linking.
• Introduce and consistently reinforce the values of transparency and continuous improvement.

• Communicate horizontally in conversations and stories, not through top-down commands.

Have you ever been involved in leading an organizational change effort? What was the primary focus? What was the result? Looking back, what do you think you should have done differently?

How might you plan a change effort to take culture into account? What would you do to be credible when you asked others to change their behavior?

Capacity and competence are like glides. They can fly, but not indefinitely, and they might not hold up during turbulent times. Who you are, will take you much further than what you can do. Character will stand the test of time and hold up when the wind howls and the storm rages around you.

Most leaders focus too much on competence and too little on character. Most people plateau, quit, or are relieved of their leadership responsibility over character issues that competency issues.

In THE LEADERSHIP CHALLENGE, authors  James Kouzes and Barry Psoner surveyed nearly 1,000 managers. The asked the following open ended question: “What values (personal traits or characteristics) do you look for and admire in your superiors? More than 200 different values, traits and characteristics were identified. Subsequent content analysis by several independent judges reduced these items into 15 categories. The category that got the most frequent response was integrity. They defined integrity as being truthful and trustworthy, and having convictions. As the study was conducted in the United States do you think a global study would come up with different results?

Being a person of character means that I am constant at home as I am in public, and I am a leader who can be trusted by my team, family and public. Competence is the engine and character is the steer that results in consistency. Your job should not define you, but the way you do your job reveals who you are. As all leaders if you are concerned with the bottom-line, focus on character because that will help you with the bottom-line.

Linda Hill and Kent Lineback argued in their blog post  “Intentions are the heart of what we call character — the values, norms, goals, and priorities that drive someone’s actions and choices. People trust us because we have the right intentions, which are those intentions people accept and agree with.” Asking an uneasy question “What are the right intentions?”

There is no consensus on a definition of character. Here we want to define character through focusing on the values. Values are beliefs that people have about what is important or worthwhile to them. Values influence behavior because people seek more of what they value. If they can get more net value by behaving in certain ways, they will. So for example, will you prefer to do what’s right to doing what’s profitable? As simple as this question might be, answering it defines where your value is and what type of character you have as a leader.

Values therefore can be seen as the guideposts for behavior. Some people value their autonomy very highly, some value social interaction, some value the opportunity to be creative, some value work-life balance, and so on.  It’s not unusual for leaders to experience value conflicts in certain situations. When loyalty conflicts with honesty, when fairness conflicts with pragmatism, or when social responsibility conflicts with obligation to shareholders, people become conflicted. It is in these conflicts of values where your character is developed. What are the values that shape your character?

Your business model describes the rationale of how your organization creates, delivers and captures value. Some organizations don’t realize that the creation and deliverance of value does not reference profits but references your customers, employees, communities, shareholders, and investors. In value creation profits are the last thing you achieve, that does not mean that profit is not important, but profitability is a result of uniquely created value. The majority of businesses in Egypt, Middle East and North Africa, and even worldwide duplicate value, deliver value and capture value but do not create value. I know this statement might challenge a lot of executives, leaders and managers, but before you disagree step back and ask yourself does your organization create value or duplicate value? Who then is creating this value being duplicated by a lot of organizations? The value created in a lot of organizations is not value created from within the organization instead it is value duplicated from competitors. Is the act of duplicating value from other competitors weather they are local or international healthy for your organization? It can be more cost effective and quicker in achieving results but is it sustainable, is it worthwhile for you as an organization?  Innovations to improve processes and products, however, are often expensive and time-consuming, requiring a considerable upfront investment in everything from research and development to specialized resources, new plants and equipment, and even entire new business units. Yet future returns on these investments are always uncertain. Hesitant to make such big bets, more companies now are turning toward business model innovation as an alternative or complement to product or process innovation. A recent global survey of more than 4,000 senior managers by the Economist Intelligence Unit found that the majority (54%) favored new business models over new products and services as a source of future competitive advantage.

Business model innovation can also help companies stay ahead in the product innovation game, as you’re always one innovation away from getting wiped out by a new competing innovation that eliminates the need for your product. A good product that is embedded in an innovative business model, however, is less easily shunted aside. Someone might come up with a better MP3 player than Apple’s tomorrow, but few of the hundreds of millions of consumers with iPods and iTunes accounts will be open to switching brands.

Creating value is inventing value, giving birth to value, satisfying an entirely new set of needs that customers previously didn’t perceive because there was no similar offering.  A lot of business models for organizations in Egypt are set up to execute already existent needs or values, how do you transform your organization to create value, and maybe become another Apple in your industry? Is that possible, or do you have to be a large organization such as Apple to conduct business model innovation?

Today countless innovative business models are emerging. Entirely new industries are forming as old ones crumble. Upstarts are challenging the old guard, some of whom are struggling feverishly to reinvent themselves. How do you imagine your organizations business model might look two, five, or ten years from now? Will you be among the dominant players? Will you face competitors brandishing formidable business models?

If your organization is keen on Business Model Innovation as part of their strategy they need to look into four main areas of business:

1-       Customers- An organization must make a conscious decision on about which segments to serve and which segments to ignore.

2-       Value Proposition- Adding and linking novel activities catering to your organizations segmented customer (quantitative or qualitative) in a manner that solves a problem or satisfies a need

3-       Infrastructure- Changing one or more parties that perform any of the activities What Key Resources does your value proposition require? Distribution channels? Customer relationships? Revenue Streams? This can be physical, financial, intellectual, or human.

An innovative business model can either create a new market or allow a company to create and exploit new opportunities in existing markets. Dell, for example, implemented a customer-driven, build-to-order business model that replaced the traditional build-to-stock model of selling computers through retail stores. Even under conditions of resource scarcity, organizations do not need to renounce innovation as a way of enhancing their performance prospects. Rather, managers should consider the opportunities offered by business model innovation to complement, if not substitute for, innovation in products or processes. Business model innovation can allow managers to resolve the apparent trade-off between innovation costs and benefits by addressing how they do business, for example, by involving partners in new value-creating activity systems.

The success of a businessmen is a function of their ability to mutate into a social entrepreneurs, while social entrepreneurs would have  never succeeded without the capitalistic spirit that drove them at the beginning of their journey.  Both types of entrepreneurs are inextricably intertwined and should not be differentiated. Can for profit organizations be separated from the community they are in? If a company is in itself a small world, then it is also a perspective on the world, one of its reflections, and one of the faces of society. Look at your organization does it no resemble a community disregarding of size or industry?  Modern entrepreneurs are now aware of this responsibility and wish to part ways with an attitude of mere utilization of the world. How is that possible?

1-       Social Innovations are based on user-centered innovation (human centric design). The creation of ideas products, and services should arise from the direct need of your communities which your organization is part of.

2-       Every product or service is eventually targeted to a certain community directly or indirectly, assess the effect of the value you deliver on the community and whether or not it truly develops the community and creates an ecosystem

3-       Allow the face of society within your organization to become similar to the face of society you serve as your clients

4-       Generate a method in which each team member is able to generate a initiative that dually increases bottom line results and fulfill societal needs

So, if social innovation can become an intellectual and methodological model, could it in turn end up trapped into formulas and methods? Not unlike classic entrepreneurship, it is mainly driven by unusual characters, closer in kinship to the adventurer or the navigator than to the manager. Creativity in social innovation arouses a sense of Purpose to everyone within your organization because of its overall objective of advancing the well-being of individuals and communities, but also in relation to its “outstanding, non-standard character.” While it is fascinating to observe social innovation in action, there are several challenges on how this innovation can be intertwined and integrated with your business model and process. This process should be nurtured by leadership of the organization but brought into life by team members; involving them in the making has a replica effect on areas of collaboration, culture, loyalty and turnover. The power of social innovation comes from the people.

How can social innovation be managed?

This is where Vision and Strategy prove to be decisive. This boils down, in short, to tuning in and empowering oneself and one’s company to notice projects and nurture them. Crucial element in a project is to achieve sustainability, by simply being profitable.  It’s basically a cross-fertilization initiative, aiming to create a dialogue between different worlds. Today we are witnessing a proliferation of initiatives and proposals to change communities globally. Yes, what I am saying is developing communities and people should be profitable for your organization. The concept of sustainable development is a symptom of this situation: few people had heard of it ten years ago, and now it is taking the center stage! Social innovation, thus, would be one of the elements leading to the reconstitution of a “reformist nebula”. The beginning of a cycle of innovation: the invention, on the fringes of the current central model, of tomorrow’s economy.

What obstacles does capitalism face to develop communities? Is there a conflict of interest? Does developing communities develop bottom line results on the short term, long term, both or none?

Social Innovation is defined as new ways of doing things in order to meet social needs.” It can involve two types of stakeholders: activists and entrepreneurs. Activists have a commitment with charity or with social emancipation. As for Entrepreneurs it is quite the opposite: their ambition is to expand the market by bringing their business to it, either by competing with existing players, by offering new services or new products, or by targeting new customers.

If your organization is for profit, can they intertwine social activities with their business cycle, as a catalyst for development?

On the other hand if you are a non-profit can you become for profit to become sustainable without losing focus of your vision?

More recently, the development of open source systems and the fascinating economic uses of free services have shown how the profit economy could revitalize itself by incorporating non-profit exchange. Organizations operating in Egypt have a growing need for business devolvement in the midst of an unstable economic market and large underdeveloped community.  Organizations find the Egyptian market to have a potential of 90 million customers and/or employees, unfortunately they are unable to capitalize on this opportunity. The fact is at least 40% of the population cannot be employed due to lack of education, health or suitability neither can they be a potential customer as they cannot afford any of the products or services provided.  The solution is in developing these communities, not only for the benefit of the communities but for the benefit of business development. Yet we approach community development in a conventional method through, CSR programs established, which are terminated in the effort of cost reduction. On the other hand nonprofits are suffering from either lack of funding or structure to constitute a true change. Can the solution be in the integration of social need and business need?

All things considered, it would not be the first time. The mutual insurance companies historically founded by the workers of the nineteenth century were the very womb where social insurance systems of the present day were born – the latter being one of the pillars of modern capitalism. Absorbing significant financial flows to pay millions of people, they provide healthcare safety. In India, an NGO which funded cataract surgery suddenly saw its funds dry up. While not very expensive, many families were unable to afford it. Then an American volunteer had the idea to have them pay anyway, but based on what they could give: it appeared that they could afford a budget of about fifty dollars, and on that basis the NGO was able to sustainably build and not rely on aid or charity. This volunteer turned into a contractor, manufacturing intraocular lenses in large quantities. He now runs a profitable company and has contributed to restore sight to four million people. So, at once, one has profit and non-profit.

Yet the distinction between business entrepreneurs and social entrepreneurs was precisely based on the differentiation between profit and non-profit. What happens with such a differentiation, if the creation of social ties is to become the core for new economic activities growth and development in Egypt?

Good ambition combines a desire to move up with a commitment, to adding value for everyone involved, and marked with self discipline rather that domination of others.  Humble leaders refuse to kill the minds, passion, ideas, careers, and sense of worth of their team members to scramble toward the top.  Humble Leaders don’t allow their own ambitions to blind them to the needs and success of those around them. This attitude by a leader in itself is what I see to be innovative leadership which allows room for others to deliver value through adding value to those around you resulting in a high sense of loyalty, morale and culture.

A lot of leaders are afraid, and wish to avoid their team identifying them as week hence decide to take a sharp turn from humbleness, which causes more damage on the culture, loyalty, and morale of the team. Humble Leaders value others and they build the same “others first” humility into their organizational cultures, as a sign of strength and not weakness as they are confident in their abilities yet have an understanding that their job is to lead others. They know that developing respect for others starts from the bottom up and they remember that no one is ever very far from the bottom and that the arrogant are especially close to it. If a leader does not have that attitude it is hard to expect from their team to have it, and as a result team members are working in silos. A silos culture treats the individual as a GOD and creates “its all” about me attitude. On the other hand a culture lead by a humble leader allows people to understand that your opportunity will become effective when you become effective.

Leadership comes with a lot of praise and criticism, but believe it or not criticism is a lot easier to handle for a leader than praise. Criticism of any leader provides them with room for development and the ability to develop their leadership style, should they accept criticism. Praise especially for the arrogant leader provides them with blindness of their team, market, ability to learn, weaknesses and strengths. On the other hand a humble leader becomes a lifelong learner, to become successful and can handle praise in the way it should be handled; especially as praise is needed for a leader. Arrogant leaders are always guided by ignorance- simply as only someone who is ignorant about the size of life can be arrogant enough to think they have it figured out. With a contrasting difference to humbleness which provides a realistic assessment of a Leaders true ability, focus on development of others, builds character and provides self discipline. Confidence and humbleness seems to be opposites, but in reality they are very closely interrelated and mutually supportive. Humbleness prevents confidence from morphing into arrogance and confidence prevents humbleness from morphing into debasement. For that reason we see humbleness to be self serving training character of a leader that gives them sustainability, loyalty, morale, impact, and results?

Do you see humbleness as a weakness? What ways has humbleness affected your leadership negatively? If you are not humble are you arrogant, or is there a compromise?

Passionate Leaders throughout ups and downs have this light within them that allows them to push when times within the organization are hard, a problem can’t be solved, or an idea is needed. “Passion” comes from the Latin root “to suffer”, which sheds light on the survival ability of a passionate leader during suffering. On the other hand there is a danger with passionate leaders, when there drive does not result in measurable results.  Passion without perspective and/or reason can actually serve to distort one’s perception of reality. Just because you can convince yourself (or others) that your position is correct, doesn’t necessarily mean that it is… Just as there is a very fine line between brilliance and insanity, there also exists a fine line between passion and fantasy. Healthy passion for one’s business actually brings focus and clarity of thought, which serve to accelerate growth and create sustainable success.

Passion is built into each individual when born, unfortunately a lot of individuals are put into a system where they don’t realize they have passion. Instead just work diligently to be what society expects them to be.

How many leaders today can say ”We have been taught to search for our passion?” Does your organization teach leaders to search for their passion?

Allowing leadership within your organization to search for passion can be a fruitful exercise, not only will it rejuvenate your company but it will drive results, innovation, culture, and morale. The key to this exercise is linking passion with results, other than that your company will be a dream shortly. Are you doing a job that you are passionate about? Lack of passion is a problem a lot of organizations encounter every day, and they lack to make that breakthrough innovation, the difference in their community, or simply the difference within their organization. Passion does not replace knowledge, expertise or experience but it’s a drive that will enable you to attain all of those even if that means hard working hours.

What effect does the passion of your leader have on your morale, performance, appetite to innovate and making a difference? On the other side of the coin what about you as a leader, what difference do you achieve when you are passionate about something, how does your team react or deliver? Passionate leaders take people into unchartered territory, which delivers purposeful results that creates legacies.

As part of leadership management you can discover your passion even if the industry you are in, is not what you are passionate about. The search for your passion and how to integrate it within your job function to deliver higher value as a leader is a process. Prior to starting the process there are some facts about passion that you must use to avoid moving from passion to fantasy

1-       Passion in a leader is a deep and abiding commitment to a cause, a vision, an enterprise.

2-       Passionate leaders think clearly and seek independent counsel and advice to continually gut-check and refine their thinking

3-       Effective leadership teams have a balance of left-brain and right-brain thinkers from a variety of backgrounds in order to draw from the broadest possible array of experiences when formulating positions and options.

4-       Passion which is balanced by perspective and reason can reveal purpose, but passion absent those filters can just as easily impede purpose

Are you a passionate leader? Do you have this quality of perseverance through adversity? Can you stay focused and moving toward success even when things are tough? Is your passion creating clarity, focus and purpose, or is it blinding you from seeing the reality of your current situation? How can passionate leaders translate their passion to results? What problems do passionate leaders cause in a business environment?    

I’d love to hear how you or others have demonstrated passion and the impact it had on your life or your business.