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CAP: A Sense of Regret

One of the anomalies we found during the research was a sense of regret in each of the companies studied that the desired synergies did not transpire, in spite of their best attempts.

Synergies were seen as critically important. One of the ways in which this synergy would be measured would be through cost savings, and while there was an average of 83% agreement that cost savings were important, there was only 63% agreement that cost savings were actually accomplished. Most of those came from downsizing after the merger was complete, rather than any other method.

Meanwhile, the companies clearly saw the importance of the cultural fit, as shown by the following:

  • Cultural issues will affect synergies: 85% or 93% (the question was repeated)

Yet, the execution was done quite differently.

In response to the survey questions regarding the pre-deal phase, the following responses were received (with 0 indicating Disagree, and 100 representing Definitely Agree):

How much value did your company place on the following items in the pre-deal phase?

  • Identifying issues and preparing a rigorous plan for conducting the due diligence stage: 86%
  • Assessing the people. Organizational and cultural fit, and the related risks entailed in various combinations: 63%

They were unable to focus on the cultural aspects of due diligence. For different reasons, each of them found themselves working against the clock and focused solely on the short-term objective of being successful at the right price while raising the capital needed.

In some cases, the leadership of the new entity did not create an environment in which synergy was a priority. In some cases the new leadership of the company was more interested in establishing control over the new entity. In others, the leadership tried to protect what had been a winning formula when the difference in national and corporate culture turned out to significant. And in another, the new entity showed only a change in ownership, but no significant change in cost structure, company name, brand or leadership.

At the time of the study, there was no evidence of the kind of cooperation that results in real synergy either through shared talent, intellectual property, technical know-how or consolidation of important functions. There was a feeling expressed that not enough was understood or put in place with respect to the new national culture, corporate culture and kind of leadership required to accomplish this critical goal.

With respect to the issue of how the HR function could have been used, respondents were asked the following: To what degree was HR used to educate the “deal team” about potential people, organizational and cultural risks? The answer was a mere 40%. It seems that in retrospect, they either wish they had done so, or wished that they could have done so, by virtue of having the right expertise at their disposal.

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CAP: A Difference in Perspective

As mentioned in a prior post, the CAP survey results showed that executives desired specific HR-related expertise that they did not believe they had in-house.

At the same time, our surveys demonstrated that there was a significant discrepancy between the perspectives of HR professionals versus other executives involved in the acquisitions under study. Specifically, this difference showed up in response to the question: “What is the right role for HR?”

In analysing the results, we noticed that there was a difference between the two groups, in answers to the following questions. (NB: A 100 point scale was used ranging from 100 / Agree to 0/Disagree. )

What is the right role for HR?

  • Strategic Business Partner: The HR response was 20 points higher (than that of non-HR executives)
  • Advisor to Executive Management: The HR response was virtually the same
  • HR Functional Expert and Implementer: The HR response was virtually the same
  • Project Manager and Thought Leader: The HR response was 13 points higher
  • Steward of the HR Functions: The HR response was 33 points lower
  • Employee Champion/Advisor: The HR response was 21 points lower

While executives seemed to want the higher-level expertise that most would associate as being HR-related, they had a different opinion. They clearly wanted and needed the skills, but they had a hard time seeing it emanating from the HR function.

The widespread nature of the observation (backed up in the interviews) indicates that this is a challenge for the profession in the region, and is not a problem related to a small set of individual practitioners. The truth is, our observation was that HR professionals were not equipped to answer the questions that CEO’s might ask when it comes to M&A’s, such as:

  • how does our company’s culture compare against those across the region?
  • what is the difference between acquiring similar companies in Trinidad vs. Guyana?
  • what are the best practices in integrating two different corporate cultures in the region?
  • who are the HR professionals you know in Belize that could be candidates for an acquisition in that country?
  • how deep is our talent pool and is it sufficient to provide the executive leadership we require to undertake one acquisition per year for the next 6 years?

These are sample questions, but they together comprise the essence of the kinds of questions that Caribbean CEO’s leading M&A’s have that, at present, most HR executives are not equipped to answer.

This is not to cast blame on those HR executives who were in the study. The data and the studies from which HR executives would glean answers to these questions just have not been done, the books have not been published, the blogs have not been written and the discussions have not been had.

Hopefully, CAP might make a useful contribution and a difference.

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CAP: A Search for Expertise

The in-depth conversations that made up the bulk of the interviews conducted in the study were probably the richest part of the experience.

One of the strongest and most disturbing points was the need by executives to have particular distinct competencies at their disposal. Given that the study focused on distinguishing best practices in the implementation of acquisitions, the focus of these competencies are most likely to be found in the HR function.

One response stands out in connection with the following question:
What is the importance to accomplish M&A’’s….. in the area of:
Expertise with people/organization/culture integration? On a scale of 0 to 100, with 0 indicating disagreement, and 0 indicating full agreement, the score given was 94%.

When asked what the current level of capability was to accomplish M&A’s with their organization in the same area, the response fell to 62%.

Our research showed that while executives were looking for this particular expertise in “people/organization/culture integration”, they were steadfast in not looking to their current HR executives and managers for that support.

This dichotomy showed up all throughout the study: a refreshing sensitivity to cultural differences and the need to account for difference in corporate and national culture, coupled with a lack of faith in the HR expertise on staff to provide what they said was needed. We connected that with a variety of roots causes, all of which were mentioned in the interviews:

  • A historical bias to view HR as little more than “Personnel.” In this case the HR executive would have to take the lead in changing the popular perception.
  • An uneasiness with their HR department’s ability and competence to play a strategic role
  • The inability of the HR department to effectively get itself into the fast-moving waters of an acquisition process
  • A failure of the HR leader to clearly establish their knowledge and expertise in the area of M&A’s before the opportunity came up

A deeper investigation of the exact cause would be the subject of a different study.

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Critical Thinking vs. Faithful Following

One of the grim reminders of plantation slavery in the Caribbean is how well we were trained not to think.

To say it differently, it has to do with how well we were trained to follow without questioning. This tendency that I see widespread in our people across the region does not augur well for business, as critical thinking is a key competitive advantage in a world that is coming to rely more and more on knowledge workers, and less and less on manual labour. Recent studies, most notably in the work of Rich Florida’s “The Rise of the Creative Class” demonstrate that cities marked by lower wages and fewer knowledge workers are less successful by almost every key measure: prosperity, crime, unemployment, etc.

The truth is, the colonial powers in the Caribbean did a good job in subjugating large numbers of slaves with a combination of physical force and religious fear. In Jamaica, for example, news of the Haitian Revolution of 1791 in which former slaves set themselves free, while killing thousands of their former owners and master, caused a stir in Jamaica’s white planters class. They too were vastly outnumbered (by more than 10:1, I believe). They too were using brutal, physical methods to subjugate their slaves.

Upon emancipation, it was feared that when the Negroes took their revenge there would not be a single white person left standing. However, that did not happen, and it was not only because of the possibility of brutal repression.

Instead, the fear of God had been driven into the hearts of their former employees. Christianity was unknown to the Africans that were enslaved. Today, there is only the slimmest of evidence remaining in a handful of religions (obeah, vodun, etc.) that the slaves brought to the Caribbean had had any exposure to any other religion than mainstream Christianity.

The religious transformation was virtually complete. Millions of slave and their ancestors were transformed from being Muslims, Animists, Ancestor-worshipers and other religions into Christians.

In the mind of a brutal slave owner, I can only imagine that when a missionary asked a plantation owner for permission to “minister” to the slaves, the owner had no interest in teaching them the liberating power of the gospel and the equality of all people before God! Instead, I imagine that he was only interested in how deeply he could entrench his slaves in a thought-system based on fear that would further subjugate them.

This was not the religion of the ruling class in either Europe or the Caribbean. Nor was it the religion of the ordinary white people in either region.

Instead, it was a customized, weakened and twisted Christian philosophy that was more or less invented by whites were, above else, wanted to maintain control. This control was important in just staying alive, thereby avoiding the brutal fate of the slave-owners in Haiti, but it was also critical in making a good profit.

This determination to make a good profit was of course, paramount, and was the entire reason to have slaves to being with. The minds of the Africans being used to make that profit was seen as a potentially useful cog in the wheel.

But it was just not enough to get the slaves to believe a set of lies and half-truths backed up by scripture. After all, obvious lies can be mis-proven through direct experience by a thoughtful few. This fact is puzzling, as the religious fabric put together by the missionaries and plantation owners now seems so transparent and ridiculous in retrospect, and their motives so patently obvious. Couldn’t a slave have figured out what they were up to, and tell the others?

The final piece of the puzzle resonates even in today’s workplace.

Slaves were taught to follow faithfully. Serious questions, doubts and critical thinking were made evil. The reward for blindly believing was God’s blessing in the afterlife, while the punishment for the sin of doubting “God’s message” was hellfire and damnation.

As a slave-owner, getting this way of thinking into the minds of your slaves signified success of the higher order. It made the job of keeping control that much easier, and reduced the slaves to unthinking, but God-fearing brutes.

Which is what we have in today’s Caribbean workplace, in varying degrees. Not brutes, but workers. Not unthinking, but demotivated and disempowered.

From the book “Why Workers Won’t Work” by M.L. Carter” (a summary of which is available on the Framework Consulting website under Ideas) are the following findings:

  • 76% of workers in surveys have described themselves as “demotivated”
  • Over 51% of supervisors and 83% of rank-and-file workers considered their skills and education to be under-utilized.
  • Some 65% of the rank-and-file workers considered their jobs to be unimportant in relation to the objectives of their organization.
  • Some 66% of supervisors and 80% of rank-and-file workers reported that they are rarely, if ever, consulted about changes that affect their jobs.
  • Some 84% of workers disagreed with the following statement, “In general, the more workers produce, the more management earns, and the more workers will benefit in terms of higher wages and better fringe benefits”.

These are the results of a manager-worker relationship that was born in the slave-master relationship that formally ended in 1838, but has never been discontinued.

Today’s workforce has less and less of a need for manual labourers, and more and more of a need for knowledge workers, yet there is no evidence of a systematic approach to unravelling this historical evil. The results in the Caribbean are clear — the Blacker the country, the poorer it tends to be. In other words, the result of the slave-owners peculiar theology and means of control is poverty, unemployment and crime, and the countries that had more slaves with which to inflict this ideology are suffering the most.

It remains a dicey subject to this today, and it is difficult to see encouraging signs — although I am committed to finding them and writing about them. If the problem were seen plainly, I believe that the mental slavery that Bob Marley sings about could be reversed within a single generation.

Our schools would be focused on teaching our students that their own critical thinking is paramount, rather than the ability the repeat the thinking of others.

Our parents would encourage our children to think for themselves, rather than to just be obedient or else face physical punishment.

Our Christian churches (and mosques and temples) would teach the faithful to skillfully renew their own minds, rather than to merely believe what they are told, and that to do so represents the best path towards the liberation of future generations.

Teachers, parents and pastors have every reason to be frightened by all this, as it contradicts their experience and what they have been taught over the years: ” Don’t do it, or else you will lose control.”

Except that, that’s the voice of the plantation-owners, whispering to us from years past, and it is our duty to steadfastly ignore them.

P.S. The summary of Why Workers Won’t Work can also be downloaded by sending email to fwc-whyworkers@aweber.com

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The EMyth and the myths it dispels


I was so, so very lucky to happen to run into the newest book from Michael Gerber last December, while browsing in a bookstore, entitled EMyth Mastery.

For anyone who is contemplating starting their own business, any of the EMyth books should be required reading as the author does an excellent job of describing what it takes to start a successful company for the long-term. The irony is that very few people truly understand what it means to be an entrepreneur, or what it is that entrepreneurs actually do on a daily basis.

Essentially, most people think that if you do something well, and enjoy doing it, that starting a business doing that thing is a natural next step that should be encouraged.

Knowing what I know now, after 13 years of running my own firm, I would discourage those who think that that is all that is required. Their ignorance will only hurt them.

What most people do NOT appreciate is that there is a distinction between working IN your company and working ON your company that I am only still grappling to appreciate.

Working IN your company means, in the simple example of a roti shop: making and selling rotis.

Working ON your company means setting up the operations processes, policies and turn-key applications that are basically required to make any company successful, and must be customized to make your own company viable over a period of years. For example, the roti vendor would have to develop a standard process, manual and teaching method to standardize the method of making rotis so that

  1. they are made the same way each time
  2. they can be taught and re-taught the same way
  3. they could one day form the basis for expansion

Case in point: it was Ray Kroc’s genius for building a viable, expandable business that turned the store he bought from the McDonalds’ brothers into a multi-billion dollar empire.

The big myth about starting a business is that, for example, it’s the quality of the rotis that will make the business succeed. While that’s important, it’s just not true. Instead, it’s the quality of the business itself (and how it is run) that is much, much more important.

I’ve spent the last month re-tooling my own company and writing manuals for doing just about everything that I think is important. The areas that I have created for Framework Consulting are:

  • Enterprise Leadership
  • Management
  • Financial Leadership
  • Client Fulfillment
  • Lead Generation
  • Lead Conversion
  • Thought Leadership*
  • Marketing

* this is one that I added to the standard set that Gerber recommends.

I had to do quite a bit of reworking of his original ideas to fit my kind of business, but his basic thinking is still the best advice around for small business owners

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CAP: Talent Development

One of the important findings of the research we conducted in the Caribbean Acquisition Project (CAP) is how little was done prior to each of the acquisitions to develop managerial talent.

The reason that there were no more than only one or two companies in the project came from an unfortunate series of failures in the Jamaican financial sector in the early 1990’s. Several companies were taken over by Barbadian and Trinidadian companies in response to tenders that were put out by the government of Jamaica.

At some level, each of the companies was responding to a once-in-a-lifetime opportunity to purchase assets and increase their customer base in a new territory in the region. For each company in the study, there was no well-developed acquisition strategy that they were executing. Instead, they were invited to submit bids, against a particular deadline.

None of the companies involved had a reputation for being facile at executing acquisitions.

Instead, they scrambled to put together their bids and to secure the financial funding and background information to make the deal a reality. This they did successfully, but there were several casualties of this situation that were seen in all the companies studied.

Once the companies were awarded the right to execute the acquisition, they had to face the difficult question of who would lead the new entity. It was as if it was a case of “be careful of what you ask for, because you might just get it.

Obviously, continuing with the prior management had its risks, even if the company was one of the few successful ones.

The problem was that there were no “spare” executives to lead the newly acquired company, and bringing in a new executive to lead the entity seemed to be a recipe for failure. The responses showed this grim reality. In response to the following questions, the responses received were as follows (on a scale of 0/disagree to definitely agree).

  • There is a process that will reliably develop managerial talent to ensure the success of future acquisitions — 50%
  • There are sufficient policies to allow easy movement of personnel between current and future subsidiaries — 47%
  • There is sufficient talent for the company to undertake another acquisition successfully — 59%

(Due to the small size of the sample, and a promise to protect the confidentiality of the companies in the study, I cannot go into the details of specific examples. )

Suffice it to say, each of the companies, upon further investigation, was found to have neither a succession plan nor a management development program when the acquisition was executed.

Furthermore, there was a considerable difference of opinion within some of the companies studied as to the philosophy to be employed in the post-acquisition on the following questions:

  • Should the new company be left to develop its own culture, or adopt the culture of the new parent company, which presumably is a more effective one?
  • Should the new leadership of the company be from the new country?
  • If a temporary executive is used, who should that person be and who should be the replacement?

There were divergent views on the above, the results being that most companies did nothing at all. In many of the cases studied, this misstep has ramifications even several years later.

The truth is, each company was experiencing the consequences of an underinvestment in its senior management development. This effectively prevented the company from undertaking even a single acquisition properly, from the point of view of its leadership.

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CAP: An Early Surprise

As promised in a prior entry, I’ll be building up the paper I’m writing through the more informal mechanism of blogging.

The first surprise is that the data is much richer than I remember. It’s been three years since I last went through the 5000+ data points that were collected in the surveys, and while the findings can’t said to be statistically significant, they are infinitely better than working with just a gut feel.

One of the findings that I’ve discovered confirms a suspicion of mine, which is that we Caribbean business-people live under a peculiar misconception that our territory or country is worse than others.

The survey showed that in response to the statement: Jamaicans as a people are more difficult to deal with (than people in the respondent’s home country), there was a 33 point difference in the responses. Outsiders felt that Jamaicans were just about average, scoring only 45 points on a scale of 1 to 100, with 100 being “Definitely Agree” and 0 being “Disagree.”

On the other hand, Jamaicans scored the response at 66 points.

The same trend continued in response to other questions:

  • Unions in Jamaica are harder to deal with (56 to 69 points)
  • Laws regarding employment are easier on the employee (58 to 80 points)
  • Business practices are more mature than in Jamaica (58 to 73 points)

In each case, the Jamaican response (from executives) was markedly more pessimistic. Without having any empirical evidence, but having the experience of extensive work in each of the three countries involved (Trinidad, Jamaica and Barbados) I would say that a given set of executives from any country (without significant first-hand foreign work experience) would respond the same way.

In other words, the point differences indicate that this is a matter of self-esteem for the executives concerned. I imagine that this matter is only resolved when there is some direct evidence with which to compare one’s home country.

One of the frequent conversations I hear here in Jamaica, is one of frustration, in which a particular situation is blamed on some local or cultural failure. Often, from my point of view, it is nothing of the sort.

Often, there are numerous examples to which I have had first-hand exposure that show that the situation is not a local one, but is one that is either global or common to all developing countries.

For example, some Jamaicans talk about the traffic in Jamaica as if it is the worst on the planet. Here in CARICOM, however, Trinidadian traffic gets so bad at times that patrons are unable to attend a fete that ends at 4:30am because the traffic is congested enough to render the ticket useless (it happened this past weekend yet again).

Some would counter by arguing that the Jamaican driver is among the worst.

While I can’t prove this, I have been driven hundreds of times through the streets of Caracas, and can testify that I would never drive there, for fear of my dear life being lost in the mayhem I witnessed. I imagine that Caracas is only one of many cities of its ilk, and the streets of Kingston offer no comparison.

I can only think that the Caribbean Single Market (CSM) will help to resolve some of the ignorance that comes from a lack of “working exposure” (as opposed to “vacation exposure” from which little can be learned).

Perhaps the issues of self-esteem will go away when with an increase in commerce comes an understanding that much of what we experience in the CSM has less to do with territorial shortcomings, and more to do with historical forces, most of which are related to how our countries were under-developed by Britain.
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On Caribbean Acquisitions

In 2001-2002 Framework Consulting conceived and executed the Caribbean Acquisition Project, a survey of 7 Jamaican companies that had been acquired by foreign entities. Given the historical failure of mergers and acquisitions to create new value (estimated at between 60-80% of cases), we felt that there was a unique opportunity to take advantage of the number of acquisitions taking place to learn some valuable lessons. Hopefully, the lessons learned could be shared with other companies.

Specifically, we were interested in finding out how companies were planning for the hardest phase of M&A’s — post-acquisition/integration. Many prior studies have shown that the cultural and organizational issues are the most difficult, and the ones that make or break acquisitions. Therefore, the Human Resource function has an important role to play, and our hypothesis was that the way the HR function was used or not used had something to do with the future success of the acquisition.

Several companies were approached — there were ten companies that were thought to be possible candidates at first. Five consented to be surveyed for the empirical part of the study, while informal and public data was gathered on the others. Each of them were outright acquisitions, rather than mergers. (Incidentally, there is a paper from our website entitled ‘Equal/Shmequal: It’s never a Merger of Equals” in which Amie Devero argues that Mergers always turn into Acquisitions.)

Now that I am in the process of writing up the results for publication, I am faced with a mountain of data, and no easy way to classify the findings that were discovered. It’s easily a case of having too many options to choose from, yet the complicating factors do make the choice that much more difficult.

The greatest complicating factor is that it is devilishly difficult, even years later, to prove that a company was successful or not successful based on the practices they used. The number of companies in the study is so small that statistically valid comparisons cannot be made to draw general conclusions. Also, the variety of companies in the study is so broad that direct comparisons are not possible.

While it is true that certain companies are enjoying greater success than others, even the successes have been uneven, and tend to depend on when the line is drawn to determine success. In a small data set such as the one I am working with, it makes things difficult.

Furthermore, the fact that different executives were interviewed for the study meant that while a good deal of useful information was gathered, in several companies there was no consensus view. In other words, the opinions were wide and varied and there is no way to reliably create something like a statistically “average” response for each company.

So, how best to proceed?

At one level there are the basic questions that the study set out to answer, and there is a mix of empirical and anecdotal information to back up the answers derived.

At another level there are the surprises — the discoveries that we didn’t expect. To be rigorous, this means going back and adding the questions in the form of new hypotheses and testing them against any empirical and anecdotal date we can find.

As I go through the process, I’ll share the early results — after all, in the age of blogging, information shared early will help fulfill the goals of the project long before the book for which it is intended is published (in 2007, hopefully).

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“Being Positive” — A recipe for failure

It used to be that the advice given to a new manager to “be positive” was good advice.

In fact, there was a time when movies used to be all about good things, and rarely attempted to get into the nitty-gritty underside of everyday life.

However, times have changed, and someone who attempts to “focus on the positive” is regarded with a well-earned sense of suspicion. This suspicion deepens, and eventually hardens into cynicism when times get difficult. Why is this?

Well, when the chips are down people who try to focus on the positive exclusively, eventually come to be seen as dangerous, because they tend to ignore reality in their attempt to be upbeat. And today’s followers, whether it be in politics, corporations or sports are more tuned in than ever into the nitty-gritty reality of life.

Blame television, the movies, video games, the news media… whatever. I prefer to think that there is an unwillingness to overlook the raw unvarnished truth, and that that is a sign of maturity and growing consciousness that I can see at work here in the Caribbean.

The message that is hard to swallow here is that the truth that people hunger to hear the most from leaders is not how a situation is a mess (although that may be true). Instead, they want to hear from the leader where they realize that they have contributed to the mess themselves, and have now had some kind of insight from which they can glean some hope.

This degree of authenticity is fast becoming the new currency of leadership.

Some are seemingly rich in it — Oprah’s apology after defending the author James Frey’s lies comes to mind.

Others are poor — George Bush’s inability to be able to remember any mistakes he has made on several public occasions comes to mind. PJ Patterson’s insistence on “solid achievements” in areas of minor interest, and inability to take responsibility for failures also comes to mind.

The psychologist Carl Jung said “Everyone carries a shadow and the less it is embodied in the individual’s conscious life the blacker and denser it is. At all counts, it forms unconscious snag, thwarting our most well-meant intentions.”

I would add to that and say that the harder a public figure tries to look good, the worse they look. Why? The tactic that most use is to try to find ways emphasize their good sides and play down their bad (i.e. shadow).

However, a leader that plays down his bad size as bluntly as Bush and PJ do only seem to drive up the suspicion of those listening that they are either

  1. hiding the fact that they know they have major failures
  2. are unaware of the fact that they have major failures

As we enter 2006, and as people increasingly insist on “Keeping it Real” this style of leadership is sounding more and more hollow.

The leaders of the future will not only know that they have a shadow, but they will have the courage to openly talk about it. The more they talk about it, the more people will recognize themselves and be able to relate to the leader, and if the leader can show that they have found a way beyond their shadow, that will inspire people more than any “positive talk” can.

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Business Week published an interesting article related to this topic available here.

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Going Wiki


Framework is becoming more and more wiki.

And, no, wiki has nothing to do with witchcraft (that’s “Wicca.”)

Instead, wiki refers to online collaboration – a way of creating new knowledge, meaning and information using internet based tools that allow up to millions of people to work together to share information in ways the benefit everyone.

For example, Wikipaedia is probably the best known application. Wikipaedia is an online encyclopaedia that is owned by millions of contributors, and therefore does not rely on the specialized knowledge of a handful of “experts.” This is an eminently good thing, as I can vividly recall going on a boring shopping trip with a friend in the U.S., and finding a very old encyclopaedia from 1907 or so.

It was fascinating.

I was flipping around the pages until I got to the entry for “Negro.” It had a line picture of something that looked like a cross between the ugliest black man I have ever seen and a massive ape. Furthermore, the explanation ran something like this:

“Negro: an inferior human, typically characterized by lazy, shiftless behaviour.”

It went on in this vein for an entire column. So much for the “experts” of that time.

After months of hunting around I finally found a wiki application that we could use on Framework projects. The application is PBwiki (the PB stands for peanut butter… of course.) The link to their tour is here and the home page on the site is www.pbwiki.com.

I recommend the application for its ease of use and everyday pricing (some of the alternatives were ridiculous). It is quite easy to use, in keeping with the democratic of those of us who are “going wiki.”