An organization in the health-tech space had been executing a growth strategy resulting in a number of post-merger integration opportunities. One, in particular, had become an all too common example of value realization that never materialized after the deal. For a number of years, the acquired company had been the woefully underperforming backbone of the organization when it was supposed to carry the company into an emerging, but well-established market. The challenges were numerous: changing government regulations, massive underutilization of talent, and a lack of successful post-merger integration into the business at large. The total impact of these challenges was staggering: the business unit’s revenue declined by over 60% over 3 years, employee engagement scores were aggressively declining, and the business unit was now pulling invaluable resources from across the enterprise to fight fires, straining any efficiencies across the enterprise. This new business unit’s system was simply broken – to the detriment of the enterprise.
The organization’s executive team considered two paths forward: either sell off the business unit at a loss, or attempt to turn it around enough to mitigate their losses at the time of a future sale. Kotter, already in partnership with this enterprise on a number of post-merger integration projects, worked with leaders to develop a turnaround strategy for the business unit.
The key objectives for the post-merger integration were to:
- Align and focus on 2-3 most critical metrics for the business unit to achieve. In this context they were: adjusted EBITDA growth of at least 15%, industry lagging to industry-leading employee engagement scores, and grounded belief that this business unit could be a hyper-growth lever for the enterprise.
- Cultivate a deep level of passion and urgency across the organization to change the status quo and hit the 2-3 defined metrics.
- Disrupt the business unit’s self-fulfilling prophecy of not being expected to reach targets, and thus not reaching targets.
- Achieve results within weeks and months – not years – to highlight in an upcoming investor meeting and earnings calls.
Kotter designed a solution to meet these objectives, organizing a handful of teams working in a highly coordinated fashion according to a precise timeline, completely integrated in their approach to delivering the right types of results at the right times. Exceeding even the most optimistic scenario to better position the business unit for future sales, the work transformed the fledgling business unit into a post-merger integration success story. In the first quarter of the year following the change effort, the business unit met budget and exceeded forecasts to Wall Street. Even more exciting was posting growth for the first time since the acquisition went through seven years prior, along with the highest employee engagement scores the business unit had seen in years. The CEO remarked, “this is the most scientific approach to business growth I’ve seen anywhere in the whole company.” He encouraged other parts of the business to replicate the urgent, focused alignment responsible for delivering a record year for the business unit that went from laggard to leader.