The Logic of corporate acquisitions

Nice girls, sailors

Approximately 3 1/2 billion years ago, I studied Philosophy and Mathematics at Bristol University. My Logic Professor was the incredible Dr Mayberry. My abiding memory of him was a particular esoteric tutorial during which he explained the different possible meanings for the phrase ‘every nice girl loves a sailor’. Is it: “For each nice girl, For each sailor, the nice girl loves the sailor”, or perhaps “For each nice girl, there exists a sailor, such that the nice girl loves the sailor”? Each of these possibilities, and I recall there being many more, was written out in logical notation. The point was, I suppose, that language is sloppy, logic is not, and… you know… be careful.

Perhaps the most infuriating lack of care is when a marketing person gets hold of a ‘unifying idea’. And the best example of this was a former employer (I was an adopted child in a marriage of the shotgun variety), who shall be known as XYZ Corp.

Two sorts of super smart people worked at XYZ’s massive head office, it seemed to me at the time. Type A went and did complex acquisitions. Type B went around behind them explaining why such and such an acquisition was ‘strategic’. This is all well and good of course, you can’t possibly announce you’ve just bought companies for the sake of getting bigger, or to conceal and distract from some other failed corporate activity. Protocol dictates that for a period of at least one year, all involved will pretend they were genuinely in love and not remotely drunk. After a year, it’s time to start arguing over who owns the CD collection and what you’ll tell the kids.

Anyhow. The rightness or wrongness of corporate mergers is not the point. The point is the mangling of logic which often ensues. For XYZ, faced with integrating a digital design consultancy with a company that made things with flashing lights, the story was that we were both ‘information’ businesses.

I suppose we could have just said we were both in the sales business, or the bullshit business.

Aside from the pure bravado of this manoeuvre, which is breathtaking, the most amazing thing about it is that it sometimes worked. People would nod along, half asleep in meetings. The air would be punched at sales conferences as we discussed how ‘information’ was at the heart of our growth strategy. The fact that not a single employee understood a word of it was not discussed.

And XYZ corp were certainly not alone in this madness. I’ve seen all sorts of companies stitched together on the thin understanding they are about ‘results’, about ‘communication’, or shared a ‘passion for customers’. Someone once tried to tell me our digital agency (a different one) should merge with a bill-stuffing company because we were both ‘about customer data’. This last one must have taken a supreme effort of self-will to keep a straight face for. Equally brazen, and potentially more incoherent, I once heard that a music retail company was ‘already a social network’ because people used to socialize ‘in their stores’.

If your objective is to make two things that aren’t equal sound equal by positioning each at the end of a similar sounding definition, then you have only served to slightly weaken our ability to communicate. And if it’s your job as a branding agency (who I believe have to take at least most of the blame for this sort of behaviour) to do this, then I fear you’ve not responded candidly to the brief. Go back and tell your client it doesn’t all fit neatly together, and that’s not the end of the world, so long as you can create customer value. There are other branding strategies than ‘one big brand’, there are worse things than being diverse. Namely being incoherent and self-obsessed. And if your client doesn’t want to hear that then let them hire someone else.

[reposted from Usable Interfaces]

Decisions decisions

Billionaires Warren Buffet and Bill Gates

Buffet’s annual letter to shareholders is famously both candid and amusing, with a particular brand of humility: “here are all the dumb things I did on my way to being a multi-billionaire”.

Obviously the force behind Berkshire Hathaway knows a few things about investing. This year Bill Gates particularly highlighted the section from page 23 onward.

Aside from the views on the efficient allocation of capital with regards to taxation (which is surprisingly interesting), Buffet looks at how to know when an investment is worth making, particularly focusing on how vested interests can distort the market. He focusses on an early mistake to stay in the textiles industry for the wrong reasons, and which took decades to overturn:

“…[the] capital withdrawals within the textile industry that should have been obvious were delayed for
decades because of the vain hopes and self-interest of managements. Indeed, I myself delayed abandoning our obsolete textile mills for far too long.

“A CEO with capital employed in a declining operation seldom elects to massively redeploy that capital into
unrelated activities. A move of that kind would usually require that long-time associates be fired and mistakes be admitted. Moreover, it’s unlikely that CEO would be the manager you would wish to handle the redeployment job even if he or she was inclined to undertake it

“…[At Berkshire Hathaway] ….we are free of historical biases created by lifelong association with a given industry and are not subject to pressures from colleagues having a vested interest in maintaining the status quo. That’s important: If horses had controlled investment decisions, there would have been no auto industry.”

In Unthinkable, we discuss exactly these issues of course. It’s very close to being at the heart of why such decisions are so difficult to make at a human level. We also talk about the incredible value of real case histories – not those of the “conquering hero” variety. The great attractiveness of Buffet’s letter this year is that it shows us how much can be learn from mistakes openly shared.

 

How brands talk

Found a ton of great Fishburne cartoons when writing a post over here. Here’s a great  one that didn’t fit that theme:

Slide29-550x412

For me, it brings to life two great fallacies about brands:

1/ That customers want to have a relationship with their brands. There may be some very special brands that are like that for some very ‘special’ people. Obviously, there are the Mac people. I’m told some people are very keen on sports clubs, but does anyone really want to have a relationship with their breakfast cereal?

2/ That consumers spend very much time at all thinking about what brands mean to them. Of course the wonks at branding agencies would love to perpetrate this myth (and indeed the one above). We’ll get people to “Like us on Facebook”, they plan with the most wonderful double think: “When I friend a brand on Facebook, I’m just messing around. When a ‘consumer’ does it, they’re really serious”.

Yes, you might be able to trick a customer into clicking on a Like button about your brand, but don’t be convinced that they care, or even remember you. And ask yourself further if the patronizing empty content on most brands’ Facebook pages is likely to have a positive effect on any poor sods who find themselves there accidentally.

Facts not opinions

We’ve been lucky enough to have Hugh MacLeod provide the illustrations for the book, and damn fine they are too. I won’t ruin that surprise.

However, I was reminded this morning of just how close in thinking much of Tom Fishburne’s work is. As an innovator in a big business, we know many clients can feel like this:

Garden of innovation (the threat to the idea).

Or this:

Or this:

Start managing innovation the same way you manage media budgets and the Christmas party, and you can guarantee the sort of brutal attack Fishburne envisages will come about. If you try and make yours just another project, you can be sure it will be managed like one – which doesn’t work for doing new things.

The only way to fight the opinions of those more senior, or disruptive, is facts. And the innovator must dedicate themselves to finding the real facts at the heart of their business idea.

What Fishburne doesn’t allude to in his fantastic cartoons is just why the nurtured idea is about to be exposed to the knives and barbs or colleagues.

And the answer here is simple: money.

If you can run your innovation effort out of petty cash, no-one will ask those question or take a swipe at you. It’s when large outlays are required, and more importantly, grand projections made that critics will circle.

Prove them wrong, and do it on a budget.

But that’s not to say that your don’t want criticism. Exactly the opposite, you should seek it out. And be your own worst critic.

All too often the adversarial process of getting and keeping budgets can convince the innovator to be bloody minded in the pursuit of their original concept. Keeping your idea away from the most sectarian and political forces may be wise, but never shelter an idea from criticism entirely. This is how your idea will grow. We’ve seen over and over again, that ideas which only ever get praised, rarely get any better, or indeed see much success.

A final Fishburne

innovationfunnel

 

What we’re saying is see the teeth in the picture above as your friend. If you are tough (not pointlessly critical) as you progress thorough every stage of assessment of the idea and build of the proposition, the process will make you (and your idea) stronger.

Old jokes home

Peter-Cook-and-Dudley-Moo-001

My favourite joke. Peter Cook and Dudley Moore.

Moore says: “I’m writing a book”, Cook replies: “Really? Neither am I.”

I’ve written a book on innovation. There, I’ve said it. And if there’s something more commonplace, less innovative than books on innovation, it must be blog posts about how bloody hard it is to write a book.

But I don’t care.

I’ve got to tell you, I didn’t believe it. I thought that it might well be the case for other people but I would take to it just fine. I’ve always liked writing. I know how to use Word, and I absolutely knew what I wanted it to say.

But it was hell. I started it in 2013. I wasn’t 40 when I started. I had a different job. And now its almost finished. Its had the gestation period of an Elephant. If it went on much longer, it would have had the lifespan of a government IT project.

I’ve loved it as well. Not only do I understand now why everyone told me how hard it would be but also why they told me I should do it anyway.

It’s got a big chunk of the story of Fluxx in it, Hugh McLeod has done the cover, and I very much hope that I’ll be able to interest at least a couple of you in reading it when it is on Amazon early next year and we launch it at Fluxx at the start of 2015.

And yes, that’s why there hasn’t been any blogs.

It’s over here if you want to find out more and sign up for news.

What’s it about?

So. Why did we write the book, Unthinkable?

The truth is that the thinking that got us to write the book is just the same as the reason the partners started the agency, Fluxx, back in 2011.

We knew from years of working with companies on new things that often the most exciting ideas and challenges were prone to end up the most disappointing failures. We knew too the reality of such missed opportunities was not of innovation teams overcome with the technical or consumer challenge but rather battling against the forces of their own business.

We recognised the need to find new ways to operate to enable the largest businesses to forget their pasts and truly embrace completely new things.

For us to get stuff done in large companies, we must spend as little money as possible, tangle with as few of these sectarian forces as we can and get output as early as possible.

We must move the game from predictive project and management thinking to foster learning and facts over bluster, confidence and unfounded optimism of macho management.

Unthinkable will be published in the first half of 2015. Sign up for our newsletter (right or below) if you would like to learn more. Contact me if you’d like to tell me your stories of getting stuff done in large enterprises.