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This CIO has a system for improving the merger integration process.

By Andy Nallappan, VP and Global CIO, Broadcom

Most mergers fail. Broadcom’s don’t. We have grown from $2.6 billion in annual revenue in 2012 to $25 billion today, largely through acquisitions.

If there is a secret to our success, it’s that we have learned how to move quickly and efficiently through the integration process. We keep our management team lean, outsource most of our development, and make very rapid decisions about which employees we want to keep and who we will let go.

The process can seem ruthless to some, but it is fair and effective. And I’m not exempt from its risk-taking rigors.

A Race Against Time

When you acquire a company, you’re basically in a race against time. At first, people in the acquired company are expecting a change and prepared for it, and you have to take advantage of that expectation. Strike while the iron is hot.

Within the first two weeks of the announcement, I go have a coffee with the new IT team. I talk about our goals, our operating model, and the Broadcom way. I tell people what will be changing and what will stay the same. I try to answer the big questions people have about their personal situation. Even before we close, every one of the employees knows their status. No one is sitting in limbo, wondering whether they have a job.

Even so, there is still a lot of friction from the people in the acquired company. Often, they'll say things like, Hey, this is the best product in the industry, why do you want to change? Or, You’ve got a lot of things to do now, why do you want to touch my area? They talk this way in part because everybody’s trying to protect their unit’s jobs. When we push back, the managers who own the process will say, It’s easy for you to ask me to change it, but I have to face those people we won’t need if we eliminate that process.

We listen, but we maintain the momentum. One way we do that is by changing as much as possible the texture of the acquired company right away. On Day One, we change all our branding, all our collaboration tools, all the email, the WebEx, and every single sign-on. When people come to work that morning, they have to feel that they are part of a new organization.

Stripped-Down Decision Making

On our side, we have done a number of things to streamline our own decision-making and reduce our internal friction. The main thing is that we don’t do any of our own development. I have a triangular-shaped operating model in which the other decision makers and I occupy a very small portion of the top of the triangle while we outsource the base, the teams that do the development, to our technology partners or to cloud providers. We seldom do any hands-on work.

As a result, we are not emotionally attached to any particular solution; we aren’t anxious about our jobs; and we aren’t constrained by capacity. If we need more help, we can get it very easily. Whenever we need something built, we take the order to our partners or to the cloud, and we get it done.

We’re also a very flat organization, which further accelerates our decision-making. Nobody has to ask my permission to act. We don’t silo teams, or people. We try to behave like a small startup, and we move fast. 

A Certain Kind of Risk-Taker

One of the biggest issues we face in any integration is finding a few people who are ready for this kind of challenge. I spend a lot of time talking to the managers of our acquired companies, telling them about our culture and asking their candid opinion about who they think would survive here. Then I talk to their nominees. The ones I like, I give three or four months to prove themselves.    

Many of them don’t make it. I always tell the managers that when I look for an employee, there are three things I look for: skills, knowledge, and attitude. Of these, the last is the most important. I can buy skills, I can send people for training to gain knowledge. But I can’t buy attitude.

I tell people right up front that Broadcom isn’t for everybody. There are no mentors; there is nobody to hold your hand. Everyone on my team has the maturity and the ability to navigate a high level of chaos.

They also have to be capable of handling risk. In many larger companies, the C-suite prefers throwing money to taking risks. Our company is the opposite. Getting money is hard – you have to fight tooth and nail to get money – but you’re free to take risks.

Of course, you have skin in the game with any risk you take. If you fail, there is no group hug.

Our CEO doesn’t like it when we say, we – IT – failed. He says, There is no ‘we’ here. We need to know who made the call. If it’s me, sometimes I have to go and stand up and say, It’s me. I made the call. I was wrong, and I’ll fix it. He respects that, but he also asks, How are you going to fix it? Why did you make this call? What was your assumption? It’s a painful system, but it’s also a good way to make sure anything you break gets fixed quickly – and the mistake doesn’t happen again.

The Takeaways 
<p>A successful integration depends on moving quickly. People in an acquired company expect to see changes, and if you’re planning on making some, you need do so right away.</p>
<p>Be as honest and open as you can be, particularly when it comes to employment. It’s better to get bad news out of the way quickly.</p>
<p>Outsourcing development reduces emotional involvement with particular software programs and makes scaling up easier.</p>
<p>Give managers the authority to move quickly but hold them accountable for their decisions.</p>