Editorial

Michael Anobile, LISA’s Managing Director, joined Ding Wenwu (Deputy Director-General of the Chinese Ministry of Information Industry, Xiao Lan (Secretary General) and Andy Lee (CTO) of the Changfeng Open Standards Platform Software Alliance, Dr. Steven Bratt (CEO of W3C), Patrick Gannon (CEO of OASIS) and others this past week to deliver keynotes during the Beijing 2007 Open Standards International Convention. High-ranking members of the Government, along with foreign technology experts from companies such as Adobe, Fujitsu, HP, IBM, Lenovo, LINUX Foundation, Microsoft, Red Flag Software and Sun, attended this first non-governmental event to focus on the application and impact of open standards within the Chinese Government and the business community.

As Chinese companies gear up for their global push westward, we invite you to join them during the Annual LISA Forum Asia CHINA FOCUS 2008 in Beijing from March 10-14. LISA has an unmatched record in China and strong ties to the Chinese standards community, manufacturers and developers. CHINA FOCUS 2008 is the place to be if you are doing business in China and need to understand the issues that will impact you, or if you are a Chinese company preparing to move out of China and onto the world stage. Click here for more information and to register.

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KPMG: The overwhelming cause for failure [in mergers and acquisitions] was the people and their cultural differences.

During his presentation at the recent LISA Forum Europe in Berlin, Philo Holland (Senior Program Manager at T-Systems/Deutsche Telekom) shared these findings from a recent study by KPMG:

83% of mergers and acquisitions produced no benefit for the shareholders. Interviews with over 100 senior executives involved in over 700 deals over a two-year period revealed that the overwhelming cause for failure was the people and their cultural differences.

Wow! That’s a fairly damning indictment of a process that’s very common in business. Obviously, something is broken.

If you are a LISA Member, you can log into the LISA web site and click here to access Holland’s presentation, Scaling for Growth and Organizational Diversity.

As we head into what will probably be a round of acquisitions of Western companies by Chinese companies and vice-versa in our industry, I want to get my 2 cents in about how you can make yours succeed. Here are my 5 tips to help you get started on your merger and acquisition (M&A) planning.

1. Mergers and acquisitions are really about (dis)assembling teams of humans and their work processes, so recognize and deal with it upfront.

Mergers and acquisitions are not about assembling computer components or tweaking financial results. We all know that they are about human relationships, and the trust that does or does not underlie them. But we still insist on ignoring this fact or not giving it the critical priority it deserves. Why? Because it’s really, really hard work and very, very time-consuming to factor in the prisms and filters through which all of the various players will interpret a merger or an acquisition, and how they will gain/lose from one.

So recognize and deal with it upfront by making change management and team (dis)assembling one of the top priorities prior to, during and after the M&A activity. This means that you proactively build a plan to address these issues – just “keeping people informed on a regular basis” is not enough. Your middle-level managers and directors should be the ones responsible for this plan, since they are the ones who must work with their teams to implement it.

2. It’s the (corporate) culture!

We’re all aware that cross-cultural issues are in full play when, for example, a Chinese company acquires a Western one, or vice-versa. As Holland is fond of pointing out, you can have the best workflow processes in the world, but if people can’t work together because they don’t understand one another well enough to trust each other at the level required, then projects and initiatives will fail.

The multicultural issues are the easy ones!

But the multicultural issues are the easy ones to deal with – we know they will surface, and there is a lot of expertise available to help us through those. The harder cross-cultural issues are the ones that we are not even aware of, e.g., the differences rooted in corporate cultures and functional perspectives. What do I mean? Differing cultural and functional perspectives come into play most often in relation to how the initial questions/challenges are framed and how decisions are actually made and implemented. The greatest cultural differences usually manifest themselves in the give-and-take (“tug-and-pull?”) between the following three decisionmaking models: individualistic vs. paternalistic vs. consensus-building. This may be somewhat of an over-simplification, but the differences between these models are often at the root of most conflicts if one digs deep enough to figure out what is “really” going on.

Our functional areas of expertise are like putting on a pair of glasses

Even more important than the cultural differences, in my opinion, are the variations in perspective based on people’s functional areas of expertise. Not nearly enough attention is given to this area, even though a person’s function tends to override cultural differences in many situations. Our functional areas of expertise are like putting on a pair of glasses, through which we then view and interpret the world around us.

In other words, a Chinese Engineer is more apt to “think like” a German Engineer than like a Chinese Marketing Manager. Underneath the veneer of cultures in this example, the engineering “mindset” will almost always exercise a greater influence on a team member’s perspective in problem-solving and decisionmaking than any cultural pull.

The fallout from this is that you should look to differences in corporate cultures and functional perspectives, rather than immediately jump to the conclusion that the conflict you are experiencing during a merger or acquisition is due to the multicultural makeup of the two organizations.

3. Involve your customers at every step along the way

It goes without saying that, if your employees are not comfortable before/during/after any M&A activity, your customers will sense it almost immediately. And, even if things proceed perfectly, your customers may wonder how they will benefit from merging two organizations and whether your “bumps in the road” will translate into missed delivery dates or a lowering of the quality bar.

Again, work with your people who are on the front lines to develop a plan that spells out the real benefits for customers; the steps that you will follow to combine the two organizations; the ways that you will proactively elicit feedback from your customers at key points during the M&A process, etc.

4. Walk in their shoes

Humans are humans, and rarely is any relationship actually one between true equals. This is never more true than during a merger or acquisition. It’s clearer when one group is acquired by another, but that may not make it any easier for the “acquirees.” And, certainly, in any merger, one organization always has the upper hand, even if it’s not officially recognized as such.

So, think about (and have your employees think about) how they would feel if they were walking in the other person’s shoes. How would they want to be treated? What are their fears/hopes? How can all of this be addressed as part of the change management plan?

And if you’re on the side with less power in this relationship, then find champions within the parent company, so that you can negotiate for resources and share processes. Be proactive! Don’t wait for someone to come ask you what you need.

5. Learn from someone who has done it

If you’re the “top dog” responsible for M&A activity, seek out some of your colleagues in another industry who have successfully – and perhaps not so successfully – weathered the process. Find out what went right, what went wrong, and what they would do differently if they were to do it over again.

And study what others have done within our industry – LISA Members such as Beyondsoft, hiSoft, Lionbridge, SDL, thebigword, Welocalize, etc. (my apologies to those whom I have not listed). More to come on this topic ...

Good luck!

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LISA Member HP has been in the business news in recent weeks – and for all the right reasons. Unlike much of the technology industry, HP reported a 15% increase in revenues from a year earlier, to USD 28.3 billion, beating estimates by USD 1 billion! Why the success, given the slowdown in tech spending in the U.S.? According to analysts quoted in a recent issue of Business Week, it’s due to the company’s large global footprint and relatively low exposure to the financial-services market.

HP now derives 67% of its revenues from international sales!

While many high tech companies now generate about 50% of their sales from outside of the U.S., HP derives 67% from international sales. In this month’s issue of the Globalization Insider, Monique Floch, Vendor Manager for HP’s Application and Content Globalization (ACG) team and one of the people at HP who makes this “large global footprint” possible, shares how HP has entered the world of e-auctions for purchasing localization services in Reverse e-Auctions: A Controversial Buying Process (premium). Floch discusses the process they use, the controversy around the pricing of localization services and the steps ACG has taken to mitigate this, along with results and key learnings from the group’s first e-auction.

LISA has just released the new 3rd edition of the LISA Best Practice Guide: Managing Global Content. It includes updated benchmarking data and case studies for decision makers, and specific do's and don'ts for all aspects of implementing GCMS. Learn how to develop your own International Content Model and how to prepare your Request for Proposal (RFP) from the experts. Click here to read a short excerpt (public).

ANNOUNCEMENTS

Are you passionate about quality and educating future localizers?

Then plan to attend Teaching Localisation for Global Business Readiness, to be hosted by LISA and the Lessius Hogeschool in Antwerp from December 10-12. This unique Forum will bring together localization professionals from academia and industry seeking to improve career development and training in today's localization industry.

The keynote, Terminology Management – How Do Companies Find the Skills They Need, will be given by Barbara Karsch, Terminology Research at Microsoft. Academia will be represented by professors from Europe, the Americas and Australia. InfoTerm and TermNet (ISO TC/37) will also present a one-day workshop on training people for CEN 15038 certification. Click here for more information and to register.

That’s all for this month.