Israeli companies (often start ups) are often acquired by European, American and Chinese companies which are in need of innovation. The acquired Israeli companies often already have a value-add product for the purchaser, or even a suite of products, and the expectation is that the acquisition will result in an endless stream of innovation.

Indeed, this is the very essence of the Israeli high-tech scene. Israeli companies often lack the ability to scale properly after innovation due to poor discipline as well as distance from the market place , and the acquiring company has proximity both to market, an install base as well as resources to make it happen.

The success rate of integrating innovative companies is impressive but there are failures, huge failures, and I want to point out the most frequent reason for these failures.

1-Too much “process” is thrown at the Israelis: development, methodologies, business process, new IT systems, all of which divert the focus of the acquired company from continuing to innovate.

2-Senior  management on the acquiring side puts the Israeli site at the mercy of HQ -based middle managers and staff members who have no skills in managing innovation, and micromanage the Israelis to death.

3-Upon acquisition, top talent and key developers leave, fearing becoming part of a “big company”

4-Frequent clashes occur as the Israeli site strives to gain favour directly  with very top decision makers to ensure that the Israeli site maintains strategic positioning in the company roadmap. This often is very effective, but puts the Israeli site in conflict with everyone except the acquiring CEO.

5-The acquiring company wants the innovation, but lacks the stomach to deal with the results of “fast and dirty”, so characteristic of Israeli high tech, where speed is strategy.

6-Israeli developers tend to tell customers what they need, as opposed to giving customers what they want; this causes huge clashes with the acquiring company’s sales force, who want innovation, but don’t like how innovators interact with their customers.

7 The sales force of the acquiring company is reticent to sell innovative products to their clients, so they choke the products of the acquired company to death, in a slow squeeze, to the dismay of the acquiring CEO and the Israeli site. This is often a mean and brutal power play.

The media is full of stories as to why the European Union has failed to vaccinate its population against Covid 19. I am adding on one more.

My unique vantage point on the EU vaccine crisis stems from looking thru the lenses of an OD practitioner with (I hope) relevant experience in global organizations. As usual, I’ll keep it short and answer comments and queries that readers leave in the relevant section below.

Mergers take an awful long time to heal and as such, the European Union is still naturally experiencing severe post-merger integration issues. Post-merger organizations make decisions slowly because the centres of power are not developed enough to make coherent decisions. As a result, post-merger organizations suffer from decisional constipation, with key issues stuck in the system because no one is quite strong enough to push decisions thru even after these decisions have been made.

Post merger organizations are larger, but they cannot yet leverage their size. Their size becomes a major liability because it slows them down until they figure out how it all works, which can and does take  generations.

Procurement and deployment, when left in the hands of bureaucrats, becomes self-serving, because there is no one powerful client who has to be pleased and/or no dictator holding a gun to your head. Thus, negotiations go on for ever because the sense of urgency is lacking. Nothing, absolutely nothing, is more dangerous to a project than a self-serving bureaucracy immune to immense pressure from a powerful stakeholder.

Values prevalent in the major EU countries are liberal, with lots of slogans like about “no one is safe until we are all safe”. When these values impact a rigid bureaucracy and an organization with weak ultimate stakeholder pressure, another crushing blow is dealt to an effect coping strategy. So what’s wrong with these values, one may ask? To be honest, lots is wrong. Demand creates supply; central planning creates shortages. The Soviet Union taught that lesson very well. The strong help the weak because they are strong. You put on your child’s emergency mask on an airplane only after put on your own, otherwise you both die. Strong healthy nations can export vaccines only when they themselves no longer feel threatened. That’s common sense, except that neither common sense nor value consistency is common during post-merger integration.

When Mr. Yu asks his supplier, Mr. McGraw from whom he buys from millions of dollars, to hire his good-for-nothing-son, McGraw thinks Yu is corrupt. Yu thinks McGraw is thankless.

But Yu is right; favours do work, when they are mutually agreed to. As a matter of fact, favours work much faster than do negotiated contracts. If I were Italian, or Spanish, or Greek, I would prefer my procurer had pockets full of money to better leverage pressure (bribe) a vaccine supplier, rather than a book of procurement rules written by some clerk who wants to follow process and be “fair”, and immune from stakeholder pressure. 

Is this crisis a defining moment which will speed up the post merger integration of the EU? Well that’s another post, and it’s a crap shot at this point. Too early to call. It depends how many bodies will pile up and how ruinous the economy becomes within the nation states composing the EU. 

It never ceases to amaze me how organizations kick themselves in the ass by making teamwork almost impossible.

John from Sales, Edna from Product Marketing and Paco from Customer Service are at one another’s’ throats. They were summoned into the big boss’ room and told to “get their act together and act like a team”. John has been promoting products that do not exist; Edna has been accused of ignoring customers’ unique needs (especially in low cost markets and the Japanese market)  in her product road map and Paco keeps telling his customers that he will ask a design engineer  from R&D to fix bugs, because his own department lacks the needed documentation and some of the features are “immature”. Customers have complained to the big boss that “no one in your organization gives the same answer”.

Thus the boss stressed the need for team work; however, he ain’t gonna get what he asked for.

The standard definition of a team is a group of people with shared common goals, mutual dependencies and a feeling of partnership. However, this definition is very misleading. Indeed mutual dependencies may exist, but these dependencies may not be acknowledged due to the very way that an organization is designed. As a result of poor design and the wrong assumptions, infighting, finger pointing, endless email threads and inter-departmental warfare predominate-not team work.

Back to the gang of 3. John, Edna and Paco are not a team. Indeed they may have a common goal, mutual dependencies and a feeling of partnership as expressed by some nebulous commitment to the company’s vision, but when the rubber hits the road, not only are their goals not aligned, but their mutual dependencies are unacknowledged. John needs to sell, Edna needs to produce a coherent product road map, and Paco needs to fix what does not work, or cool off the customer until a new fix is available. And above all, Paco, John and Edna need to make their respective  bosses (not one another)  look good.

The integration of the organizational system for which John, Edna and Paco work has not been downloaded to these three players; it is a matter of organizational design, prevention of sub system maximization, and allowing integration and trade-offs to be made at the lowest possible level. Example: John will sell only from the product road map, Edna will make this road map more flexible and Paco will ensure that his service agents have more product knowledge.

But this won’t happen, because the organization does not want it to happen. The basic assumption guiding the present dysfunction is that if John, Edna and Paco do their very best and over-perform in their specific areas, the organization will succeed. Nothing is farther from the truth.

The Boston based AI division of an Nasdaq traded company acquired a start up based in Paris and Tel Aviv. Due to faulty due diligence, the decision to retain the founders of the start up as joint CTO’s (chief technology officers) was abandoned and they were asked to leave the company. As a result, a massive rupture of trust occurred between Boston HQ and the brain power in France and Tel Aviv.

Marvin Duvalier was hired to integrate the acquired start up into HQ. Marvin had perfect credentials: he had vast experience in M&A activity, he spoke English and French as native languages, his wife is Israeli so he had an amazing  understanding of Hebrew, although he could not speak well. He also had vast domain expertise in AI.

Two months after he was hired, Boston acquired another start up in Moscow, which had competed with the French Israeli start up. Marvin was tasked with “putting this all together into one working unit”.

Six months into his role, Marvin is seen as a “failure”. In his initial performance review, he was told that he was seen as untrustworthy, manipulative and a professional bull-shitter, trying to please all of the people all of the time.

Marvin was asked to hire a coach, to hone his trust building skills. Marvin hired a coach as requested, and immediately started looking for a job, which he found after two months.

“Those fuckers in HQ make decisions based on excel sheets, faulty due diligence, and revenue scenarios crunched out by hacks, and then assign me a coach!”, he told the recruiter who found him his next job.

The Head of Business Development who recommended these failed  acquisitions and the CEO of the AI unit, are very close friends from their days in university. Three years down the road, the AI Boston based  Business Unit’s entire management team was replaced. Moscow was closed down; the French team could not be downsized due to labour law and drained huge financial resources. In Tel Aviv’s hot high tech market, the company got a bad name and talent walked out. It was a veritable disaster, which the coach did not prevent.

Coaching is often used to frame individuals as “guilty” of individual incompetence,  thus evading focusing attention on the real  system problems. 

“How will we know that the service that we are purchasing is effective? How can we measure the results”, are questions posed by clients at the outset of an Organization Development project. These queries are posed either due to the need to justify the expense, or out of ignorance, or in order to gain control of the vendor. At times, perhaps, they are asked naively.

What’s the answer to such a question? Let me start with two stories that I have shared with potential clients.

An organization providing product X decides to measure customer satisfaction by discovering how many times the phone rings before it is answered, and how many complaints are received about poor service per customer service agent. Software is purchased and an OD vendor is commissioned to implement that change. Immediately, customer service agents beginning answering calls immediately and saying “please hold”, and when they identify themselves, they mumble their name so that it’s hard to complain about someone specific. Later on the consultant learns that product X itself is faulty and its non functional features were, and are still, over promoted.

Another client wants to enhance the long term commitment of the ultra-skilled staff, and hires a consultant to enhance their engagement. Over time, it becomes clear that this very staff has become a monopoly of knowledge, systematically keeping new recruits in the dark for years, making their experience into a power bloc that makes incredulous pecuniary demands.

OD, I explain, deals with the “underworld”, the subterfuge that prevents change from happening effectively. And up front, it is very hard to define exactly what success will look like. The “success” we strive for changes constantly. OD is often initially commissioned for the wrong reason, or the intervention is aimed at the wrong people. It is ever so rare that OD deals with the problem that it was initially commissioned to deal with.

So the answer is that success cannot be defined a priori. It can be initially defined every few weeks, and each definition will be vague and not binding. Success is not even progress, because in the initial stages, things get worse, or much worse. If the client shies from this truth, it can be likened to planting a flower bed in the wrong direction with no/too much water. It’s not going to work. And it’s best to make this clear as early as possible, as early as possible.

Of all my Dad’s friends, I liked ‘Uncle Rupert’ most of all.

Unlike my Dad, Uncle Rupert was short, and had almost no neck. He had an infectious laugh, and a great sense of humour. He loved to smoke, drink, and to play golf very poorly.

However, Uncle Rupert was absolutely brilliant. ‘So Nupping, why are you on the same page of your homework for twenty minutes’, asked Uncle Rupert as I sat at the dining table doing homework while my Dad and Uncle Rupert smoked and had a drink in the adjacent living room’. ‘I’m doing an unseen in Latin’,  I complained. Uncle Rupert got up, stood behind my back, and translated every word that I had marked. Many years late, Uncle Rupert asked me, ‘Nupping, is it still 26-9-48?’ He had helped me set my combination lock a decade before-and still remembered.

There is one memory that sticks out in my mind more than any other. Dad, Uncle Rupert and I had flown to Northern Quebec to fish, and we were driving the last 200 miles to Wapoo-Sibi fishing camp. I was still a young boy, and I was lying in the back seat, exhausted from the day’s travel. Uncle Rupert heard my stomach gurgle and said to my Dad, ‘pull over at the next restaurant, Phil; Nupping is hungry’.

Sitting in our back yard in 1967, Uncle Rupert asked me what are my thoughts on the Greek military coup. I gave a dumb answer, and for over an hour, Uncle Rupert gave me an overview of the history of military coups, Greek history, and how radical changes in government ‘screw the little guy’.

Dad often told me that Uncle Rupert can talk about almost every subject in great depth. ‘The man has a great mind’, was Dad’s one liner on Rupert. My Dad had one-liners for a lot of his friends.

When I started to talk, nupping was the way I pronounced nothing, and Uncle Rupert never ever called me anything but that.

When Uncle Rupert passed away, I had returned to Israel. The news devastated me and I wrote to his wife, Auntie Selma, who was a head taller than Uncle Rupert. I received a very touching answer from Auntie Selma, who was an artist.

Montreal is a city with so much to remember: bitter winters, skiing at Tremblant and Mt Gabriel, rue de la Montagne where my Dad lived, the Main, the French ambience, my summer working at Expo 67, Schwartz’s Deli, McGill, Orange Julep,  Place des Arts, McGill, 7 graves of family members, my remaining cronies from childhood, and memories of Uncle Rupert.