Decentralized Execution Needs Centralized Coordination

I recently wrapped up the course path ‘Integration Management & Synergies’, and one of the resounding considerations throughout all of the coursework was the underlying tension between what to centralize and what to specialize. I’ve seen several different types of approaches in my years doing post merger integration, and I am fully aligned to the the central messaging addressed throughout this course: successful post-merger integration requires a deliberate separation between coordination and execution. The center should define the destination, guardrails, dependencies, and measures of success, while functional teams closest to the work need enough autonomy to determine how to get there.

In order to build muscle and competency within a highly acquisitive firm, companies will frequently respond by shaping their integration strategy with a higher level of centralized control. From a corporate management standpoint, this feels safer, but it can greatly slow decisions and separate execution from the people who actually do and understand the work. To overcome this, corporations are increasingly pushing decisions into functional workstreams. By doing this, teams fain focus, expertise, ownership, and speed. The problem is, these teams aren’t actually independent. Procurement decisions affect technology. Technology affects finance and operations. Finance and operations have strange and sometimes unintended consequences to HR. Organizational decisions affect incentives and talent across the board. As a result, this push for local optimization can create a not-insignificant amount of enterprise-level problems.

I believe the best solution is to centralize the things that can benefit from enterprise visibility. This includes items such as deal thesis and integration objectives, synergy targets (including tracking against those targets), strategic guardrails, cross-workstream dependencies, common overall KPIs and other performance measures, and an escalation pathway. Everything else remains decentralized to the teams with the knowledge and accountability to deliver it. Centralized oversight then remains a key function with a core team with this as their main job function, and decentralized components incorporate into wide labor strategy, appropriately balancing headcount growth in line with the same centralized vs decentralized model.

The best IMO is therefore less of a command center, and more of an air traffic control function, setting direction, managing dependencies, and keeping each workstream moving toward the same destination. The execution can be decentralized, but the integration cannot afford to become disconnected.