Strategy Implementation and Acquisition Integration - 2012 Corporate Strategy and Corporate Development Priorities Survey Results

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Strategy Implementation and Acquisition Integration

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2012 corporate strategy and corporate development priorities survey results

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#2012priorities

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2012 survey resultsgrowth team m e m b e r s h i p™

Contents

intro

executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3–4

Survey Purpose and respondents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

what is the Growth Team Membership™ . . . . . . . . . . . . . . . . . . . . . . . . 6

Corporate Strategy and Corporate Development overarching Challenges . . . . . . . 7

Key Corporate Strategy Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . 8seCtion

1

Key Corporate Development Challenges . . . . . . . . . . . . . . . . . . . . . . . . 22seCtion

4

Corporate Strategy resource Trends . . . . . . . . . . . . . . . . . . . . . . . . . . 12seCtion

2

Corporate Development resource Trends . . . . . . . . . . . . . . . . . . . . . . . . 25seCtion

5

Special Interest Topic: M&A Integration . . . . . . . . . . . . . . . . . . . . . . . . . 30seCtion

6

Special Interest Topic: Strategy Implementation . . . . . . . . . . . . . . . . . . . . . 17seCtion

3

respondent Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35seCtion

7

3



Growth Team Membership™ research.

Introduction

Corporate Strategy Executive Summary

seCtion 1: Key Corporate Strategy Challenges

Key internal Challenge Key internal Challenge root CauseDeveloping effective strategy implementation plans Limited staff and insufficient skills

seCtion 3: Strategy Implementation

Composition of implementation teams

Frequency of strategy reviews Ability to execute the Plan

The majority of companies have dedicated implementation teams

Strategy implementation teams meet quarterly to review and revise strategy execution plans

Strategists indicate that their teams are “Average” in their ability to implement strategic initiatives

seCtion 2: Corporate Strategy resource Trends

Budgets resourcesStrategists typically have annual budgets under $1 million (uSD) Budgets and staffing levels will remain constant in 2012

4




Introduction

Corporate Development Executive Summary

seCtion 4: Key Corporate Development Challenges

Key internal Challenge Key internal Challenge root CauseAligning acquisition strategy with corporate strategy Lack of alignment on common objectives

seCtion 6: M&A Integration

timing of integration PlanningForms of integration Communications

Purpose of M&A Activity

Integration teams begin planning during Due Diligence

“Company e-mails” is the most popular form of communication during integration

Gaining new capabilities is the primary reason companies will conduct M&A activities in 2012

seCtion 5: Corporate Development resource Trends

Budgets resourcesCorporate Development departments typically have an annual budget under $1 million (uSD)

Budgets and staffing levels will remain constant in 2012

5




Introduction

Survey Purpose and Respondents

Co-SponsorSurvey PopulationMethodologyResearch Objective

To understand the most pressing internal challenges shaping corporate strategy and corporate development executives’ 2012 planning .

web-based survey platform Manager level and above corporate strategy and corporate development executives from companies globally .

116survey

respondents

6




Introduction

What is the Growth Team Membership™?

GtM is a subscription program that supports executives within the functions that report to the Ceo

GtM provides best practices, events, and services that enable executives to address challenges within their companies

CCorporateStrategy

Coorrppoorrate DDevelopment

Marketing

CompetitiivveeIInntteelllliigence

MMarketResearch

SalesLeadershipp

R&D/IInnnnoovvation

IInnvvestors/Finance

CEO

CorporateStrategy

Corporate Development

[email protected] www.gtm.frost.com

Ceo’s Growth Team™ GTM: Creating Client value

GTM’s case-based best practices help executives:

Speed the design and implementation of initiatives by not reinventing the wheel

Save money and reduce risk by avoiding mistakes made by other companies

Accelerate problem-solving with a cross-industry perspective

Improve their functions’ and companies’ performance and productivity

slideshare.net/Frostandsullivantwitter.com/Frost_GtM

mailto:[email protected]

http://www.gtm.frost.com

http://www.slideshare.net/FrostandSullivan

https://twitter.com/#!/Frost_GTM

7




Introduction

Strategy Implementation

Strategists are struggling with developing, implementing, and monitoring the annual corporate strategy .

Learn how Sundt created an integrated strategic planning process to break down silos, establish a shared corporate vision, and coordinate both strategic and tactical planning for effective implementation .

Planning for the FutureStrategists are incorporating a long range view—to identify game changing opportunities and risks—by including future trends in their strategic planning process .

Learn how Knorr bremse developed a systemic, Macro-to-Micro process to identify and integrate Mega Trends within its strategic planning process .

M&A: Supporting IntegrationCorporate development executives are relying on ad hoc integration teams, which result in inconsistent processes for integration, high turn over rates, and ultimately integration failure .

Learn how weir established a network of part-time, region-specific integration teams to increase capacity and harness local knowledge for effective acquisition integration .

Corporate Strategy overarching Challenges

Corporate Development overarching Challenges

best Practice Solutions from GTM

Contact us at GTMresearch@frost .com .

What’s Keeping Corporate Strategy and Corporate Development Executives Up at Night in 2012?

http://www.frost.com/prod/servlet/cpo/244346679



mailto:[email protected]

8




Key Corporate Strategy Challenges

INTRO

SECTION

4

SECTION

2

SECTION

5

SECTION

7

SECTION

3

SECTION

6

SECTION

1

9




Section 1

Challenge 1 Developing effective strategy implementation plans (26%)*

Challenge 2 Creating strategic plans that support corporate financial objectives (22%)

Challenge 3 embedding insights from future trends into strategic planning (14%)

Challenge 4 Tracking strategic initiatives’ progress and impact (19%)

Challenge 5 Factoring the role of company culture in strategy development (15%)

Top Five Key Corporate Strategy Challenges

survey Question: Please indicate the top five functional challenges shaping your corporate strategy plans in 2012.

* The respondents were asked to rank their top five challenges. The percentage values indicate how many respondents indicated that particular challenge was their first through fifth challenge.

10




Section 1

B-to-B B-to-C

Challenge 1 Developing effective strategy implementation plans (24%)*

Developing effective strategy implementation plans (26%)

Challenge 2 Creating strategic plans that support corporate financial objectives (23%)

Creating strategic plans that support corporate financial objectives (19%)

Challenge 3 embedding insights from future trends into strategic planning (15%)

Aligning division-level strategies with corporate strategy (13%)

Challenge 4 Tracking strategic initiatives’ progress and impact (26%)

Engaging stakeholders to overcome barriers to new strategy adoption (23%)

Challenge 5 Factoring the role of company culture in strategy development (20%)

Creating a sustainability strategy (12%)

Corporate Strategy’s top challenges are largely the same across business models, but vary in their prioritization

Top Five Corporate Strategy Challenges (by business Model)


11




Section 1

Challenge 1 Developing effective strategy implementation plans

Staff: Limited resources and inadequate skills (24%)

Challenge 2 Creating strategic plans that support corporate financial objectives Process: Ineffective process (36%)

Challenge 3 embedding insights from future trends into strategic planning Process: Ineffective process (22%)

Challenge 4 Tracking strategic initiatives’ progress and impact

Technology/Systems: Inadequate/outdated technology (33%)

Challenge 5 Factoring the role of company culture in strategy development

Strategic Alignment: Lack of common objectives (33%)

The root cause of corporate strategy’s challenges run the gamut of people, process, and tools

survey Question: Please indicate if the root cause of your top five functional challenges are—staff, process, technology/systems, or strategic alignment.

root Cause of Top Five Corporate Strategy ChallengesTop Five Corporate Strategy Challenges

12




Corporate Strategy resource Trends

intro

Section

1

Section

4Section

5

Section

7

Section

3

Section

6

Section

2

13




Section 2

F

F

F F F F

0%

10%

20%

30%

40%

50%

60%60% 59%

19%21%

3%

10% 10%7%

5%

0%

5% 5%

19%

59%

6% 6%

3% 3%

Regardless of business model, the majority of strategists have budgets below $1 million

2012 Corporate Strategy budgets (by business Model)

survey Question: which of the following ranges (in $uSD) best describes your 2012 total Corporate Strategy budget (all expenditures on corporate strategy activities and general & administrative—including staff):

The red percentages are for all respondents .

Below $1 Million $1 Million to $2.99 Million

$3 Million to $4.99 Million



$20 Million or more

All Companies b-to-b Companies b-to-C Companies

14




Section 2

Strategists foresee little to no change in 2012 staffing levels

2012 Corporate Strategy Staffing (By Business Model)

survey Question: In comparison to 2011, your 2012 corporate strategy staffing will:

15%

1%4%

58%

22%

stay the same

Decrease Moderately

Decrease substantially increase substantially

increase Moderately

All Companies

B-to-C Companies

B-to-B Companies

20%

3% 3%

44%

30%

stay the same

Decrease Moderately


increase Moderately

5%

61%

24%10%

stay the same

Decrease Moderately

Decrease substantially

increase Moderately

15




Section 2

Strategists in B-to-C companies are more optimistic about their budgets for 2012

2012 Corporate Strategy budget Changes (by business Model)

survey Question: In comparison to 2011, your 2012 corporate strategy budget will:

All Companies B-to-B Companies

B-to-C Companies

21%

4%4%

21%

20%

5%

3%

5%

3%

45% 48%

44%

30%

26% 21%

stay the same stay the same

stay the same

Decrease Moderately Decrease Moderately

Decrease Moderately

Decrease substantially Decrease substantially

Decrease substantially

increase substantially increase substantially

increase substantially

increase Moderately increase Moderately

increase Moderately

16




Section 2

Strategists in B-to-C companies are more likely to rate their function’s effectiveness as “Above Average”

Corporate Strategy effectiveness (by business Model)

survey Question: how would you rate the performance or effectiveness of your function compared to others within your industry?


B-to-C Companies

11% 8%

14%

37%32%

41%

40% 46%

35%

12% 14%

10%

Above AverageAbove Average

Above Average

exceptional exceptional

exceptional

Below Average Below Average

Below Average

Average Average

Average

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Special Interest Topic: Strategy Implementation

intro

Section

1

Section

4

Section

2

Section

5

Section

7

Section

6

Section

3

18




Section 3

45%55%

48%52% 53%47%

survey Question: For strategic planning, how would you rate the clarity of roles and responsibilities between your company’s Ceo, senior management, line management, and corporate strategy group?

survey Question: Do you have a dedicated team for managing and monitoring your corporate strategy’s implementation?

Strategists in B-to-C companies are more likely to have a dedicated implementation team but feel there is a lack of clarity in strategy development roles between the various participants

Dedicated Strategy Implementation Team (by business Model)

Clarity of roles between Strategic Planning Participants (by business Model)

All Companies

All Companies

B-to-B Companies

B-to-B Companies

B-to-C Companies

B-to-C Companies

13% 13% 13%

43%

47%

40%

28% 29% 24%

16%11%

23%

Above Average Above AverageAbove Average

exceptional exceptional exceptionalBelow Average

yesyes

yes

Below Average

Below Average

Average

Average

Average

19




Section 3

Respondents indicate that their company’s ability to execute its annual corporate strategy is only “Average”

Ability to execute the Annual Corporate Strategy (by business Model)


B-to-C Companies

6% 8%

3%

30% 24%

37%

45% 52%

37%

19% 16%

23%

Above Average Above Average

Above Average

exceptional exceptional

exceptional

Below AverageBelow Average

Below Average

Average Average

Average

survey Question: how would you rate your company’s ability to execute the annual corporate strategy?

20




Section 3

Strategists in B-to-C companies meet to review strategy implementation more often than their peers in other companies

Frequency of Strategy reviews and Involvement of Senior Management (by business Model)

survey Question: how often does your strategy team convene to review and revise the strategy execution plan; and how often do they meet with senior management to review and revise the strategy?

All Companies B-to-B Companies B-to-C Companies

Frequency Conduct reviewsConduct reviews

with senior management

Conduct reviewsConduct reviews


Conduct reviewsConduct reviews


Weekly 3% 0% 5% 0% 0% 0%

Monthly 29% 22% 24% 23% 38% 20%

Quarterly 32% 38% 42% 45% 17% 30%

Twice a year 15% 15% 13% 16% 17% 14%

Annually 15% 15% 13% 8% 17% 23%

21




Section 3

The majority of companies ensure that all divisions (profit and service centers) create annual plans to support the corporate strategy

Service Centers Create a Strategy to Support the Corporate Strategy

survey Question: Do the divisions (profit centers) within your company have their own annual plans that support the corporate strategy?

survey Question: Do the support functions (e .g ., human resources) create annual plans to support the corporate strategy?

survey Question: Do the support functions (e .g ., human resources) create annual plans to support the divisions’ (i.e., profit centers’) annual plans?

Profit Centers Create a Strategy to Support the Corporate Strategy

Service Centers Create a Strategy to Support the Profit Centers’ Strategies

All Companies

B-to-C Companies

86%

14%

66%

34%

57%43%

92%74%

58%

80%

20%

59%

41%

57%43%

yes

yesyes

yesyes

yes

yes

yes yes

B-to-B Companies

22




Key Corporate Development Challenges

intro

Section

1

Section

4

Section

2

Section

5

Section

7

Section

3

Section

6

Section

4

23




Section 4

Challenge 1 Aligning acquisition strategy with corporate strategy (21%)*

Challenge 2 Identifying promising acquisition targets ahead of competitors (17%)

Challenge 3 Creating a methodology to identify and assess the “right” strategic partners (19%)

Challenge 4 Assessing and balancing risk across a portfolio of acquisition opportunities (18%)

Challenge 5 Creating a process to assess the strategic fit of existing businesses within the corporate portfolio (12%)

Top Five Key Corporate Development Challenges

survey Question: Please indicate the top five functional challenges shaping your Corporate Development strategy in 2012.


24




Section 4

Staffing limitations are the predominant root cause of corporate development’s challenges

survey Question: Please indicate if the root cause of your top five functional challenges are—staff, process, technology/systems, or strategic alignment.

root Cause of Top Five Corporate Development ChallengesTop Five Corporate Development Challenges

Challenge 1 Aligning acquisition strategy with corporate strategy

Strategic Alignment: Lack of common objectives (43%)

Challenge 2 Identifying promising acquisition targets ahead of competitors Staff: Limited resources (50%)

Challenge 3 Creating a methodology to identify and assess the “right” strategic partners Staff: Limited resources (40%)

Challenge 4 Assessing and balancing risk across a portfolio of acquisition opportunities Staff: Lack of knowledge (25%)

Challenge 5Creating a process to assess the strategic fit of existing businesses within the corporate portfolio

Process: Lack of process (50%)

25




Corporate Development resource Trends

intro

Section

1

Section

4

Section

2

Section

5

Section

7

Section

3

Section

6

Section

5

26




Section 5

B-to-B companies tend to have larger corporate development budgets than their peers in other companies

2012 Corporate Development budgets (by business Model)

survey Question: which of the following ranges (in $ uSD) best describes your 2012 total Corporate Development budget (all expenditures on corporate development activities and general & administrative—including staff):

All Companies b-to-b Companies b-to-C Companies

F

F

F

FF

F

0%

10%

20%

30%

40%

50%

60%

5%

50%

20%

25%

55%

13%10%

6%

0% 0%

10%

6%10%

32%

45%

3%

0%

10%

The red percentages are for all respondents .

Below $1 Million $1 Million to $2.99 Million




$20 Million or more

27




Section 5

Regardless of business model, respondents foresee no change in staffing for 2012

2012 Corporate Development Staffing (By Business Model)

survey Question: In comparison to 2011, your 2012 corporate development budget and staffing will:

All Companies

B-to-C Companies

B-to-B Companies

5%

3%

5%

66%

21%

stay the same

Decrease Moderately Decrease substantially increase substantially

increase Moderately 5%10% 5%

67%

13%

stay the same

Decrease Moderately


increase Moderately

63%

31%

6%

stay the same

Decrease Moderately

increase Moderately

28




Section 5

The majority of corporate development executives indicate there will be no change in budgets from 2011

2012 Corporate Development budget Changes (by business Model)

survey Question: In comparison to 2011, your 2012 Corporate Development budget will:

All Companies

B-to-C Companies

B-to-B Companies

5%

3%

5%

10%

10%5%

54%55%

56%

33% 20%

44%

stay the samestay the same

stay the same

Decrease Moderately

Decrease Moderately

Decrease substantiallyDecrease substantially

increase substantially increase substantially

increase Moderatelyincrease Moderately

increase Moderately

29




Section 5

Respondents in B-to-B companies rate the effectiveness of their function more highly than their peers

Corporate Development effectiveness (by business Model)

survey Question: how would you rate the performance or effectiveness of your function compared to others within your industry?


B-to-C Companies

11%5%

19%

29% 43%

29%

47%38%

56%

13% 14%

12%

Above Average Above Average

Above Average

exceptionalexceptional

exceptional

Below Average Below Average

Below Average

Average Average

Average

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Special Interest Topic: M&A Integration

intro

Section

1

Section

4

Section

2

Section

5

Section

7

Section

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Section

6Section

6

31




Section 6

The majority of B-to-C companies tend to rely on ad hoc integration teams pulled together from other departments

Integration Team Composition (by business Model)

survey Question: which of the following best represents your company’s post-merger/acquisition integration staff composition?

Full-Time Team Part-Time Team Full-Time Team Supported by Supplemental Staff

Part-Time Team Supported by Supplemental Staff Ad hoc Team other

All Companies B-to-B Companies B-to-C Companies0%

50%

100%

8%

11%

11%

16%

48%

6%

5%

14%

19%

19%

33%

10%

13%

7%

13%

67%

32




Section 6

All Companies 17% 0% 52% 14% 11% 0% 6%

B2B Companies 21% 0% 52% 16% 10% 0% 0%

B2C Companies 13% 0% 50% 12% 13% 0% 12%

Companies tend to have integration teams begin planning during the due diligence phase of M&A

M&A Stage Integration Team begins Planning (by business Model)

survey Question: At what stage in the M&A process does your integration team begin integration planning?

survey Question: Does your company’s post-merger/acquisition integration team manage the operational due diligence?

Integration Team Conducts operational Due Diligence (by business Model)

Opportunity Analysis

Target Identification

Due Diligence

Deal Negotiation

Deal Finalization

Deal Announcement

Day One


63%

37%

68%

32%

54%46%

yesyes

yes

33




Section 6

FAQ for stakeholders (63%)

Companies employ a wide mix of internal communication mechanisms during integration

M&A Integration Communication Mechanisms (by business Model)

survey Question: Which of the following does your company use in its internal communications during integration (check all that apply)?

employee e-mails (92%) employee e-mails (89%) employee e-mails (94%)

Company newsletter (67%) Town hall presentations (79%) FAQs for stakeholders (44%)

Deal-specific talking points for staff (75%) Company newsletter (84%) Deal-specific talking points for staff (63%)

Town hall presentations (66%) Deal-specific talking points for staff (73%)Town hall presentations (38%)

Company newsletter (38%)

FAQ for stakeholders (59%) Integration portal (31%)


34




Section 6

(72%)

(72%)

(63%)

(53%)

(68%)

(63%)

(52%)

(52%)

(42%)

Companies are predominantly using M&A to gain customers or capabilities

Top Four Goals of M&A Activity in 2012 (by business Model)

survey Question: Which of the following best represents the purpose(s) for your M&A activities in 2012 (check all that apply)?


(69%)

(63%)

(63%)

(50%)

(50%)

(44%)

35




respondent Demographics

intro

Section

1

Section

4

Section

2

Section

5

Section

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Section

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7

36




Section 7

Respondent Demographics

survey Question: Please indicate the type of enterprise, business model, and revenue that best represents your company .

N = 109

N = 108N = 110

enterprise type Business Model

Company revenue

1%7%

47%

38%

7% 21%

21%58%

Public

Private

Hybrid (i.e., a mix of public and private components)

Not for Profit

B-to-B Company

venture Capital

0%

30%30%

11%13%

29%

17%

Below $100 Million



$1 Billion to $11 Billion

More than $11 Billion

B-to-C (indirect) Company

B-to-C (Direct) Company

The majority of the respondents come from b-to-b companies .

Most respondents come from public companies .

37




Section 7

Automotive and transportation

energy and Power systems

information and Communication technologies

Healthcare and Life sciences

Aerospace and Defence

survey Question: Please indicate which region you are located in and which industry categories best describe your company (check all that apply.)

Professional services

Respondent Demographics: Region and Top Six Participating Industries

N = 99

N = 115

0% 10% 20%

20%

17%

15%

14%

13%

13%

industriesregion

3%

17%

6%

74%

Americas

Middle east

Asia Pacific

europe

Strategy Implementation and Acquisition Integration - 2012 Corporate Strategy and Corporate Development Priorities Survey Results

Business

revise strategy average

frost sullivan

acquisition integration

survey results introduction

ma activities

integration reason companies

teams areimplementation

annual budgets