16 October, 2017
There is no question that when one company acquires another, the integration process can be fraught with difficulty. Yet all too often management’s go-to approach for overseeing the transition is to set up a Project Management Office (PMO). Unfortunately, when management views the process of integrating a new organization as “a project,” they may be in for some unpleasant surprises.
Companies need to take a much broader perspective and instead implement an Integration Management Office (IMO). Although only a single word is changed, there is a world of difference between a PMO and an IMO. Failure to appreciate that can get an integration off to a rocky start. Here are just a few ways in which IMOs differ significantly from PMOs.
The size of an IMO’s undertaking is really, really big. A PMO generally oversees a few functions working together to complete a joint initiative. An IMO’s effort, on the other hand, is not just company-wide: It spans the enterprise ecosystem for two companies. That means it involves communicating with stakeholders affected by the transaction—from vendors and suppliers to employees and contractors to shareholders—and even one or more governments.
The dependencies an IMO handles can be mind-boggling in their complexity. Even the best transition team can underestimate the complexity and level of effort it will take to drive an integration. That’s because there are so many workstreams involved, each with dependencies that require cross-functional resolution. The IMO sits at the center, directing traffic across those workstreams, identifying cross-functional dependencies or “dependency clusters” where work sometimes breaks down because individual silos don’t have control over outcomes. That level of complexity is rarely the case with a PMO, which at the most will be tasked with handling workstreams across a handful of functions.
IMOs have senior-level oversight. Senior management cares deeply about the work of an IMO—in fact, their careers may depend on it. That’s why oversight of an IMO tends to be at the executive level, and senior management gets regular reports on the progress of the integration. PMOs, which generally operate within specific functions, rarely report to senior management. This is one reason why names actually matter. Your integration PMO may be tasked with doing the work of an IMO, but if you label it a PMO, it may not get the attention and oversight it deserves.
It takes a different type of professional to staff an IMO. If an IMO is treated like a PMO, it is easy to assume that pulling together a team of solid project managers is an adequate way to staff it. But that can be a serious mistake. Project managers by default take a very tactical view of their work, while the work of an IMO is strategic in nature, particularly as it involves the melding of different organizational cultures and designs. That means at least some of the individuals brought in to manage the IMO need to have a deep understanding of these of issues. In fact, because the work of an IMO calls for a strategic and a holistic perspective—as well as the ability to make rapid decisions and tough calls day after day – assigning managers to work on an integration is one way to test their mettle as future leaders.
For IMOs, Day One really is Day One. Many project-focused transition teams consider their job more or less done once the deal closes. Yet for an IMO, that’s when everything starts in earnest—and unlike the situation with a PMO, the job is open-ended. It’s impossible to know the level and type of activity that will be required of an integration until the deal is closed and the transition team can look under the hood of the newly-acquired company. Integration is a long-term effort with an uncertain outcome, and the IMO should be monitoring activities for years after the deal closes to make sure it stays on course.
To be sure, an IMO comprises some elements of traditional project management, including project reporting, but it involves so much more. For an integration to be successful, an integration team needs to address breadth, scale and complexity of the task, as well as manage significant interdependencies, communicate regularly with a myriad of stakeholders and navigate ambiguity and uncertainty. Most PMOs are poorly equipped to face a challenge of this magnitude. But that’s what an IMO lives for.