Duncan Angwin Discusses Strategy, Mergers and Acquisitions

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    • 00:00

      [THEME MUSIC PLAYING]I'm Duncan Angwin.I'm a professor of strategy at Oxford Brookes University.[Professor Duncan Angwin, Professor of Strategy,Oxford Brookes University Business School]I have a number of research linkswith a variety of other places such as Oxford University,

    • 00:22

      Accounts Business School and some international schoolsas well.I specialize in strategy research, of course,but also in particular mergers and acquisitionsand really trying to understand that phenomenain a more sophisticated way.Yes, I've published must be around 50 articlesnow in mostly international journals.

    • 00:43

      I've also written six books.That's a mixture of academic books and also practitionerbooks, as well some textbooks.So it's quite a varied output.I also write for practice and paid commentaryin the news media and so on.[What do you believe are the most critical aspectsof strategy, mergers and acquisitions?]

    • 01:04

      Well, if we look at mergers and acquisitions,it's been studied for a long time.I mean the phenomenon itself, of course, has been aroundfor hundreds of years.Academic studies been going for the best part of 80 years.But up until fairly recently it tendsto focus on a fairly narrow financial view,the sort of the most well-known fact

    • 01:27

      must be that somewhere between 50% and 80%of all mergers and acquisitions fail.And I think that raises two very interesting questions.I think the first is why do so many fail?There's a lot of research in that area attemptingto unpack what it is about mergers and acquisitions thatmakes the difference.

    • 01:47

      It's tended to focus on the post-acquisition integration,and in there you have a lot of issues around cultural fit,organizational fit, which can become quite complex in itself.Less attention in some ways to what makes them successful,which is quite ironic.Where I think research is going at the moment,

    • 02:08

      though, is to say, well, we do need a more nuanced view.We're tending to look at them sort of as a whole.Certainly the work I've been doing is trying to say,well, there are many ways to skin a cat, if you like.So rather than maybe just two or three waysto integrate a merger or an acquisition,I've recently presented some materialwhich has just been published suggesting

    • 02:30

      in fact there are five distinct integration strategies.And these have different implicationsin terms of the way they're managed.They have big implications for whether youkeep the top management team or the chief executive.They have implications for the speedat which you can integrate.And of course they have implications for performance.

    • 02:51

      It also means are becoming quite critical of the ideaof this ballpark figure that somewhere between 50% and 80%fail.And some recent work I've done there suggests againthat that's really too simplistic.And it has the effect of making the managers whoare doing a good job we tend to underestimate, if you like,some of the successes.

    • 03:12

      But also it tends to rarefy or tendsto exaggerate the failures.Not all mergers are done to maximizestockholder value, which is one of the assumptions of finance.So my work is trying to look at thatin a more sophisticated way.And to say that there are plural outcomes, whichis very much the European tradition, if you like,

    • 03:33

      in how we think about acquisitions.Plural outcomes, which are not necessarilyreducible to a single financial measure.There's also indications to suggestthe stock market measures on their ownare not necessarily the best way and certainly not the only wayto understand performance.So this whole area is beginning to explode,I think, to give us a much better, more sophisticated

    • 03:55

      understanding of mergers and acquisitions.And that's something, of course, that couldbe of interest to managers.So if you're a practitioner it's probablyheartening to know that there's morethan say one way to manage.There are more sophisticated waysof thinking about outcomes.And this can also help the way you manage both marketsand other stakeholders.So there's a lot of research in this area.

    • 04:19

      [Can you tell us about your latest research in the areaof acquisitions?]Essentially conventional wisdom saysthat there are maybe three ways to integrate acquisitions.There are some suggestions there couldbe perhaps a fourth approach.I've just recently conducted some cluster analysisthat shows in a fairly robust way in fact there are

    • 04:42

      five quite distinct strategies.It also means that some of the generic issues aroundwhat makes acquisition successfulpossibly need to be adjusted in some way,depending on what acquisition style you are using.So for argument's sake, also somework I published some time ago, I raised the issue of speed

    • 05:03

      as being very important in M&A, and a lot of peopleare now beginning to seize on this topic.But of course then one has to say, well,in some styles you might have a really fast integrationprocess.It could maybe last 90 days or 100 days.But that would not be appropriatein another integration style where

    • 05:23

      you could be looking at maybe three, five, even seven yearsto integrate particularly complex multinational deal.Particularly amongst the research functionsof pharmaceutical companies, for instance.That's extremely tricky.It takes time.So whilst one might say speed is generally good in some ways,

    • 05:43

      it needs to be temporized by what style they'reattempting to use.The same with should you keep the chief executive,for instance, of the target company.This is often debated.People believe they're important,so I think that's a generic pronouncement.But how do you decide whether you should keep someone or not

    • 06:04

      keep them?And this again is linked to those styles.In some cases, absolutely.They have all the customer relationships.They have the loyalty of the staff.They've been running the firm in an extremely effective way.So maybe you do want to keep them.But in a different style, you may say, well,in fact they would get in the way of strategic changefor the future.

    • 06:24

      That they'd always be attempting to protectwhat they've achieved in the parts of the company.So once again, yes, we know the leader, if you like,of the target matters, but it depends which wayyou want to integrate.Maybe a third one.Some people will tell you communicationis the key issue in acquisitions.Some books say the three most important things

    • 06:45

      integration are communicate, communicate, and communicate.Absolutely communication matters,but again we could say that with five different styles,the way you communicate what you attempt to do possiblyneeds to be adjusted.Sometimes it's very top-down directive, reduce uncertainty,make it clear what people should do.

    • 07:08

      Other times you want something that's much more consultative,interactive, trying to draw out people's opinions,make them feel involved in the process.That would not be appropriate in a veryfast-moving, aggressive, quick restructuring.So again, communications matter.That's a generic truth.

    • 07:30

      But one has to decide what approachyou're using to integration, and that can influencecommunication policies.And of course you can get it the wrong way around,as I'm sort of hinting.So the styles matter, and I think the article shows thatfairly well.[Can you tell us about the role and importance of strategydirectors?]

    • 07:51

      This came from having a lot of experience teaching strategyto a wide range of audiences.[INAUDIBLE] at University of Warwick and some other places.Essentially I've been teaching frameworks for a long time,but also encountering senior strategy directorswho were sort of raising some interesting questions

    • 08:11

      such as, we don't actually use the frameworks you teach.I think if you've been teaching and you know this materialwell, this in my mind said, well, what am I teachingand for what purpose?So I decided to research it.And as a result, I wrote an articlein California Management Review in 2009which looked specifically at who are strategy director,

    • 08:31

      and what do they actually do?And it was a fascinating, sort of exploratory study, whereI came out with a number of conclusions around the role,if you like, of what we teach and possiblywhat we research in strategy, which was really quite at odds,I think, as the way it's being presentedin textbooks and the way it was being taught in the classroom.

    • 08:54

      And it's led to a much more sophisticated understanding,I think, of what strategy professionals do.And I use that term in a more-- in a broader sense.So I don't include just the strategy directors, but perhapsmore than ever now we have strategy directorsof marketing, of IT, of HRM, and so forth.So everyone's a strategist.

    • 09:16

      The question is what do they do?What make them strategic?How do they manage to engage with strategywithin the organization, obviously for betterorganizational outcomes?So that research brought out not onlythat there's a very important rolefor the analytical, for which we havea large number of frameworks.But also the critical role of the social,

    • 09:38

      in the sense of it's often a negotiating process.And these tools and techniques are notnecessarily objective artifacts that stand above.But they're actually used as mechanismsfor engaging a wide range of stakeholders,not just inside the company, not just the employeesor not just the main board.

    • 09:59

      But vertically, of course, across the levels,but also across organizational boundarieswith various stakeholders as well.So this paints the role of strategy toolsin a slightly different light to the way in which perhapsthey've been used in the past.And they become an effective means,I think, for not only in communicating strategy,

    • 10:20

      but possibly crafting and creating strategy as well.And in that sense they're very powerful.So the article, as I say, focused very muchon this class of practitioner, the strategy consultant.And of course the broader strategies practice movementhas said, well, there are other strategy practitionersas well, such as management consultants, for instance.

    • 10:42

      And you could also argue business school academics,people like myself have a role in sortof influencing people in the fieldand also thinking about and crafting ideas thatmight come from practitioners.And one thing I specialize in is what youmight call engaged research.So I try to research alongside practitioners.

    • 11:04

      So that article is a good example.In order to have something that's grounded in realityas well as trying to engage with the academic frameworksthat give insights and so forth.So that's the practitioners, if you like,which I'm not foregrounding in the way wethink about strategy, which were frankly absent before.

    • 11:25

      It you take the famous framework everyoneuses something like Porter's Five Forces,where is the human being?They're just not there.And that's absolutely a limitation or a weakness.The strategist practice field, or course,looks at other issues as well.So it's not interested in just the actors, but also

    • 11:46

      their day-to-day activities.What do they do?How do they go about their jobs?Again, the 2009 article describes in some detailwhat they actually do.It's surprising.It's highly varied.It's not predictable.It's not routinized in that sense, whichI think makes for some very interesting challenges perhaps

    • 12:07

      to the traditional view.And also it looks again at some of the frameworks and toolsto that they use, if you like the practices.And the practices of how do they makesense of their environment?How do they give sense about wherethey're trying to take things?That gave rise with some colleagues of mine,

    • 12:27

      Sotirios Paroutis and Liozos Heracleous.We came to the conclusion that we needed a textbookon strategist practice, because there is no textbook.And this is why we put it together with that sortof framework at the heart.So we do look at the practitioners.We do look at the practice.We do look at the practices.And we then interpret certain situations in those terms

    • 12:51

      so that people get this more practice-based viewof what strategy is.And we think it's highly relevant, not only to studentswho may aspire to work in the strategy field,but also to the people out there doing strategy.I think there's a need for it.And in that sense I think it's a useful contribution.[What advice would you give to students and researcherson research methods you have used in your own research?]

    • 13:17

      I came into academia from practice.I was a senior investment banker for quite some years.And obviously as a banker, very, very strong with numbers,so the quantitative side was somethingI found pretty straightforward.And maybe there's some messages here for other peoplein that there are a continuous flow of people,often very senior people, coming from industry back to academia

    • 13:38

      with a lot of experience, wondering how they mayfit into the academic scene.So there could be some interest here.As a consequence, when I started on my PhD, obviouslyI tended to move towards a quantitative approach,using cross-sectional survey methods and so forth.But interestingly enough, startedto go on a bit of a journey.

    • 13:59

      And I think it is a journey.I think research as a whole is a journey of learning,not just about the subject, but how you think about research.In that sense, if anyone reads Henry Mintzberg and peoplelike that you'll get an idea.I began to become very curious about the subject whichI was investigating, particularlymergers and acquisition integration,and concluded that really the quantitative

    • 14:21

      was purely providing some sort of skeletonand was not getting into the explanation,and it was not exploratory in the waythat I feel is important.And that's the way that my research have evolved.So as a consequence of the PhD, I actuallymoved into a dangerous area, whichis hybrid methodology, using both quantitative andqualitative.

    • 14:42

      I have to say to anyone who's listening to this video it'slike doing two PhDs, so think carefullybefore you lap on what appears to bea solution to all problems.And also I have to say it was a major challengeto publish from that, because the journals at the timedid not accept hybrid methodology.You'd always have a reviewer that says,you need more on the quants, or you need more on the qual.

    • 15:04

      Bin the quants or bin the quals.So you're always compromised and not seeing the fusion,the value of the fusion.So I would say I wrote this hybrid methodologyarticles in M&A. It took a long time to get them published.And I'm glad to say now this has taken off.We now have some articles which aresaying that this sort of approach to methodology

    • 15:24

      is exactly what we need.Not just in M&A, but in interdisciplinary researchas a whole.So there are huge challenges, and I'm notattempting to say that there are not, in doing this.But it also leads to very excitingand I think very interesting outcomes.Where I am today, more or less, I

    • 15:44

      suppose while I'm still comfortable with my quantsand I still do some very big, large-scale quantitative stuff,hopefully publishing something on that soon.I think my heart lies and always willlie in exploratory research.Rather than necessarily testing or generallytrying to verify previous ideas, I'm interested in--

    • 16:06

      and you could argue that I'm sortof a realist in this sense.I'm interested in what are the issues that face practitioners?Are they really new and novel in a sense?What can academic research say about thenwhat the theory tell us about them?And if there genuinely is something

    • 16:26

      there that's undertheorized or for which we have no reallycohesive answers, then that to meis an interesting problem to solve.So I'm driven, very unusually, from the practice field,a semi-academic start from the theoretical base,and then try to do build from there.I come at it from the other way.It causes all sorts of problems in terms of publications,

    • 16:49

      but one of the reasons I came back to academiawas to explore and understand the world.And this is different.I see it as a different sort of game that many are playing.

Duncan Angwin Discusses Strategy, Mergers and Acquisitions

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Abstract

Professor Duncan Angwin discusses strategy, mergers and acquisitions, particularly focusing on the high proportion of mergers that fail and how to help them succeed. He explains his own research and gives advice to students in this field who are considering doing their own research.

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Duncan Angwin Discusses Strategy, Mergers and Acquisitions

Professor Duncan Angwin discusses strategy, mergers and acquisitions, particularly focusing on the high proportion of mergers that fail and how to help them succeed. He explains his own research and gives advice to students in this field who are considering doing their own research.

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