Friday, September 30, 2016

Big Deals Like Bayer’s Often Fail to Deliver High Performance
Fair Game

This article highlights our many discussion on the challenges of growing through an acquisition strategy. My belief is that M&A can play an important role in building the Capability Platform to enable organic growth

If the deal goes through, Monsanto’s executives and shareholders will receive a 44 percent premium to their company’s stock price on Wednesday, before Bayer sweetened its offer. The companies’ bankers and deal advisers will also reap rich rewards in the deal, which will create a global pharmaceuticals, health care and pesticides behemoth.History suggests, however, that one group should be wary of the transaction: Bayer’s stockholders.......That’s the message in a new and comprehensive analysis by the S&P Global Market Intelligence team. “Mergers & Acquisitions: The Good, the Bad, and the Ugly (and How to Tell Them Apart),” by Richard Tortoriello and a group of analysts, found that among Russell 3000 companies making significant acquisitions, post-deal returns generally under performed those of their peers.“Despite the often-heard claim of M&A synergies,” the report said, “acquirers lag industry peers on a variety of fundamental metrics for an extended period following an acquisition. Profit margins, earnings growth and return on capital all decline relative to peers, while interest expense rises, as debt soars, and other ‘special charges’ increase.”.....Timing, he speculated, is one reason for the poor performance. “Mergers and acquisitions really heat up at the top of the market when business prospects going forward aren’t as good,” he said. “Then it cools down when the market falls, just when you’d want to be buying stocks and companies.”......But precious few executives seeking to juice their earnings via acquisitions will get what they wished for. The average acquisition, the S&P Global study concluded, “tends to be dilutive to earnings growth over an extended period.” 
Other performance metrics — returns on both equity and invested capital — also declined as acquirers compared with their industry peers. This is partly a result of increased interest expense and other charges. And when looking at return on invested capital, many post merger companies struggled under the weight of their increased debt loads........Another aspect of failing deals: Those using stock as buyout currency under perform those deploying cash, as Bayer is doing with Monsanto. And the larger the stock acquisition, the more likely it is to under perform significantly, the study found. Acquirers using the highest percentage of stock under perform industry peers by 3.3 percent one year after the deal is done and by 8.1 percent after three years.

Monday, September 12, 2016

From touchpoints to journeys: Seeing the world as customers do
By Nicolas Maechler, Kevin Neher, and Robert Park

To maximize customer satisfaction, companies have long emphasized touchpoints. But doing so can divert attention from the more important issue: the customer’s end-to-end journey.

Great article and strongly recommend you g to the original source

When most companies focus on customer experience they think about touchpoints—the individual transactions through which customers interact with parts of the business and its offerings........customer journeys include many things that happen before, during, and after the experience of a product or service. Journeys can be long, stretching across multiple channels and touchpoints, and often lasting days or weeks........ he explosion of potential customer interaction points—across new channels, devices, applications, and more—makes consistency of service and experience across channels nigh impossible—unless you are managing the journey, and not simply individual touchpoints........the customers’ cumulative experience across multiple touchpoints, multiple channels, and over time.......Six actions are critical to managing customer-experience journeys :
  • Step back and identify the nature of the journeys customers take—from the customer’s point of view.
  • Understand how customers navigate across the touchpoints as they move through the journey.
  • Anticipate the customer’s needs, expectations, and desires during each part of the journey.
  • Build an understanding of what is working and what is not.
  • Set priorities for the most important gaps and opportunities to improve the journey.
  • Come to grips with fixing root-cause issues and redesigning the journeys for a better end-to-end experience.