Igor Borovikov
Igor Borovikov grew Softline from a company with 10 employees to an international powerhouse, giving him valuable insight into how to create a culture of innovation. In April 2023, he sold all the shares of Softline and left the company to develop new IT products in international markets and focus on investing in AI-related products. Whether you’re going through a merger or anticipating an acquisition, innovation should be one of your top priorities. Borovikov offers these tips for creating a culture of innovation that gets results.
- Anticipate problems
In many cases, employees are extremely resistant to mergers and acquisitions. They’re comfortable with their current work environment and worry about what’s going to happen when managers from another company come along and try to change longstanding processes and procedures. It’s also common for employees from two companies to have completely different work styles and values, leading to heightened levels of conflict.
If you’re committed to creating a culture of innovation, you need to anticipate problems before you ever begin an M&A transaction. Familiarize yourself with common issues, such as communication breakdowns, poor leadership, and management conflicts. Work with your HR team to provide extra support for employees and coach them through the transition. Having an action plan in place reduces friction, ensuring that your company can reap the benefits of completing an M&A deal.
- Listen to employees
Employees need to feel heard, especially when they’re concerned about their professional futures. To improve morale and prevent valuable employees from leaving your company, create focus groups to hear ground-level issues from both sides. If two companies are merging, employees are likely to have concerns about core values, work assignments, managerial roles, and other day-to-day activities. Acquisitions are a bit more fraught with problems, as employees from the company being acquired have to contend with a whole new set of policies, procedures, and processes.
Maximize the value of each focus group by asking questions about specific topics. If you ask general questions, you’re likely to get general feedback that isn’t of much value to your leadership team. For example, if you’re concerned about morale, ask participants if their morale is better than, worse than, or the same as it was 6 months ago.
- Create a system for reviewing ideas
Employee feedback is critical for enhancing productivity and boosting morale, but you need some way to review ideas and sort them into categories. Otherwise, you may spend so much time reviewing that you never have a chance to act on any of the feedback. If possible, set up a computerized system that allows employees to submit their ideas from any company computer or mobile device. You can automate some aspects of the system with artificial intelligence, which Igor Borovikov contends will change the world as we know it.
For best results, the system should also allow managers to review ideas and tag them according to their relevance or timeliness. If you implement a review system, provide ample training to ensure employees and managers use it as intended.
- Promote ideas from all levels
Every employee in your organization should feel comfortable sharing ideas, not just executives and department managers. Set aside time at least once per month to solicit feedback and find out if one of your employees has the solution to a problem created by a recent M&A transaction. By listening to your employees, it’s possible to increase innovation and position your company as a much stronger competitor.
- Assemble diverse teams
When every member of a team has the same socioeconomic, educational, and ethnic background, it’s easy to miss opportunities for expansion. For example, many companies ignored the wants and needs of Latinx consumers until just a few years ago, leaving the market for certain products virtually unexplored. Now, store shelves are filled with aguas frescas, colorful textiles, and other items designed to appeal to Latinx families.
If you truly want to create an innovative culture after a merger or an acquisition, you need to assemble divorce teams. Work closely with the HR departments in both companies to identify gaps in the workplace and find the right candidates to fill them.
- Offer additional development opportunities
Smart managers look for ways to help employees develop new skills and abilities. After all, it costs a lot more to hire and train a new employee than it does to retain an existing employee. Once you complete an M&A transaction, take a good look at what each employee has to offer. If possible, work with HR to create a custom learning path for every employee. This contributes to a culture of innovation and makes succession planning much easier.
- Reward employees for taking risks
Innovation requires risk-taking, but some cultures penalize employees for taking risks instead of rewarding them for trying something new. Even if a risk doesn’t pay off as intended, you should still reward employees for coming up with new ideas.
- Update your core values
After an M&A transaction, it’s important to update the core values of the new company. Otherwise, employees won’t have any values to guide them when making business decisions or building relationships with vendors, customers, or shareholders. Work with the new executive team to identify appropriate values based on your company’s stated purpose.
