Hi, I'm Paul Vesure, and together with my colleague Ferdinand from Siemens,
we're speaking with Eva Maria Vico about how collaboration functions in the
world of acquisitions and mergers.
Trained as an art historian, Eva completed her degree in international management
and began working for Goldman Sachs in 2004 in different capacities,
and in 2020 she was named managing director for investment banking at Goldman Sachs in Germany.
Ava, would you like to start with just giving a short description of your professional
trajectory that brought you to the point where you are now?
Sure, happy to. So I joined Goldman right after university.
I was sort of talked into it basically by my colleagues at that time,
or my colleagues at uni, because everybody told me that when you have an offer,
you have to go join Goldman.
And I wasn't sure at that time what it's all about, because none of my sort
of direct personal background is related to banking or investment banking.
And I stayed for a long time. And there are many reasons for that.
But one of the reasons is really the culture of the firm and the fact that I
felt from very early on that I have a big impact on the culture.
I can have a big impact on the culture if I speak up.
And um that that that was really the the beginning and that's what kept me for
now almost 14 years at goldman i managed to walk through different stations
like it is in a corporate career,
when you start in one office and then move to london and go back to to germany
and where and i ended up now in uh in the frankfurt office of goldman um being
a managing director in our,
investment banking department, which is what commonly is understood under the
M&A execution or M&A department.
Right. So now...
In that experience, also the position you're at, you are immersed in a number
of processes that we could call collaborative, right?
You have collaboration inside your organization and then also with the entities you work with outside.
So what types of collaboration would you distinguish in that context?
And first and foremost, which is really sort of my everyday job when I when
I start my my day at 9am is, is is really the collaboration within the teams that I work with.
And I happen to by my by definition of my job now I happen to mostly lead,
teams or four to five people that are working on certain projects,
which are mostly mergers, acquisitions and financing transactions for clients of Goldman's.
And these These are colleagues of mine that are throughout the different levels
of seniority, mostly four or five, and I speak to them every day frequently
on how the project is going,
what the next steps are and what needs to be done.
So that's the first one, which is very easy because it is very much...
Common sense of what is what needs to be done the the
the teams know very well uh what
uh how they how we work together how they're flat
but there's obviously a hierarchy in this team so how this how this team works
and functions together even though we tend to switch teams a lot so i work with
new people every probably every three four months um but it's still um a very
yeah it's it's relatively
easy the way how it's set up because everybody knows exactly
what he's in her role in this team is and what's the
common goal and I think that by virtue
of the organization and that acquisition of talent the people are in a sense
expecting what what what what how they will be asked to work and um and have
a have a we have a very a lot of common ground and and And probably there is too much similarity.
That's what we try to change now in these teams.
But I think either it's people who joined from university or other organizations
very much expect what will need to be done at Goldman.
So I think that's the easy part. Now, the more challenging part is to collaborate
when it comes to collaborating with clients on big transactions,
because we are M&A specialists.
So for us, mergers and acquisitions are our everyday bread, whereas for our clients, these.
Are the big transformational situations in the life of an organization,
which makes the collaboration of the client a much more difficult situation.
I sometimes explain it to, like when I talk privately about it to my partner
who is a doctor, we see a lot of similarities there because I'm working in a
hospital for M&A and our clients are like patients.
They come only to the hospital if they need some help.
And for them, it's already extraordinary to be in a hospital.
They already feel sort of the slight discomfort of being in this situation.
And their collaboration is,
is much more difficult because it's first
and foremost what we need to win from our clients is
trust that they trust us that we are all on
the same side that we all try to achieve the same goal and that
we adjust the way we collaborate and the pace of um you know execution and the
pace of of the situation to the needs of the organization so it's really that
is very much interactive and needs to be adapted and is very different depending on the size,
the culture of the organization and how important the project really is for
the living of the organization.
So what's the scale of these M&A operations?
So what's the largest operation just in volume in terms of market cap,
employees and so on? What's the scale of such a process?
So it can be very large. And I think one of the largest transactions in Germany
I worked on was the whole change of or the set of transactions around the utility industry from RWE,
Eon, Energy in between. And it was really about...
40 plus billion market caps and sort of huge organizations.
And also about changing completely, splitting the organization into two and
then changing people's workplaces and merging also two cultures.
It really had a big, big impact on the organization itself, on the regional
setup and where they will sit, where the headquarter will be,
where people will go to work.
And ultimately, also, all of this was accompanied by the fact that the industry
has had to fundamentally change from producing power by power stations run by
gas and oil and nuclear power stations to renewable energy, etc.
So it all had to happen at one time. And when we started to work on the project,
really nobody really knew which part of which organization am I going to be?
How is this going to go we only had this common goal which was an extremely short term for the.
Amount of work that had to be done and and
there needed to be a lot of working together and collaboration
from different sides from from political side from
the from the employees themselves but also us
all the advisors involved there and it was not only obviously
investment banks but also some other advisors lawyers and
and consultants that that had to basically all
work towards a common goal right that was there
okay so you have quite some moving parts in that
process right so yeah then do you approach that
from a certain methodological perspective
where you say all right to make
this work we should first establish trust and
then we should establish something else and then something else and then we work
down the list or so how do you approach that and is
there a method yes there is so
there is a structure of how to
organize how to plug in the the project itself
of of sort of corporate reorganization into
the everyday life or the everyday operation of
the company because these these companies obviously have to do
what they have done um every day still and then there is a new that that comes
on top and And we first need to establish the understanding of the organization
that it's actually going to be extraordinary times because next to your normal
day-to-day operational job, there's going to be this new project on top.
And you will have to talk to a lot of new people and ask questions where you
will see that they don't necessarily exactly understand what you do every day.
And I think in order to be able to do that, you have to establish some type
of project organization which is centered around certain work streams that need to be done.
And then it's really, I think, a lot is understanding how much involvement from
the organization itself is going to come and how much additional.
People additional human resources you will in the end need in order to actually
make it work so so it's it's pretty it's structured on the one side that we
have very much a very good view on what work streams needs to be need to be
done and then there is a little bit of diagnosis to be done,
on how much can the organization do itself our client do itself how much help
will they need And actually, I think a good project manager,
project leader, which in this case oftentimes is the investment bank,
is the one who is able to easily or initially establish status quo and say, what is the status quo?
Who else do we need? And then make it really work from day to day.
So there is a method to it by dividing it into subgroups and sub work streams.
And then I think this is 20 to 30% of the whole thing and the rest is really
on the go, actually realising how is it, what are the issues here, what are the conflicts.
What are departments within the organisation that don't work that well together,
what are individual interests of people.
So it's a lot of politics and
psychology into this as well in order to make
sure that everybody has a goal that
is at the end helping to reach the overall
goal but you need to establish most of the time sub course
to make you people motivated our projects normally tend to last from six to
12 months even 18 months in such in case of such bigger projects and if you
imagine the if someone asks you to not to do 18 months of additional on on top job of very,
very high quality because it's super important for the organization on top of
what you do anyway every day. That's a long period of time.
And in order to keep you motivated, it cannot be just there ringing the bell
on the stock exchange in 18 months.
It has to be smaller goals in between and smaller goals for individuals that
run the work streams or help run the work streams.
So now you have split up the different activities,
but your methodology covers, as you say, 20% to 30%, and the rest is also a
deeper understanding of people and organizations.
Now, I guess it's on that part of the divide that the concept of collaboration
resides, right? Because as you say, you have to establish goals and sub-goals.
So now, how do you establish goals and sub-goals in such a heterogeneous environment?
You need to make sure that you understand,
especially in situations where organizations will be split or there will be
a new firm joining the other in case of mergers,
and to really understand very
early on how these firms will go
together and who will be in what position also after the transaction has completed
so it's not only about the transaction itself but it's also what will be people's
individual interests once the transaction really already worked out and is completed.
When you start to understand how the organization will look like,
or what's the goal of how it's supposed to look like, you can involve people
in different work streams and involve.
People in in completing the goal
but you you need to understand where they will end up
because they will mostly or what's their or what's
their intermediate goal maybe they try to you know
apply for a new position within the organization in within
a short period of time and then you have to understand that
and you establish these goals really only by
individual contact and and
relation establishing relationships and you
understand what they actually want to achieve in terms of
their career but also their position today and then
you know how to involve them or how to sometimes even you
know it's not only about involving it's also maybe sometimes about avoiding
too much involvement from certain people if you know that it's going to be very
difficult to actually align their personal goals with the goals that you actually
have as their as a project So sometimes it's keeping them satisfied.
Informed, but maybe focused on something else than what you will be mainly focusing on,
because too much involvement from their side will be difficult because the alignment
is not there and their role will be a different role over time.
So, and it's really, it's really very personal in the end, I think it's,
it's about personal relationships and understanding each situation specifically,
um, and understanding also how the organization works and who is in charge and, and who's, uh,
how, how, how people get motivated in different teams is very heterogeneous in the end.
I think most of those organizations are very much driven by still,
um, a strong leadership culture, but also a quite hierarchical culture.
I think that varies a little bit across countries and organizations.
But on average, my experience is when I came from university with all this management
theory and all that you're being taught and into sort of organizations,
real life organizations, I realized that not a lot of this is already sort of reality.
There is still a lot of hierarchical and structured thinking.
And even if organizations tend to believe they are very meritocratic,
in the end, they tend to be, especially in critical situations,
they tend to be very hierarchical.
That's my experience. Right. Well, that's very interesting.
But I would like to unpack a little bit what you were saying,
right? Because you talked a lot about the importance of addressing the people in the organization.
And in some sense, it sounds very much like a very customized approach,
like we have to massage people to fit in some process.
But those people, who are those people?
Project managers or managers of different work streams, probably mid-level,
mostly mid-level managers of firms.
So not the board or the CEO?
No. Okay. Most of the time, if you have taken a decision to do such a project,
the decision is already made in the board and most of the time the board is
already standing after that and really pushing for it.
That's when you start when you really kick off the project you need to before
that you need to convince a lot
mostly the board on the the supervisory board in in in the german award,
and um that's before you you actually start when you really start on the execution um,
that's more going more further down into
the organization and really aligning people's interest on that side of things
i personally think that's that's oftentimes more challenging because it's less
rational and it's less clear what what individual goals are because on the board level,
in in general apart from several specific situations but in general there is
the especially enlisted companies which most of the time i deal with is there
is still the alignment of the general goal of the board is to maximize shareholder value.
And if there is certain concerns about achieving this goal, then hopefully it works.
And if there is big opposition in the board, then mostly these big transactions
don't happen because the opposition starts before you even dive into the project itself.
That's a slightly different and probably even more customized process and because there is a lot of.
Out of very individual decisions, people who are, everyone is basically in the
same position of strength.
And then it's really about the ability to convince that this is a good idea.
But I think even though, I think maybe some bankers will tend to believe that
they actually initiate strategic projects.
I think we are more facilitators of strategic projects than we initiate them
Because if someone decides to develop the organization into a totally different
organization in the future and believes in certain technology or certain direction.
Strategic direction, mostly it's coming from within the organization that there
is the belief that something needs to change and you need to go into strategic direction.
So where I really play a role as a banker is more helping execute it and helping
make it reality more than develop the strategic concept as such.
We're sometimes being used as sparring partners for that, but not necessarily
we are the initiators of such ideas.
But that would mean that the first level of collaboration that already happens
before you really get engaged is the level of the boards of the different entities
to come to a common view that is in their collective benefit to merge.
Correct? Yes. Only then do you get brought on board to, in some sense,
make sure that that also happens in a comprehensive way.
But now that process of the strategic collaboration at the level of the board,
this might in itself also be fragile.
No? Because people might change their mind. Or people might learn more about
an organization as you're in there and then understand like,
oh, wait, my decision was based on the wrong premises.
Right? So how then do you keep at the top level of the organization the sense
of a collaborative effort for a common goal intact?
I think, coming back to the board level question, I think, yes,
people have to be convinced that this is a good transaction or is a good decision they have taken.
On the other side, especially in the public market environment,
a lot of this is also driven by the virtue of the premium price and how much
do you offer and what is the premium over your current price.
And sometimes you if you
you can have good arguments as a board member against certain
offers but they have to be economic in nature because your shareholders are
driven by return on capital considerations only mostly and now it's changing
a bit now but mostly capital capital goes to the there where the return on capital
is highest so there is a certain element
of enforcement in this if you are a board member of the target that is being taken over.
But obviously not all situations are like this.
And there are also situations where that needs to be the collective belief on both sides.
And I think that this is a good deal and that there is not a better alternative.
And it's even the fiduciary duty
of the board to actually go and look for other alternatives and
i think keeping um keeping everyone engaged
and is is the question here is also how much
influence they can have on the future of their
organization and how much they believe that this is
really the best home they can get for for
their people in their organization and this
is really where where where collaboration comes into
place and i think we're also um one One has to be very thoughtful about how
to acquire and engage an organization and put it within your organization without
the new team members or the new members feeling that they have been taken over.
The word takeover, by definition, has something a little bit aggressive in it,
and I think that's really...
Engaging people and giving them proper roles
in the new setup that where they feel that
they can gain and benefit from from a bigger organization
and um why i think the uh
you know the one level below the board is also very important is
because these are mostly the the people in
the organization that believe that in the
next five to ten years they will be running the
firm or the organization of the company and
they are really thoughtful about their future there
whereas board level members might be
much more short-term oriented because they want to
make it a success within the short term um and
want to and sometimes they have attractive exit options
after such a merger but but the level the one level below is really that where
the where where the longer term perspective in the organization is and i think
oftentimes when um when the board level discussions take place it gets a little
bit underestimated that there needs to be the next generation.
People with a perspective on the organization who will drive the success of this really,
and i think organizations that ultimately tend to
uh tend to be very
good at sort of taking over sovereign consolidating markets are those that have
the ability to involve the next generation managers into these decisions and
give them a chance and a perspective in this and show them that if the organization
is getting bigger or they are getting part of a bigger organization,
it also means more chance for them for developing their personal careers.
And that's also the motivational aspect you mentioned earlier. To go back to the board,
If the arguments at the level of the board are always return on investment or
standardly, so this is like 90% of the cases or 95%, what's the number you would give that?
Or 99% even?
I would say in the US it's probably 90+.
I think in Europe, it's probably a bit different because many firms are also co-owned by families,
co-owned by the state or by some other foundations, other organizations.
And there it's totally not only return on capital, it's sometimes also the importance.
Standing of the organization in in
the in the in in the country or
in the region or the the relative importance of
the organization for the region oftentimes up to some some and obviously in
in germany which which i think um we are also being probably um especially these
days admired by some others it's also about the employees and and how they will react to it and
end up and it makes the the discussions much
more complex because there's different motivations but on
the other side there is a lot of security that everybody will
go into the right direction and i think if i compare
my sort of us take over to the to the german uh situations experience then it's
very the involvement of the of the employee representatives and um which mostly
are on the board of directors or at least in the supervised report um that's
really that's the part where it where,
again, there is another level of complexity.
I think in the US, it's really very, very capital and return on capital driven.
In Germany, I think it's less than 80% personally.
Okay. But it will still be decisive in the whole equation, right?
Yes. What is interesting about that is that if we talk about collaboration.
As you also described it yourself, right?
We talk about goals and goal setting. setting, but if in the end there's actually
only one goal that's being served, then that's not an option.
It's just a quantitative analysis.
In some sense, the market is coercing organizations to come together instead
of collaborating to come together.
How would you see that? Can we speak of an economic coercion in this domain
of mergers and acquisitions?
I think, yes, I think yes, in the end, you have to be able and everybody who
is publicly listed is slightly different,
obviously, for companies that are run by a single person who can basically do
whatever he or she prefers.
And there might be different, but then the motivation is really different to
say there is a commonality in it, because then it's different personalities, really.
But I think if you if you think about the capital market environment.
The public capital market environment i think yes because it's
ultimately you need to prove and short-term
proof that there is an economic benefit
and of of bringing companies together
and we can't forget that the big
as much as as as we like to
think as in in terms of synergies and
you know synergies by definition have
the hint of there is a collaboration two minds
come together and there is something they create more
and there are synergies from this this is
kind of the the nice part of of kind of synergies where
you think that you're combining more knowledge together and
then you you're creating something new out of it that's
the that's the nice part of this order the the more
optimistic part of the synergy but we can't forget that
a big part of the synergy is also cost cutting and cost cutting
is just asking one person to do probably 20
more and then cover the job of
another person and take the other person out and ask them
to you know do something totally different or even leave the
company in the end of the day so and i think part of the m a um strategy of
some organizations is obviously also cost synergy so there is a a lot of behind
that is also the economic better economic performance and efficiency and uh
which which is i think also.
A symptomatic for a very established market where you have a lot of various stories.
Now it's changing a little bit because now because of the technological.
I don't know if we should call it revolution or fast evolution,
whatever the best word for it is.
But now I think, and also my job is very, very much driven by that,
is that firms tend to not only look for optimization of the already existing,
but tend to look for new business model that they can add to their business
because they fundamentally believe that they will be doing something completely
different from what they do today in 10 years' time.
And I spent like the last 14 years in banking and the years after the financial crisis and everything.
And I never remember a time where somebody from a very established firm that
is producing something would tell me,
the CEO or the COO would tell me,
i'm producing x today boxes
or whatever cars or i don't know whatever
it is today and what will i be doing in 10 years the only thing i know is that
i will not be doing what i'm doing now and i think 10 years ago if you ask people
you're producing cranes or cars or any some other forms of equipment if they
ask if you ask them what will you be doing in 10 years from now you You see,
I would be producing better cars or better cranes.
And now we are in a very different environment. I think that makes it so exciting
that now the transactions are partially,
which makes it also much more difficult for us, by the way, that firms are trying
to buy new technology, new ideas and new culture.
And it's less about the economic aspect of return on capital within the next three to five years.
And it's more about having a business in 10 plus years. but.
That is changing right now.
It's not the biggest part of the market, but I think that will fundamentally
also change the way these decisions are driven because they are not driven by
the short-term cost cut and the improvement and the very clear,
very measurable way of collaboration.
But this is less measurable because you need more time to integrate a very technologically
advanced organization into a more established organization and actually develop the product together.
And sometimes the decisions today are taken to go together, even if you don't
exactly know what the product will look like.
But you tend to believe that adding this knowledge and this expertise to your
organization will ultimately bring some new product into life,
but very different from what it used to be.
Okay. So we understand now a bit the economic forces that might drive the merger.
And also you indicated right now new factors are coming up.
Let's look at that later because now, okay, the board has decided we're going to do this.
And the board, in the end, if you would push them, will put an economic argument
on the table, return on investment.
But now with that, you have to go inside the organization.
And of course, you will encounter people in different positions who would say,
I don't care about return on investment. My interest in life is different.
I'm more worried about my job and so on. So now how do you make that translation step?
Hmm i think that's that's really to find out
what the role of these people could be in the new combined organization and
this is a joint work of sort of the advisor but also jointly with obviously
the board members who have the responsibility to think about how to allocate
the resources afterwards and it's very important that people have clarity what's going to happen,
especially people who have to drive and motivate others is what's going to happen
And I think there is a very important element of some type of growth,
whichever type of growth it is, that it's helping the organization to enhance
its capabilities and really influence in a sense that people get a growth mindset,
that they ultimately start to believe that this is going to be enhancing for themselves,
for their job, everyday job, for they pay, for the security of their job,
and for their next step on their career path.
And this is a joint work that has to be done and these projects are very mostly,
the bigger they are, the more prominent they are in the organisation.
So if you think about it, many of the line managers that you would be working
with, that will be their chance,
which is not every day and it's not even every month, to present or present
what they have done or present their their part sub,
project or part of the project to the board of directors to
an influential people within their to the shareholders to influential people
within the organization so they will have that will be their ability to shine
probably and and so go go for the next career step potentially if they do it
well and I And I think this is where I actually,
when I was sort of going along in my career,
building up my career, where I gained a lot of even personal friends,
but also good allies for the future,
where you try, because I'm an expert in M&A, and for many people,
this is the first situation of that magnitude in their career,
where we can help, or I can help them.
Prepare best for this, for presenting and for, you know, setting up their sub
project and, and performing well in front of their reporting lines and board
members or, or shareholders.
And that's where they can. Yeah. But that is the positive side of the spectrum,
because you also know people are now competing for a smaller set of positions.
Right. So, so it's also a competitive process that's now being set up because,
Because, you know, they're redundant positions.
And yet, in the end, the total volume has to be shrunk.
So how do you manage that part of the process?
Because people under threat might lose their motivation to actually collaborate
with their direct colleagues because now they're competitors.
Agreed. That most of the time, I must say, happens after the deal has been completed.
And most of the time, I'm not anymore in there at this point in time.
Sorry, I had to... You weren't in there for a second.
Yeah, somebody called me. I had to push it out.
So most of the time, so I'm in the lucky position for this part of the question,
is that in the moment that the organizations are really being combined,
I'm mostly not anymore part of the project because we are there up until the
closing and financing of the transaction.
And the post-merger integration part is more with other people.
So for my part, but obviously these fears are there, right?
If there is a big organization, which is particularly good on the sales and marketing front,
and my client, the people in that organization know that they are taking over
a competitor and the competitor is particularly strong in this field.
They know that probably at least their
boss or at least some people on their team will
be replaced with this new organization because they
are famous in the market for being better in certain parts
certain areas or or on the technological part or
wherever right in certain areas of the business so there is
always this this this situation as well
and and that's actually tough and that's what i was trying to to say that there
is people who will who will have less interest intrinsic interest in the transaction
and you sometimes need to involve them for certain questions treat them with
respect and and obviously try to get information out of them.
But I think that's also about trying to,
to assess the situation in the right way.
And sometimes keeping them a little bit away from what is happening day to day
and minimizing the requirement for them to work extra hours or putting extra
effort into this is also the question,
like how to navigate around it, how to get the information from the organization as such,
and maybe navigate around sensitivities in certain parts of the organization.
And the interesting thing is that my personal experience is that if you show
people that you're interested in their contribution, in their intellectual contribution,
even if they are not part of the bigger thing and they don't think it's a good,
ultimately a good transaction, and you always have people in teams that think
they could have developed the technology themselves, they could have improved, they don't need this.
But I think the moment you show interest in what they can contribute and their
perspectives, people tend to open up and still talk to you.
And oftentimes, as an advisor, as someone who only jumps in for a certain period
of time and then will be out of the organization,
we have the benefit as bankers that
people are relatively open towards us because
they know that we are there for a certain period of time and they can tell us
sometimes or explain what are the frustrations and they don't fear that this
will be transported throughout the organization and will weigh on their careers later on.
So I think it's ultimately also the role of the advisor to show that.
And keep as much neutrality in all of this as possible and say,
this is my task. This is what I'm trying to achieve.
And I don't take positions or don't try to interfere with ideological questions
around who is better at what, because I can't assess it anyway.
But just try to fulfill the goal that I've been asked to do or employed for
because ultimately I'm being asked to join such a project because people want
certain results out of me.
And sometimes it helps to be neutral in this position and just take interest
in the content that people are able to deliver.
But now, so once you descend in the organization and you start to engage with
the line managers and their teams, right, in some sense, you're descending into
the black box that you didn't know before.
And then you might discover dynamics and attitudes and features and failures
of organizations that might actually be in conflict with the goals of the merger itself.
Right. So do you also see it as your task to bring that back to leadership in
the organization, the board, to readjust plans?
Or you see it more, I don't know, we just dissent the organization,
we prepare it for the merger, and that's it?
I think it is important. I think that if I was the client, I would ask any advisor
that is new to the organization to give their perspective.
Because as a new person, I think you always have a little bit of a different
perspective and you can see conflicts and issues with a fresh eye.
Um and um so yes so we we try to bring it back and ultimately is always dependent on your.
The depth of the relationship you have um especially with very senior people
how off open you can be about giving the feedback back to them and i think for
me the projects where i think,
at the very end where the client will also tell you added a lot of value as a bank,
are those where you have a very good relationship with people
at the top with the board level executives and can
really tell them what's going on and what what forces
are exist in the organization from a
fresh perspective and they would want wanted and want to listen to it and oftentimes
just to give you an example oftentimes when um in in those very in those very
close relationships where where we've been working together for years and it's
more maybe not the first transaction and there was a lot of trust.
I also gave the feedback to the board or board members that individually,
obviously in this sense, that we spent a lot of time with the.
Organization trying to phrase certain feedback in a way that people thought
will not offend their CEO or CFO or whoever it was.
And I think that actually, for me, that, that actually, that,
Initially, it surprised me.
It doesn't surprise me anymore, but I still think it's not a good sign.
And it's something that the C-level executives should ultimately work on and address.
If you don't discuss the actual content, the actual, you know,
what you're trying to achieve,
but you discuss the way you position and transport it to the C-level executives
in order not to be perceived as
the one that is opposing the project or is opposing some important steps.
And I think this always strikes me and I tend to, like my very good and well-known
clients of mine tend to tell them,
you should go and talk to this and that manager or manager of your subdivision
because he tends to spend more,
she tends to spend more time trying to think how to best sell the question to
you instead of about the question itself.
And I think it's just pure loss of time.
And it's an indication of culture where there is too much hierarchy, in my view.
So what you put your finger on now is communication.
That is nonsense. You now establish a line of communication that was absent
before, but it actually would be pretty critical for the organization.
But then if you step into that role of communicating ideas and concerns and
so on, up the hierarchy, do you do that on your own decision?
Like, this is important. I got to tell them that? Or you will only inform them when you're asked?
No, I actually inform them if I'm not asked. Okay, very good.
But at what resolution would you do that?
Because take the example of the power industry,
a very complex puzzle that you're building there and implementing,
there might be, let's say, issues coming up that locally might be completely critical,
but in the bigger picture cannot be considered because it would destabilize the whole puzzle.
So how would the balance be struck?
I think, and obviously the perspective I would take is also very specific to my job,
because my job is then to make sure this project works within the certain timeline
and also correct the timeline if the timeline is just not the right timeline.
That's also part of my job. But ultimately, my job is to make sure that inform
at any step of the project if the project is executable at all.
Sometimes we also find that.
It's not going to work the way we initially thought it's going to work that
also happens at times right but but and many times it have actually many many times it happens that we,
have to find out or have to explain that
the initial timeline is is is tough it's
just too ambitious or or mostly
it's too ambitious right and and we need to adapt and
adjust the timeline life and but and the
the the difficult statements that i
carry from a to b um and make
at the risk of sort of being considered
difficult um myself are only
then when i think they endanger the the the
process itself in a way where i think these
are they are they are endangering the process itself and sometimes you can't
when you spend i think 12 18 months very intensely in within an organization
from outside in i think any any executive will actually appreciate.
If you if you give feedback on the culture and how you consider and how you
view the culture compared to other cultures you've seen in the past um because
it's um it's just a valuable addition independent also of the project,
it's a valuable addition, a valuable information,
how people from outside perceive certain organizations.
I think that's clear.
Yeah. So we went around the track now on how you would approach such a merger or acquisition.
So what makes this really work? What's your best example? And why did that work so well?
I think I take the split of RWE back then in RWE and InnoG as an example,
because it was such an important, it was really cutting an organization into two businesses.
It was the opposite of a merger when you bring on something new,
but it was cutting the organization into two businesses, repositioning both
organizations totally and giving both of them very different strategy.
And it was such a big effort and it had to work throughout Europe,
wherever RWE had its operations back then.
And we really worked locally with people in the Czech Republic and the Netherlands and Germany.
And it was really a very, very big step for the organization from within.
It was not just an addition. Like normally, it's a bigger organization buying
a smaller one, which is easier in a way. This was a really big project.
And I think what ultimately made it work is that there was a vision for both
organizations, what they are supposed to become.
And there was a lot of
engagement and there was a lot of effort and time put into really taking this
project through the ranks down to people who work on everyday tasks in different
regions and explain to them what we will be doing,
what's the target, what do we want to achieve and
how these organizations will work in the future and what will be their vision
of sort of ensuring energy and making sure there is enough space for everyone
and ensuring that they can proceed with their operations in the future.
And I think that was a very good example of it.
I actually, when we look back on the edit from a banker's and legal perspective,
and I think we started roughly a year before the transaction was completed And
what had to be done within that year, it was, it sounded like this is not good.
It can't even work because it's just too many things.
And it was really down to everybody. And I seldomly saw it that way, that everybody worked.
With additional effort, and everybody was convinced and understood what we were
actually trying to achieve.
And I think this is often underestimated because the nature of these projects
is that oftentimes many of the decisions and many of the ultimate outcomes have
to be kept very confidential because of the capital market communication.
And you can't over-promise and under-delivered to investors,
and you try to work within the organization and not to bring too much to the outside world.
But I think oftentimes, the point in time where this is being made everybody's business is too late.
And you ask people to do too many things before they actually get a full proper
understanding of what we are trying to achieve.
And I think the ultimate The ultimate success of this was that each and every
person who was involved, independent of where in the organization.
Actually knew and understood what we were trying to achieve.
And we as bankers spent much more hours in this project going to different parts
of the organization and explaining how a new,
and one of the companies had to be IPO'd or brought to the stock exchange another time.
So how this process works, what does it actually mean to be listed on it?
So they were already listed, but why are we listing a different organization?
What steps is this taking? To
whom will we speak? Who will be the new investors and why would they buy?
And explaining it to people that didn't ultimately have anything to do with
the process as such, but they understood what for they are doing it.
And I think that was actually the amazing job done by RWE at that time because
they actually took everybody on board.
And we had this huge kickoff meetings. And many of the professional advisors
a little bit laughed at it at the beginning.
They were like, oh, my God, why are we having these hundreds of people here?
But it was actually a good decision because everybody knew what we were up for
and that they are part of it.
So you're saying it was a well-defined goal, properly communicated to the whole
organization so that everybody could get behind it, right?
This is the bottom line in this example, which indeed worked amazingly well.
But now at the other side, what has been the biggest failure and why did it
fail? Why did it break down in that case?
I have to name, but I will. You don't have to name names. Yeah, I will not name it.
Organization X. Organization X, no, but it was, and I think it's symptomatic for, it's not only,
I have a particular example from my personal experience, But
I think it's also a little bit similar for
many other situations where there are
teams of engineers or technology
people that you need to bring together
and each and everyone was always kept in a culture or was always nurtured in
a culture in the organization in the belief that their technical superiority
is the one and only success. success factor of the organisation.
I don't know if it makes any sense to you, but these are these organisations
that are very centred around their technological benefit or technological superiority
versus their competition.
And in Germany, we have multiple examples of those companies that produce something
that is really, really at the top of the market where they they compete.
And oftentimes, these engineers are brought up in a culture where they think
everything is centered around the product that they bring out.
And all of a sudden, there is someone else coming into play and being taken
over, or they are being merged with someone,
or they are being asked to help on a merger where the board decided to bring
another organization into the firm.
And I have this example of engineers, but it's probably also in different areas
is where there is this content or intellectual superiority and people judge,
the whole transaction from just one aspect.
And they say, oh, look, they cannot bring anything to the table,
which we cannot do on our own.
And then there is a big opposition. And if this doesn't work.
And I think this is the big, this is the big challenge most organizations,
have, and why many organizations struggle, even if they enforce the merger,
because the CSUD decides to do so, or even more so the family owner just ever
wanted this to have this company forever.
And then there was this window of opportunity where you could buy it and bought
it. And their organizations run in parallel for years.
They are not being integrated for years because there is the opposition from
within, from people who think that they are the ultimate drivers of success of the company.
I think from my perspective, this is one of.
This is a big mistake to make just one group of people believe that they are
the ultimate drivers of success.
And I have a very good example from a company where it's totally different.
At Scania in Sweden, where I was surprised because Scania is sort of when you're
in trucks, Scania is by many truck drivers.
If you ask the actual people who drive this car, who many times don't take the
decision to buy it, but if you ask the actual driver,
uh they will they they consider scania to
be sort of the the the premium car or the
premium truck among the trucks they think they are the sort of the
best trucks on the road and if you go into
this organization and actually i i expected exactly
the same to be in there right so think everybody will
think our engine is the best engine and why would anybody why would we combine
it with anybody else and it's very different and and the reason why is so different
is that every person Every executive in the C-suite of Scania has been put in
every position throughout his career.
So everybody once was in the engineering team and once also was selling trucks
to people and once was in the tax department.
So they understand that it's a collaboration, it's a team effort.
And it's not something that is built around an excellent, superior engineering team.
But it's a whole thing.
So that means collaboration in that sense is also a matter of your culture.
But you mentioned about the engineers turning against change was nicely captured
by the Spanish philosopher Ortega y Gazette in what he called the barbarism of specialization.
And the issue there is that the specialist, the engineer...
Has so much confidence in his own skill or her own skill that they just generalize
that confidence to everything else.
So they're completely blind to the complexity of everything else because they
really know their engineering, right?
So it's the barbarism of specialization, which, of course, I think is a huge
challenge in organizations because everyone would have a sense of,
if you want, superiority in their skill.
And then to communicate with others who actually have very different activities
can make collaboration extremely difficult.
But so now to go towards the finish line, did this whole period of COVID-19 and also confinement,
teach you important lessons about collaboration in the domain where you're active?
Or is it still the same story, nothing changed?
I think interestingly enough, I would think, especially from the communication perspective,
the sort of video type of environment is actually helping to break through some
historical or some situations which have been forever in a sense and which now change.
And why is because there is in this corporate, the bigger the corporate,
the stronger the corporate culture and the more the older the organization and
the more established everything is,
that they tend to be my clients historically because these
are the big firms and the bigger this
is the stronger this culture the more there is
a ritual of how you
know people enter rooms are invited into meetings talk first talk second and
all this kind of ritual like it's like it's like when drinking green tea right
in in in asia there's whole ritual of how you set up meetings And I think the
video meetings actually.
Are shifting this more into a
more content meetings because you have
to say something which catches people's attention relatively quickly
because it's even because people tend to
you know everybody tends to be a little bit more similar in front of a screen
than when you sit there and have a room and there is a certain seat that already
indicates that you're the most important person in the room sometimes it takes
ages to people people to sit down because nobody somebody wants to take the
seat that indicates that you're trying to sit in CEO's seat.
And if the CEO happens to take another seat, it just confuses the whole room.
And you don't have all of this in the video meeting. So it's really about what
you say and the meetings are shorter.
They are more to the point and more content driven.
So that is on the positive side. I think that is something that a little bit
makes the culture less hierarchical and more meritocratic over time,
I think, from that perspective.
Right. But on the other hand, you also, in some sense, you develop a model of humans, right?
You develop a psychological model, which you look at humans.
And if economic factors are the decisive one, we're back at this old idea of
homo economicus, who just optimizes return on investment.
On the other hand, psychology has shown very clearly that humans actually are
not that optimal, and sometimes seem to act against this kind of optimization.
So, what kind of model of humans do you actually then bias towards?
Homo economicus in your domain or Homo unpredictable?
I think in the middle, it's not homo economicus in terms of really return on
capital, but it's homo economicus in terms of your social sort of relevance and position.
And I think that is something that you can observe wherever is that people want
to be heard, want to be a personality and want to be relevant.
Relevant wherever they are they want to be relevant to
the whole thing and to society at the very
end and the feeling that you're irrelevant to society even
if you have the capital on your side by for whatever reason i think on average
is kind of making people feel unsecure in in where they belong it's really the
the relevance and your role in the society and And the feeling that the society
actually appreciates what you do and needs you.
That's my take.
That's very good.
But do you believe humans, humanity, as we are with all our quirks,
will we ever be able to really sincerely collaborate towards a sustainable future,
sustainable society? Will we be able to do that?
I tend to be an optimist and that's why I deeply believe theoretically we can.
I think by nature we are collaborative individuals and I obviously sometimes
when you look at the sort of geopolitical situation you struggle with the belief.
I think it's a big challenge right and I think with one of the historians and
philosophers of our time.
Said, there is no option. If we fail on this, this time, the challenges and
the complexity of the challenges are so big.
But if we fail to collaborate on a global scale, we probably fail on our planet and many other things.
And I tend to believe it is possible. I think in my micro sort of economic work,
I've worked around the world and put transactions and And people together from
very, very different parts of the world, in China, in Brazil,
in German company, Brazilian company, German company, Chinese company,
Chinese company taking over a German company, ultimately down to the individual
person and individual acting humans.
And I think there is more commonality than there is difference in the way we
are motivated as human beings.
We want a certain security around our lives, and security ultimately means also
financial needs in our world.
But then the other thing is about having the feeling that we are part of something
that is important and relevant for the world.
And I think this motivation is very similar, actually, from my personal experience
across different countries and cultures. So I ultimately believe we can.
But then if you could just change one thing in humans by magic,
what would be the one thing you would change for them to be better capable in
maintaining and building collaboration?
In the wish to be the star or the hero i
would change the hero culture and i wouldn't change it
by magic i would i would change it by education and
upbringing of our kids because when i
read books kids books with my four-year-old son i
realized that most of the books are around one
hero and if you want to find a book that are
that is not about heroes you need to go and
search for one and actually ask friends and psychologists and
to to to give you some books and i think
this is our upbringing is our upbringing is um
we try to believe that it's that it would
be best to become the one hero and not the team hero or not part of a hero team
but but sort of the one and only person who who has all the abilities and i
think if we overcome that um or and and it's part Part of this is really how we are educated.
And if we manage to sort of deal with that, and I think there are parts of the
world where people tend to deal with it better.
I think there are also cultures in the world that tend to deal with it better.
And I think in our Western world, we still have some work to do on that.
Right. Well, Eva-Maria Vico, thank you very much for this conversation.
That was great. Hi, you listened to one of our podcasts in the series on collaboration,
Produced by the Ernst Trommel Forum and the Convergent Science Network.
You can find more episodes on our website.