WEBVTT

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Hi, I'm Paul Vesure, and together with my colleague Ferdinand from Siemens,

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we're speaking with Eva Maria Vico about how collaboration functions in the

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world of acquisitions and mergers.

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Trained as an art historian, Eva completed her degree in international management

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and began working for Goldman Sachs in 2004 in different capacities,

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and in 2020 she was named managing director for investment banking at Goldman Sachs in Germany.

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Ava, would you like to start with just giving a short description of your professional

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trajectory that brought you to the point where you are now?

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Sure, happy to. So I joined Goldman right after university.

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I was sort of talked into it basically by my colleagues at that time,

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or my colleagues at uni, because everybody told me that when you have an offer,

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you have to go join Goldman.

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And I wasn't sure at that time what it's all about, because none of my sort

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of direct personal background is related to banking or investment banking.

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And I stayed for a long time. And there are many reasons for that.

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But one of the reasons is really the culture of the firm and the fact that I

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felt from very early on that I have a big impact on the culture.

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I can have a big impact on the culture if I speak up.

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And um that that that was really the the beginning and that's what kept me for

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now almost 14 years at goldman i managed to walk through different stations

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like it is in a corporate career,

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when you start in one office and then move to london and go back to to germany

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and where and i ended up now in uh in the frankfurt office of goldman um being

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a managing director in our,

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investment banking department, which is what commonly is understood under the

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M&A execution or M&A department.

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Right. So now...

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In that experience, also the position you're at, you are immersed in a number

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of processes that we could call collaborative, right?

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You have collaboration inside your organization and then also with the entities you work with outside.

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So what types of collaboration would you distinguish in that context?

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And first and foremost, which is really sort of my everyday job when I when

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I start my my day at 9am is, is is really the collaboration within the teams that I work with.

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And I happen to by my by definition of my job now I happen to mostly lead,

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teams or four to five people that are working on certain projects,

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which are mostly mergers, acquisitions and financing transactions for clients of Goldman's.

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And these These are colleagues of mine that are throughout the different levels

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of seniority, mostly four or five, and I speak to them every day frequently

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on how the project is going,

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what the next steps are and what needs to be done.

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So that's the first one, which is very easy because it is very much...

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Common sense of what is what needs to be done the the

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the teams know very well uh what

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uh how they how we work together how they're flat

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but there's obviously a hierarchy in this team so how this how this team works

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and functions together even though we tend to switch teams a lot so i work with

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new people every probably every three four months um but it's still um a very

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yeah it's it's relatively

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easy the way how it's set up because everybody knows exactly

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what he's in her role in this team is and what's the

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common goal and I think that by virtue

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of the organization and that acquisition of talent the people are in a sense

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expecting what what what what how they will be asked to work and um and have

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a have a we have a very a lot of common ground and and And probably there is too much similarity.

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That's what we try to change now in these teams.

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But I think either it's people who joined from university or other organizations

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very much expect what will need to be done at Goldman.

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So I think that's the easy part. Now, the more challenging part is to collaborate

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when it comes to collaborating with clients on big transactions,

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because we are M&A specialists.

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So for us, mergers and acquisitions are our everyday bread, whereas for our clients, these.

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Are the big transformational situations in the life of an organization,

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which makes the collaboration of the client a much more difficult situation.

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I sometimes explain it to, like when I talk privately about it to my partner

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who is a doctor, we see a lot of similarities there because I'm working in a

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hospital for M&A and our clients are like patients.

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They come only to the hospital if they need some help.

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And for them, it's already extraordinary to be in a hospital.

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They already feel sort of the slight discomfort of being in this situation.

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And their collaboration is,

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is much more difficult because it's first

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and foremost what we need to win from our clients is

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trust that they trust us that we are all on

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the same side that we all try to achieve the same goal and that

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we adjust the way we collaborate and the pace of um you know execution and the

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pace of of the situation to the needs of the organization so it's really that

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is very much interactive and needs to be adapted and is very different depending on the size,

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the culture of the organization and how important the project really is for

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the living of the organization.

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So what's the scale of these M&A operations?

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So what's the largest operation just in volume in terms of market cap,

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employees and so on? What's the scale of such a process?

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So it can be very large. And I think one of the largest transactions in Germany

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I worked on was the whole change of or the set of transactions around the utility industry from RWE,

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Eon, Energy in between. And it was really about...

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40 plus billion market caps and sort of huge organizations.

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And also about changing completely, splitting the organization into two and

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then changing people's workplaces and merging also two cultures.

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It really had a big, big impact on the organization itself, on the regional

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setup and where they will sit, where the headquarter will be,

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where people will go to work.

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And ultimately, also, all of this was accompanied by the fact that the industry

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has had to fundamentally change from producing power by power stations run by

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gas and oil and nuclear power stations to renewable energy, etc.

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So it all had to happen at one time. And when we started to work on the project,

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really nobody really knew which part of which organization am I going to be?

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How is this going to go we only had this common goal which was an extremely short term for the.

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Amount of work that had to be done and and

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there needed to be a lot of working together and collaboration

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from different sides from from political side from

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the from the employees themselves but also us

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all the advisors involved there and it was not only obviously

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investment banks but also some other advisors lawyers and

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and consultants that that had to basically all

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work towards a common goal right that was there

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okay so you have quite some moving parts in that

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process right so yeah then do you approach that

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from a certain methodological perspective

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where you say all right to make

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this work we should first establish trust and

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then we should establish something else and then something else and then we work

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down the list or so how do you approach that and is

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there a method yes there is so

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there is a structure of how to

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organize how to plug in the the project itself

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of of sort of corporate reorganization into

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the everyday life or the everyday operation of

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the company because these these companies obviously have to do

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what they have done um every day still and then there is a new that that comes

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on top and And we first need to establish the understanding of the organization

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that it's actually going to be extraordinary times because next to your normal

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day-to-day operational job, there's going to be this new project on top.

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And you will have to talk to a lot of new people and ask questions where you

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will see that they don't necessarily exactly understand what you do every day.

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And I think in order to be able to do that, you have to establish some type

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of project organization which is centered around certain work streams that need to be done.

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And then it's really, I think, a lot is understanding how much involvement from

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the organization itself is going to come and how much additional.

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People additional human resources you will in the end need in order to actually

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make it work so so it's it's pretty it's structured on the one side that we

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have very much a very good view on what work streams needs to be need to be

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done and then there is a little bit of diagnosis to be done,

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on how much can the organization do itself our client do itself how much help

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will they need And actually, I think a good project manager,

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project leader, which in this case oftentimes is the investment bank,

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is the one who is able to easily or initially establish status quo and say, what is the status quo?

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Who else do we need? And then make it really work from day to day.

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So there is a method to it by dividing it into subgroups and sub work streams.

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And then I think this is 20 to 30% of the whole thing and the rest is really

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on the go, actually realising how is it, what are the issues here, what are the conflicts.

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What are departments within the organisation that don't work that well together,

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what are individual interests of people.

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So it's a lot of politics and

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psychology into this as well in order to make

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sure that everybody has a goal that

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is at the end helping to reach the overall

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goal but you need to establish most of the time sub course

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to make you people motivated our projects normally tend to last from six to

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12 months even 18 months in such in case of such bigger projects and if you

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imagine the if someone asks you to not to do 18 months of additional on on top job of very,

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very high quality because it's super important for the organization on top of

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what you do anyway every day. That's a long period of time.

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And in order to keep you motivated, it cannot be just there ringing the bell

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on the stock exchange in 18 months.

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It has to be smaller goals in between and smaller goals for individuals that

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run the work streams or help run the work streams.

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So now you have split up the different activities,

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but your methodology covers, as you say, 20% to 30%, and the rest is also a

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deeper understanding of people and organizations.

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Now, I guess it's on that part of the divide that the concept of collaboration

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resides, right? Because as you say, you have to establish goals and sub-goals.

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So now, how do you establish goals and sub-goals in such a heterogeneous environment?

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You need to make sure that you understand,

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especially in situations where organizations will be split or there will be

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a new firm joining the other in case of mergers,

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and to really understand very

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early on how these firms will go

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together and who will be in what position also after the transaction has completed

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so it's not only about the transaction itself but it's also what will be people's

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individual interests once the transaction really already worked out and is completed.

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When you start to understand how the organization will look like,

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or what's the goal of how it's supposed to look like, you can involve people

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in different work streams and involve.

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People in in completing the goal

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but you you need to understand where they will end up

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because they will mostly or what's their or what's

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their intermediate goal maybe they try to you know

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apply for a new position within the organization in within

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a short period of time and then you have to understand that

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and you establish these goals really only by

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individual contact and and

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relation establishing relationships and you

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understand what they actually want to achieve in terms of

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their career but also their position today and then

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you know how to involve them or how to sometimes even you

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know it's not only about involving it's also maybe sometimes about avoiding

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too much involvement from certain people if you know that it's going to be very

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difficult to actually align their personal goals with the goals that you actually

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have as their as a project So sometimes it's keeping them satisfied.

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Informed, but maybe focused on something else than what you will be mainly focusing on,

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because too much involvement from their side will be difficult because the alignment

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is not there and their role will be a different role over time.

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So, and it's really, it's really very personal in the end, I think it's,

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it's about personal relationships and understanding each situation specifically,

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um, and understanding also how the organization works and who is in charge and, and who's, uh,

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how, how, how people get motivated in different teams is very heterogeneous in the end.

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I think most of those organizations are very much driven by still,

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um, a strong leadership culture, but also a quite hierarchical culture.

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I think that varies a little bit across countries and organizations.

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But on average, my experience is when I came from university with all this management

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theory and all that you're being taught and into sort of organizations,

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real life organizations, I realized that not a lot of this is already sort of reality.

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There is still a lot of hierarchical and structured thinking.

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And even if organizations tend to believe they are very meritocratic,

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in the end, they tend to be, especially in critical situations,

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they tend to be very hierarchical.

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That's my experience. Right. Well, that's very interesting.

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But I would like to unpack a little bit what you were saying,

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right? Because you talked a lot about the importance of addressing the people in the organization.

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And in some sense, it sounds very much like a very customized approach,

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like we have to massage people to fit in some process.

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But those people, who are those people?

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Project managers or managers of different work streams, probably mid-level,

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mostly mid-level managers of firms.

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So not the board or the CEO?

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No. Okay. Most of the time, if you have taken a decision to do such a project,

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the decision is already made in the board and most of the time the board is

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already standing after that and really pushing for it.

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That's when you start when you really kick off the project you need to before

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that you need to convince a lot

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mostly the board on the the supervisory board in in in the german award,

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and um that's before you you actually start when you really start on the execution um,

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that's more going more further down into

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the organization and really aligning people's interest on that side of things

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i personally think that's that's oftentimes more challenging because it's less

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rational and it's less clear what what individual goals are because on the board level,

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in in general apart from several specific situations but in general there is

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the especially enlisted companies which most of the time i deal with is there

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is still the alignment of the general goal of the board is to maximize shareholder value.

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And if there is certain concerns about achieving this goal, then hopefully it works.

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And if there is big opposition in the board, then mostly these big transactions

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don't happen because the opposition starts before you even dive into the project itself.

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That's a slightly different and probably even more customized process and because there is a lot of.

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Out of very individual decisions, people who are, everyone is basically in the

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same position of strength.

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And then it's really about the ability to convince that this is a good idea.

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But I think even though, I think maybe some bankers will tend to believe that

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they actually initiate strategic projects.

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I think we are more facilitators of strategic projects than we initiate them

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Because if someone decides to develop the organization into a totally different

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organization in the future and believes in certain technology or certain direction.

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Strategic direction, mostly it's coming from within the organization that there

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is the belief that something needs to change and you need to go into strategic direction.

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So where I really play a role as a banker is more helping execute it and helping

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make it reality more than develop the strategic concept as such.

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We're sometimes being used as sparring partners for that, but not necessarily

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we are the initiators of such ideas.

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But that would mean that the first level of collaboration that already happens

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before you really get engaged is the level of the boards of the different entities

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to come to a common view that is in their collective benefit to merge.

00:19:43.459 --> 00:19:49.679
Correct? Yes. Only then do you get brought on board to, in some sense,

00:19:49.779 --> 00:19:52.619
make sure that that also happens in a comprehensive way.

00:19:52.779 --> 00:19:57.299
But now that process of the strategic collaboration at the level of the board,

00:19:57.619 --> 00:20:00.359
this might in itself also be fragile.

00:20:00.499 --> 00:20:04.779
No? Because people might change their mind. Or people might learn more about

00:20:04.779 --> 00:20:08.519
an organization as you're in there and then understand like,

00:20:08.599 --> 00:20:11.379
oh, wait, my decision was based on the wrong premises.

00:20:11.719 --> 00:20:17.639
Right? So how then do you keep at the top level of the organization the sense

00:20:17.639 --> 00:20:21.099
of a collaborative effort for a common goal intact?

00:20:24.099 --> 00:20:30.359
I think, coming back to the board level question, I think, yes,

00:20:30.619 --> 00:20:37.979
people have to be convinced that this is a good transaction or is a good decision they have taken.

00:20:37.979 --> 00:20:42.879
On the other side, especially in the public market environment,

00:20:43.419 --> 00:20:52.159
a lot of this is also driven by the virtue of the premium price and how much

00:20:52.159 --> 00:20:56.339
do you offer and what is the premium over your current price.

00:20:56.339 --> 00:20:59.179
And sometimes you if you

00:20:59.179 --> 00:21:02.419
you can have good arguments as a board member against certain

00:21:02.419 --> 00:21:07.199
offers but they have to be economic in nature because your shareholders are

00:21:07.199 --> 00:21:13.579
driven by return on capital considerations only mostly and now it's changing

00:21:13.579 --> 00:21:19.259
a bit now but mostly capital capital goes to the there where the return on capital

00:21:19.259 --> 00:21:21.759
is highest so there is a certain element

00:21:21.919 --> 00:21:27.719
of enforcement in this if you are a board member of the target that is being taken over.

00:21:27.899 --> 00:21:30.539
But obviously not all situations are like this.

00:21:30.759 --> 00:21:37.459
And there are also situations where that needs to be the collective belief on both sides.

00:21:37.679 --> 00:21:43.359
And I think that this is a good deal and that there is not a better alternative.

00:21:43.659 --> 00:21:48.579
And it's even the fiduciary duty

00:21:48.579 --> 00:21:51.819
of the board to actually go and look for other alternatives and

00:21:51.819 --> 00:21:55.179
i think keeping um keeping everyone engaged

00:21:55.179 --> 00:21:58.439
and is is the question here is also how much

00:21:58.439 --> 00:22:01.119
influence they can have on the future of their

00:22:01.119 --> 00:22:03.819
organization and how much they believe that this is

00:22:03.819 --> 00:22:06.779
really the best home they can get for for

00:22:06.779 --> 00:22:09.579
their people in their organization and this

00:22:09.579 --> 00:22:12.499
is really where where where collaboration comes into

00:22:12.499 --> 00:22:17.679
place and i think we're also um one One has to be very thoughtful about how

00:22:17.679 --> 00:22:24.599
to acquire and engage an organization and put it within your organization without

00:22:24.599 --> 00:22:31.359
the new team members or the new members feeling that they have been taken over.

00:22:31.459 --> 00:22:36.339
The word takeover, by definition, has something a little bit aggressive in it,

00:22:36.399 --> 00:22:39.079
and I think that's really...

00:22:39.588 --> 00:22:42.948
Engaging people and giving them proper roles

00:22:42.948 --> 00:22:46.468
in the new setup that where they feel that

00:22:46.468 --> 00:22:49.728
they can gain and benefit from from a bigger organization

00:22:49.728 --> 00:22:52.928
and um why i think the uh

00:22:52.928 --> 00:22:56.188
you know the one level below the board is also very important is

00:22:56.188 --> 00:22:59.028
because these are mostly the the people in

00:22:59.028 --> 00:23:01.788
the organization that believe that in the

00:23:01.788 --> 00:23:04.768
next five to ten years they will be running the

00:23:04.768 --> 00:23:08.048
firm or the organization of the company and

00:23:08.048 --> 00:23:11.288
they are really thoughtful about their future there

00:23:11.288 --> 00:23:14.268
whereas board level members might be

00:23:14.268 --> 00:23:17.548
much more short-term oriented because they want to

00:23:17.548 --> 00:23:20.968
make it a success within the short term um and

00:23:20.968 --> 00:23:24.208
want to and sometimes they have attractive exit options

00:23:24.208 --> 00:23:29.188
after such a merger but but the level the one level below is really that where

00:23:29.188 --> 00:23:34.248
the where where the longer term perspective in the organization is and i think

00:23:34.248 --> 00:23:40.888
oftentimes when um when the board level discussions take place it gets a little

00:23:40.888 --> 00:23:43.848
bit underestimated that there needs to be the next generation.

00:23:44.888 --> 00:23:49.248
People with a perspective on the organization who will drive the success of this really,

00:23:49.848 --> 00:23:53.108
and i think organizations that ultimately tend to

00:23:53.108 --> 00:23:56.108
uh tend to be very

00:23:56.108 --> 00:24:01.008
good at sort of taking over sovereign consolidating markets are those that have

00:24:01.008 --> 00:24:06.348
the ability to involve the next generation managers into these decisions and

00:24:06.348 --> 00:24:10.768
give them a chance and a perspective in this and show them that if the organization

00:24:10.768 --> 00:24:13.808
is getting bigger or they are getting part of a bigger organization,

00:24:14.108 --> 00:24:19.428
it also means more chance for them for developing their personal careers.

00:24:19.928 --> 00:24:25.408
And that's also the motivational aspect you mentioned earlier. To go back to the board,

00:24:25.408 --> 00:24:31.388
If the arguments at the level of the board are always return on investment or

00:24:31.388 --> 00:24:37.328
standardly, so this is like 90% of the cases or 95%, what's the number you would give that?

00:24:37.908 --> 00:24:39.768
Or 99% even?

00:24:41.328 --> 00:24:46.148
I would say in the US it's probably 90+.

00:24:46.148 --> 00:24:54.808
I think in Europe, it's probably a bit different because many firms are also co-owned by families,

00:24:55.088 --> 00:25:01.688
co-owned by the state or by some other foundations, other organizations.

00:25:01.908 --> 00:25:07.228
And there it's totally not only return on capital, it's sometimes also the importance.

00:25:10.799 --> 00:25:13.919
Standing of the organization in in

00:25:13.919 --> 00:25:17.119
the in the in in the country or

00:25:17.119 --> 00:25:20.119
in the region or the the relative importance of

00:25:20.119 --> 00:25:25.859
the organization for the region oftentimes up to some some and obviously in

00:25:25.859 --> 00:25:32.839
in germany which which i think um we are also being probably um especially these

00:25:32.839 --> 00:25:38.339
days admired by some others it's also about the employees and and how they will react to it and

00:25:38.439 --> 00:25:41.639
end up and it makes the the discussions much

00:25:41.639 --> 00:25:44.999
more complex because there's different motivations but on

00:25:44.999 --> 00:25:48.099
the other side there is a lot of security that everybody will

00:25:48.099 --> 00:25:51.059
go into the right direction and i think if i compare

00:25:51.059 --> 00:25:56.899
my sort of us take over to the to the german uh situations experience then it's

00:25:56.899 --> 00:26:02.259
very the involvement of the of the employee representatives and um which mostly

00:26:02.259 --> 00:26:06.819
are on the board of directors or at least in the supervised report um that's

00:26:06.819 --> 00:26:08.339
really that's the part where it where,

00:26:08.479 --> 00:26:10.819
again, there is another level of complexity.

00:26:11.019 --> 00:26:15.559
I think in the US, it's really very, very capital and return on capital driven.

00:26:15.899 --> 00:26:20.099
In Germany, I think it's less than 80% personally.

00:26:20.519 --> 00:26:26.119
Okay. But it will still be decisive in the whole equation, right?

00:26:26.279 --> 00:26:31.199
Yes. What is interesting about that is that if we talk about collaboration.

00:26:31.959 --> 00:26:34.059
As you also described it yourself, right?

00:26:34.079 --> 00:26:38.399
We talk about goals and goal setting. setting, but if in the end there's actually

00:26:38.399 --> 00:26:41.799
only one goal that's being served, then that's not an option.

00:26:42.039 --> 00:26:44.499
It's just a quantitative analysis.

00:26:45.199 --> 00:26:50.619
In some sense, the market is coercing organizations to come together instead

00:26:50.619 --> 00:26:52.499
of collaborating to come together.

00:26:53.179 --> 00:26:57.779
How would you see that? Can we speak of an economic coercion in this domain

00:26:57.779 --> 00:26:59.939
of mergers and acquisitions?

00:27:01.599 --> 00:27:09.199
I think, yes, I think yes, in the end, you have to be able and everybody who

00:27:09.199 --> 00:27:11.359
is publicly listed is slightly different,

00:27:11.499 --> 00:27:15.859
obviously, for companies that are run by a single person who can basically do

00:27:15.859 --> 00:27:18.179
whatever he or she prefers.

00:27:18.579 --> 00:27:22.779
And there might be different, but then the motivation is really different to

00:27:22.779 --> 00:27:26.359
say there is a commonality in it, because then it's different personalities, really.

00:27:26.459 --> 00:27:29.979
But I think if you if you think about the capital market environment.

00:27:30.239 --> 00:27:33.059
The public capital market environment i think yes because it's

00:27:33.059 --> 00:27:36.799
ultimately you need to prove and short-term

00:27:36.799 --> 00:27:40.099
proof that there is an economic benefit

00:27:40.099 --> 00:27:43.199
and of of bringing companies together

00:27:43.199 --> 00:27:45.939
and we can't forget that the big

00:27:45.939 --> 00:27:48.719
as much as as as we like to

00:27:48.719 --> 00:27:52.019
think as in in terms of synergies and

00:27:52.019 --> 00:27:55.479
you know synergies by definition have

00:27:55.479 --> 00:27:58.899
the hint of there is a collaboration two minds

00:27:58.899 --> 00:28:01.959
come together and there is something they create more

00:28:01.959 --> 00:28:04.899
and there are synergies from this this is

00:28:04.899 --> 00:28:08.059
kind of the the nice part of of kind of synergies where

00:28:08.059 --> 00:28:11.519
you think that you're combining more knowledge together and

00:28:11.519 --> 00:28:14.359
then you you're creating something new out of it that's

00:28:14.359 --> 00:28:17.439
the that's the nice part of this order the the more

00:28:17.439 --> 00:28:20.339
optimistic part of the synergy but we can't forget that

00:28:20.339 --> 00:28:23.239
a big part of the synergy is also cost cutting and cost cutting

00:28:23.239 --> 00:28:26.539
is just asking one person to do probably 20

00:28:26.539 --> 00:28:29.339
more and then cover the job of

00:28:29.339 --> 00:28:32.179
another person and take the other person out and ask them

00:28:32.179 --> 00:28:35.019
to you know do something totally different or even leave the

00:28:35.019 --> 00:28:41.079
company in the end of the day so and i think part of the m a um strategy of

00:28:41.079 --> 00:28:45.779
some organizations is obviously also cost synergy so there is a a lot of behind

00:28:45.779 --> 00:28:51.419
that is also the economic better economic performance and efficiency and uh

00:28:51.419 --> 00:28:53.399
which which is i think also.

00:28:53.559 --> 00:28:58.219
A symptomatic for a very established market where you have a lot of various stories.

00:28:58.299 --> 00:29:02.159
Now it's changing a little bit because now because of the technological.

00:29:03.769 --> 00:29:06.829
I don't know if we should call it revolution or fast evolution,

00:29:07.229 --> 00:29:09.429
whatever the best word for it is.

00:29:09.709 --> 00:29:14.349
But now I think, and also my job is very, very much driven by that,

00:29:14.489 --> 00:29:20.589
is that firms tend to not only look for optimization of the already existing,

00:29:20.889 --> 00:29:25.249
but tend to look for new business model that they can add to their business

00:29:25.249 --> 00:29:29.909
because they fundamentally believe that they will be doing something completely

00:29:29.909 --> 00:29:32.569
different from what they do today in 10 years' time.

00:29:32.969 --> 00:29:40.189
And I spent like the last 14 years in banking and the years after the financial crisis and everything.

00:29:40.409 --> 00:29:46.709
And I never remember a time where somebody from a very established firm that

00:29:46.709 --> 00:29:50.809
is producing something would tell me,

00:29:50.809 --> 00:29:54.649
the CEO or the COO would tell me,

00:29:54.649 --> 00:29:57.869
i'm producing x today boxes

00:29:57.869 --> 00:30:00.769
or whatever cars or i don't know whatever

00:30:00.769 --> 00:30:06.549
it is today and what will i be doing in 10 years the only thing i know is that

00:30:06.549 --> 00:30:10.329
i will not be doing what i'm doing now and i think 10 years ago if you ask people

00:30:10.329 --> 00:30:16.289
you're producing cranes or cars or any some other forms of equipment if they

00:30:16.289 --> 00:30:19.329
ask if you ask them what will you be doing in 10 years from now you You see,

00:30:19.369 --> 00:30:21.849
I would be producing better cars or better cranes.

00:30:22.109 --> 00:30:27.909
And now we are in a very different environment. I think that makes it so exciting

00:30:27.909 --> 00:30:30.569
that now the transactions are partially,

00:30:30.789 --> 00:30:35.549
which makes it also much more difficult for us, by the way, that firms are trying

00:30:35.549 --> 00:30:39.409
to buy new technology, new ideas and new culture.

00:30:39.429 --> 00:30:45.409
And it's less about the economic aspect of return on capital within the next three to five years.

00:30:45.489 --> 00:30:49.829
And it's more about having a business in 10 plus years. but.

00:30:50.455 --> 00:30:53.535
That is changing right now.

00:30:53.795 --> 00:30:57.875
It's not the biggest part of the market, but I think that will fundamentally

00:30:57.875 --> 00:31:02.855
also change the way these decisions are driven because they are not driven by

00:31:02.855 --> 00:31:07.795
the short-term cost cut and the improvement and the very clear,

00:31:08.195 --> 00:31:11.715
very measurable way of collaboration.

00:31:11.835 --> 00:31:18.895
But this is less measurable because you need more time to integrate a very technologically

00:31:18.895 --> 00:31:24.095
advanced organization into a more established organization and actually develop the product together.

00:31:24.355 --> 00:31:29.055
And sometimes the decisions today are taken to go together, even if you don't

00:31:29.055 --> 00:31:31.095
exactly know what the product will look like.

00:31:31.175 --> 00:31:36.035
But you tend to believe that adding this knowledge and this expertise to your

00:31:36.035 --> 00:31:39.595
organization will ultimately bring some new product into life,

00:31:39.715 --> 00:31:42.275
but very different from what it used to be.

00:31:42.735 --> 00:31:50.495
Okay. So we understand now a bit the economic forces that might drive the merger.

00:31:51.075 --> 00:31:54.575
And also you indicated right now new factors are coming up.

00:31:54.875 --> 00:31:59.915
Let's look at that later because now, okay, the board has decided we're going to do this.

00:32:00.195 --> 00:32:04.655
And the board, in the end, if you would push them, will put an economic argument

00:32:04.655 --> 00:32:06.335
on the table, return on investment.

00:32:06.775 --> 00:32:10.075
But now with that, you have to go inside the organization.

00:32:10.635 --> 00:32:14.195
And of course, you will encounter people in different positions who would say,

00:32:14.295 --> 00:32:19.675
I don't care about return on investment. My interest in life is different.

00:32:20.095 --> 00:32:26.635
I'm more worried about my job and so on. So now how do you make that translation step?

00:32:28.317 --> 00:32:31.377
Hmm i think that's that's really to find out

00:32:31.377 --> 00:32:35.717
what the role of these people could be in the new combined organization and

00:32:35.717 --> 00:32:40.377
this is a joint work of sort of the advisor but also jointly with obviously

00:32:40.377 --> 00:32:44.037
the board members who have the responsibility to think about how to allocate

00:32:44.037 --> 00:32:50.317
the resources afterwards and it's very important that people have clarity what's going to happen,

00:32:50.897 --> 00:32:54.677
especially people who have to drive and motivate others is what's going to happen

00:32:54.677 --> 00:32:58.297
And I think there is a very important element of some type of growth,

00:32:58.497 --> 00:33:03.437
whichever type of growth it is, that it's helping the organization to enhance

00:33:03.437 --> 00:33:09.777
its capabilities and really influence in a sense that people get a growth mindset,

00:33:09.957 --> 00:33:14.457
that they ultimately start to believe that this is going to be enhancing for themselves,

00:33:14.757 --> 00:33:19.497
for their job, everyday job, for they pay, for the security of their job,

00:33:19.517 --> 00:33:23.317
and for their next step on their career path.

00:33:23.317 --> 00:33:29.017
And this is a joint work that has to be done and these projects are very mostly,

00:33:29.257 --> 00:33:33.677
the bigger they are, the more prominent they are in the organisation.

00:33:34.277 --> 00:33:39.157
So if you think about it, many of the line managers that you would be working

00:33:39.157 --> 00:33:41.197
with, that will be their chance,

00:33:41.437 --> 00:33:47.477
which is not every day and it's not even every month, to present or present

00:33:47.477 --> 00:33:50.637
what they have done or present their their part sub,

00:33:51.097 --> 00:33:54.177
project or part of the project to the board of directors to

00:33:54.177 --> 00:33:57.617
an influential people within their to the shareholders to influential people

00:33:57.617 --> 00:34:02.997
within the organization so they will have that will be their ability to shine

00:34:02.997 --> 00:34:08.437
probably and and so go go for the next career step potentially if they do it

00:34:08.437 --> 00:34:11.457
well and I And I think this is where I actually,

00:34:11.557 --> 00:34:15.237
when I was sort of going along in my career,

00:34:15.357 --> 00:34:19.917
building up my career, where I gained a lot of even personal friends,

00:34:20.137 --> 00:34:23.377
but also good allies for the future,

00:34:23.637 --> 00:34:29.397
where you try, because I'm an expert in M&A, and for many people,

00:34:29.417 --> 00:34:34.377
this is the first situation of that magnitude in their career,

00:34:34.497 --> 00:34:38.697
where we can help, or I can help them.

00:34:39.457 --> 00:34:44.757
Prepare best for this, for presenting and for, you know, setting up their sub

00:34:44.757 --> 00:34:51.037
project and, and performing well in front of their reporting lines and board

00:34:51.037 --> 00:34:52.657
members or, or shareholders.

00:34:52.837 --> 00:34:57.417
And that's where they can. Yeah. But that is the positive side of the spectrum,

00:34:57.417 --> 00:35:02.697
because you also know people are now competing for a smaller set of positions.

00:35:03.337 --> 00:35:08.257
Right. So, so it's also a competitive process that's now being set up because,

00:35:08.257 --> 00:35:10.297
Because, you know, they're redundant positions.

00:35:10.657 --> 00:35:14.117
And yet, in the end, the total volume has to be shrunk.

00:35:15.130 --> 00:35:18.430
So how do you manage that part of the process?

00:35:18.510 --> 00:35:23.530
Because people under threat might lose their motivation to actually collaborate

00:35:23.530 --> 00:35:26.170
with their direct colleagues because now they're competitors.

00:35:27.710 --> 00:35:32.910
Agreed. That most of the time, I must say, happens after the deal has been completed.

00:35:33.010 --> 00:35:37.430
And most of the time, I'm not anymore in there at this point in time.

00:35:37.790 --> 00:35:41.190
Sorry, I had to... You weren't in there for a second.

00:35:41.690 --> 00:35:44.630
Yeah, somebody called me. I had to push it out.

00:35:45.830 --> 00:35:51.610
So most of the time, so I'm in the lucky position for this part of the question,

00:35:51.870 --> 00:35:56.670
is that in the moment that the organizations are really being combined,

00:35:57.370 --> 00:36:02.950
I'm mostly not anymore part of the project because we are there up until the

00:36:02.950 --> 00:36:05.350
closing and financing of the transaction.

00:36:05.510 --> 00:36:09.750
And the post-merger integration part is more with other people.

00:36:09.750 --> 00:36:13.630
So for my part, but obviously these fears are there, right?

00:36:13.710 --> 00:36:19.690
If there is a big organization, which is particularly good on the sales and marketing front,

00:36:19.950 --> 00:36:25.850
and my client, the people in that organization know that they are taking over

00:36:25.850 --> 00:36:30.430
a competitor and the competitor is particularly strong in this field.

00:36:31.250 --> 00:36:33.990
They know that probably at least their

00:36:33.990 --> 00:36:36.970
boss or at least some people on their team will

00:36:36.970 --> 00:36:39.850
be replaced with this new organization because they

00:36:39.850 --> 00:36:42.870
are famous in the market for being better in certain parts

00:36:42.870 --> 00:36:45.990
certain areas or or on the technological part or

00:36:45.990 --> 00:36:48.770
wherever right in certain areas of the business so there is

00:36:48.770 --> 00:36:51.730
always this this this situation as well

00:36:51.730 --> 00:36:56.750
and and that's actually tough and that's what i was trying to to say that there

00:36:56.750 --> 00:37:01.610
is people who will who will have less interest intrinsic interest in the transaction

00:37:01.610 --> 00:37:06.110
and you sometimes need to involve them for certain questions treat them with

00:37:06.110 --> 00:37:09.350
respect and and obviously try to get information out of them.

00:37:09.550 --> 00:37:13.790
But I think that's also about trying to,

00:37:14.419 --> 00:37:17.319
to assess the situation in the right way.

00:37:17.459 --> 00:37:23.259
And sometimes keeping them a little bit away from what is happening day to day

00:37:23.259 --> 00:37:29.379
and minimizing the requirement for them to work extra hours or putting extra

00:37:29.379 --> 00:37:31.739
effort into this is also the question,

00:37:31.819 --> 00:37:37.279
like how to navigate around it, how to get the information from the organization as such,

00:37:37.399 --> 00:37:43.319
and maybe navigate around sensitivities in certain parts of the organization.

00:37:44.419 --> 00:37:49.619
And the interesting thing is that my personal experience is that if you show

00:37:49.619 --> 00:37:53.819
people that you're interested in their contribution, in their intellectual contribution,

00:37:54.199 --> 00:37:58.739
even if they are not part of the bigger thing and they don't think it's a good,

00:37:58.859 --> 00:38:03.239
ultimately a good transaction, and you always have people in teams that think

00:38:03.239 --> 00:38:08.179
they could have developed the technology themselves, they could have improved, they don't need this.

00:38:08.179 --> 00:38:13.899
But I think the moment you show interest in what they can contribute and their

00:38:13.899 --> 00:38:17.939
perspectives, people tend to open up and still talk to you.

00:38:18.059 --> 00:38:24.739
And oftentimes, as an advisor, as someone who only jumps in for a certain period

00:38:24.739 --> 00:38:26.999
of time and then will be out of the organization,

00:38:27.499 --> 00:38:30.639
we have the benefit as bankers that

00:38:30.639 --> 00:38:33.559
people are relatively open towards us because

00:38:33.559 --> 00:38:39.539
they know that we are there for a certain period of time and they can tell us

00:38:39.539 --> 00:38:46.139
sometimes or explain what are the frustrations and they don't fear that this

00:38:46.139 --> 00:38:50.799
will be transported throughout the organization and will weigh on their careers later on.

00:38:51.599 --> 00:38:55.639
So I think it's ultimately also the role of the advisor to show that.

00:38:56.838 --> 00:39:01.698
And keep as much neutrality in all of this as possible and say,

00:39:01.778 --> 00:39:04.398
this is my task. This is what I'm trying to achieve.

00:39:04.818 --> 00:39:10.298
And I don't take positions or don't try to interfere with ideological questions

00:39:10.298 --> 00:39:14.458
around who is better at what, because I can't assess it anyway.

00:39:14.458 --> 00:39:21.798
But just try to fulfill the goal that I've been asked to do or employed for

00:39:21.798 --> 00:39:28.078
because ultimately I'm being asked to join such a project because people want

00:39:28.078 --> 00:39:29.918
certain results out of me.

00:39:30.678 --> 00:39:35.618
And sometimes it helps to be neutral in this position and just take interest

00:39:35.618 --> 00:39:37.818
in the content that people are able to deliver.

00:39:37.818 --> 00:39:43.798
But now, so once you descend in the organization and you start to engage with

00:39:43.798 --> 00:39:48.658
the line managers and their teams, right, in some sense, you're descending into

00:39:48.658 --> 00:39:50.698
the black box that you didn't know before.

00:39:50.998 --> 00:39:56.978
And then you might discover dynamics and attitudes and features and failures

00:39:56.978 --> 00:40:04.198
of organizations that might actually be in conflict with the goals of the merger itself.

00:40:05.138 --> 00:40:11.678
Right. So do you also see it as your task to bring that back to leadership in

00:40:11.678 --> 00:40:13.958
the organization, the board, to readjust plans?

00:40:14.878 --> 00:40:17.898
Or you see it more, I don't know, we just dissent the organization,

00:40:17.998 --> 00:40:21.418
we prepare it for the merger, and that's it?

00:40:22.405 --> 00:40:27.525
I think it is important. I think that if I was the client, I would ask any advisor

00:40:27.525 --> 00:40:30.105
that is new to the organization to give their perspective.

00:40:30.285 --> 00:40:34.705
Because as a new person, I think you always have a little bit of a different

00:40:34.705 --> 00:40:39.465
perspective and you can see conflicts and issues with a fresh eye.

00:40:40.185 --> 00:40:46.805
Um and um so yes so we we try to bring it back and ultimately is always dependent on your.

00:40:47.545 --> 00:40:52.505
The depth of the relationship you have um especially with very senior people

00:40:52.505 --> 00:40:58.445
how off open you can be about giving the feedback back to them and i think for

00:40:58.445 --> 00:40:59.985
me the projects where i think,

00:41:00.585 --> 00:41:05.465
at the very end where the client will also tell you added a lot of value as a bank,

00:41:06.025 --> 00:41:09.285
are those where you have a very good relationship with people

00:41:09.285 --> 00:41:12.245
at the top with the board level executives and can

00:41:12.245 --> 00:41:15.785
really tell them what's going on and what what forces

00:41:15.785 --> 00:41:18.905
are exist in the organization from a

00:41:18.905 --> 00:41:23.505
fresh perspective and they would want wanted and want to listen to it and oftentimes

00:41:23.505 --> 00:41:29.585
just to give you an example oftentimes when um in in those very in those very

00:41:29.585 --> 00:41:34.185
close relationships where where we've been working together for years and it's

00:41:34.185 --> 00:41:38.425
more maybe not the first transaction and there was a lot of trust.

00:41:38.745 --> 00:41:44.565
I also gave the feedback to the board or board members that individually,

00:41:44.885 --> 00:41:50.645
obviously in this sense, that we spent a lot of time with the.

00:41:52.485 --> 00:41:58.165
Organization trying to phrase certain feedback in a way that people thought

00:41:58.165 --> 00:42:03.125
will not offend their CEO or CFO or whoever it was.

00:42:03.425 --> 00:42:06.765
And I think that actually, for me, that, that actually, that,

00:42:07.425 --> 00:42:09.165
Initially, it surprised me.

00:42:09.185 --> 00:42:12.965
It doesn't surprise me anymore, but I still think it's not a good sign.

00:42:13.225 --> 00:42:19.825
And it's something that the C-level executives should ultimately work on and address.

00:42:19.825 --> 00:42:25.545
If you don't discuss the actual content, the actual, you know,

00:42:25.605 --> 00:42:27.905
what you're trying to achieve,

00:42:28.585 --> 00:42:33.205
but you discuss the way you position and transport it to the C-level executives

00:42:33.205 --> 00:42:35.785
in order not to be perceived as

00:42:35.785 --> 00:42:40.225
the one that is opposing the project or is opposing some important steps.

00:42:41.345 --> 00:42:48.605
And I think this always strikes me and I tend to, like my very good and well-known

00:42:48.605 --> 00:42:50.325
clients of mine tend to tell them,

00:42:50.985 --> 00:42:56.825
you should go and talk to this and that manager or manager of your subdivision

00:42:56.825 --> 00:42:59.225
because he tends to spend more,

00:42:59.285 --> 00:43:05.185
she tends to spend more time trying to think how to best sell the question to

00:43:05.185 --> 00:43:07.345
you instead of about the question itself.

00:43:07.705 --> 00:43:09.985
And I think it's just pure loss of time.

00:43:10.885 --> 00:43:16.845
And it's an indication of culture where there is too much hierarchy, in my view.

00:43:18.785 --> 00:43:21.985
So what you put your finger on now is communication.

00:43:22.405 --> 00:43:28.245
That is nonsense. You now establish a line of communication that was absent

00:43:28.245 --> 00:43:32.225
before, but it actually would be pretty critical for the organization.

00:43:33.405 --> 00:43:39.405
But then if you step into that role of communicating ideas and concerns and

00:43:39.405 --> 00:43:45.665
so on, up the hierarchy, do you do that on your own decision?

00:43:45.905 --> 00:43:51.385
Like, this is important. I got to tell them that? Or you will only inform them when you're asked?

00:43:52.345 --> 00:43:55.765
No, I actually inform them if I'm not asked. Okay, very good.

00:43:57.865 --> 00:44:00.565
But at what resolution would you do that?

00:44:00.645 --> 00:44:04.385
Because take the example of the power industry,

00:44:05.745 --> 00:44:09.265
a very complex puzzle that you're building there and implementing,

00:44:09.665 --> 00:44:15.245
there might be, let's say, issues coming up that locally might be completely critical,

00:44:16.005 --> 00:44:22.425
but in the bigger picture cannot be considered because it would destabilize the whole puzzle.

00:44:23.325 --> 00:44:25.745
So how would the balance be struck?

00:44:28.045 --> 00:44:34.525
I think, and obviously the perspective I would take is also very specific to my job,

00:44:34.525 --> 00:44:40.345
because my job is then to make sure this project works within the certain timeline

00:44:40.345 --> 00:44:45.825
and also correct the timeline if the timeline is just not the right timeline.

00:44:46.005 --> 00:44:51.725
That's also part of my job. But ultimately, my job is to make sure that inform

00:44:51.725 --> 00:44:55.505
at any step of the project if the project is executable at all.

00:44:55.605 --> 00:44:57.145
Sometimes we also find that.

00:44:57.811 --> 00:45:01.831
It's not going to work the way we initially thought it's going to work that

00:45:01.831 --> 00:45:07.611
also happens at times right but but and many times it have actually many many times it happens that we,

00:45:08.131 --> 00:45:11.171
have to find out or have to explain that

00:45:11.171 --> 00:45:14.131
the initial timeline is is is tough it's

00:45:14.131 --> 00:45:17.311
just too ambitious or or mostly

00:45:17.311 --> 00:45:20.991
it's too ambitious right and and we need to adapt and

00:45:20.991 --> 00:45:23.971
adjust the timeline life and but and the

00:45:23.971 --> 00:45:27.451
the the difficult statements that i

00:45:27.451 --> 00:45:30.691
carry from a to b um and make

00:45:30.691 --> 00:45:33.811
at the risk of sort of being considered

00:45:33.811 --> 00:45:37.171
difficult um myself are only

00:45:37.171 --> 00:45:40.451
then when i think they endanger the the the

00:45:40.451 --> 00:45:43.191
process itself in a way where i think these

00:45:43.191 --> 00:45:48.271
are they are they are endangering the process itself and sometimes you can't

00:45:48.271 --> 00:45:55.131
when you spend i think 12 18 months very intensely in within an organization

00:45:55.131 --> 00:46:00.911
from outside in i think any any executive will actually appreciate.

00:46:01.531 --> 00:46:06.451
If you if you give feedback on the culture and how you consider and how you

00:46:06.451 --> 00:46:11.151
view the culture compared to other cultures you've seen in the past um because

00:46:11.151 --> 00:46:15.051
it's um it's just a valuable addition independent also of the project,

00:46:15.251 --> 00:46:17.471
it's a valuable addition, a valuable information,

00:46:17.931 --> 00:46:22.351
how people from outside perceive certain organizations.

00:46:22.751 --> 00:46:24.451
I think that's clear.

00:46:25.051 --> 00:46:31.351
Yeah. So we went around the track now on how you would approach such a merger or acquisition.

00:46:31.771 --> 00:46:39.171
So what makes this really work? What's your best example? And why did that work so well?

00:46:40.338 --> 00:46:46.818
I think I take the split of RWE back then in RWE and InnoG as an example,

00:46:46.958 --> 00:46:52.618
because it was such an important, it was really cutting an organization into two businesses.

00:46:52.618 --> 00:46:55.858
It was the opposite of a merger when you bring on something new,

00:46:55.898 --> 00:47:01.678
but it was cutting the organization into two businesses, repositioning both

00:47:01.678 --> 00:47:06.118
organizations totally and giving both of them very different strategy.

00:47:06.118 --> 00:47:12.438
And it was such a big effort and it had to work throughout Europe,

00:47:12.518 --> 00:47:15.398
wherever RWE had its operations back then.

00:47:15.578 --> 00:47:21.258
And we really worked locally with people in the Czech Republic and the Netherlands and Germany.

00:47:21.698 --> 00:47:28.258
And it was really a very, very big step for the organization from within.

00:47:28.598 --> 00:47:33.118
It was not just an addition. Like normally, it's a bigger organization buying

00:47:33.118 --> 00:47:39.658
a smaller one, which is easier in a way. This was a really big project.

00:47:40.218 --> 00:47:47.158
And I think what ultimately made it work is that there was a vision for both

00:47:47.158 --> 00:47:49.478
organizations, what they are supposed to become.

00:47:49.478 --> 00:47:52.378
And there was a lot of

00:47:52.378 --> 00:47:59.758
engagement and there was a lot of effort and time put into really taking this

00:47:59.758 --> 00:48:06.558
project through the ranks down to people who work on everyday tasks in different

00:48:06.558 --> 00:48:10.418
regions and explain to them what we will be doing,

00:48:10.638 --> 00:48:13.538
what's the target, what do we want to achieve and

00:48:13.538 --> 00:48:18.578
how these organizations will work in the future and what will be their vision

00:48:18.578 --> 00:48:26.738
of sort of ensuring energy and making sure there is enough space for everyone

00:48:26.738 --> 00:48:31.938
and ensuring that they can proceed with their operations in the future.

00:48:32.178 --> 00:48:35.038
And I think that was a very good example of it.

00:48:35.298 --> 00:48:40.178
I actually, when we look back on the edit from a banker's and legal perspective,

00:48:40.398 --> 00:48:45.478
and I think we started roughly a year before the transaction was completed And

00:48:45.478 --> 00:48:50.978
what had to be done within that year, it was, it sounded like this is not good.

00:48:51.098 --> 00:48:54.838
It can't even work because it's just too many things.

00:48:55.318 --> 00:49:02.678
And it was really down to everybody. And I seldomly saw it that way, that everybody worked.

00:49:04.464 --> 00:49:10.864
With additional effort, and everybody was convinced and understood what we were

00:49:10.864 --> 00:49:12.104
actually trying to achieve.

00:49:12.404 --> 00:49:17.604
And I think this is often underestimated because the nature of these projects

00:49:17.604 --> 00:49:24.904
is that oftentimes many of the decisions and many of the ultimate outcomes have

00:49:24.904 --> 00:49:29.964
to be kept very confidential because of the capital market communication.

00:49:29.964 --> 00:49:33.484
And you can't over-promise and under-delivered to investors,

00:49:33.684 --> 00:49:39.084
and you try to work within the organization and not to bring too much to the outside world.

00:49:39.324 --> 00:49:47.244
But I think oftentimes, the point in time where this is being made everybody's business is too late.

00:49:47.424 --> 00:49:52.644
And you ask people to do too many things before they actually get a full proper

00:49:52.644 --> 00:49:54.764
understanding of what we are trying to achieve.

00:49:55.064 --> 00:49:58.964
And I think the ultimate The ultimate success of this was that each and every

00:49:58.964 --> 00:50:03.784
person who was involved, independent of where in the organization.

00:50:04.204 --> 00:50:07.404
Actually knew and understood what we were trying to achieve.

00:50:07.684 --> 00:50:13.664
And we as bankers spent much more hours in this project going to different parts

00:50:13.664 --> 00:50:17.924
of the organization and explaining how a new,

00:50:18.124 --> 00:50:24.844
and one of the companies had to be IPO'd or brought to the stock exchange another time.

00:50:24.844 --> 00:50:28.744
So how this process works, what does it actually mean to be listed on it?

00:50:28.784 --> 00:50:32.404
So they were already listed, but why are we listing a different organization?

00:50:32.704 --> 00:50:35.264
What steps is this taking? To

00:50:35.264 --> 00:50:39.004
whom will we speak? Who will be the new investors and why would they buy?

00:50:39.904 --> 00:50:45.984
And explaining it to people that didn't ultimately have anything to do with

00:50:45.984 --> 00:50:50.984
the process as such, but they understood what for they are doing it.

00:50:50.984 --> 00:50:57.704
And I think that was actually the amazing job done by RWE at that time because

00:50:57.704 --> 00:50:59.844
they actually took everybody on board.

00:50:59.964 --> 00:51:03.044
And we had this huge kickoff meetings. And many of the professional advisors

00:51:03.044 --> 00:51:05.604
a little bit laughed at it at the beginning.

00:51:05.724 --> 00:51:08.524
They were like, oh, my God, why are we having these hundreds of people here?

00:51:08.864 --> 00:51:13.444
But it was actually a good decision because everybody knew what we were up for

00:51:13.444 --> 00:51:14.844
and that they are part of it.

00:51:14.844 --> 00:51:21.304
So you're saying it was a well-defined goal, properly communicated to the whole

00:51:21.304 --> 00:51:25.184
organization so that everybody could get behind it, right?

00:51:25.244 --> 00:51:30.704
This is the bottom line in this example, which indeed worked amazingly well.

00:51:31.004 --> 00:51:36.884
But now at the other side, what has been the biggest failure and why did it

00:51:36.884 --> 00:51:38.964
fail? Why did it break down in that case?

00:51:41.149 --> 00:51:48.009
I have to name, but I will. You don't have to name names. Yeah, I will not name it.

00:51:50.149 --> 00:51:57.489
Organization X. Organization X, no, but it was, and I think it's symptomatic for, it's not only,

00:51:57.869 --> 00:52:01.189
I have a particular example from my personal experience, But

00:52:01.189 --> 00:52:04.309
I think it's also a little bit similar for

00:52:04.309 --> 00:52:08.049
many other situations where there are

00:52:08.049 --> 00:52:11.629
teams of engineers or technology

00:52:11.629 --> 00:52:14.629
people that you need to bring together

00:52:14.629 --> 00:52:22.649
and each and everyone was always kept in a culture or was always nurtured in

00:52:22.649 --> 00:52:27.969
a culture in the organization in the belief that their technical superiority

00:52:27.969 --> 00:52:32.169
is the one and only success. success factor of the organisation.

00:52:33.409 --> 00:52:37.489
I don't know if it makes any sense to you, but these are these organisations

00:52:37.489 --> 00:52:45.569
that are very centred around their technological benefit or technological superiority

00:52:45.569 --> 00:52:46.969
versus their competition.

00:52:47.269 --> 00:52:52.429
And in Germany, we have multiple examples of those companies that produce something

00:52:52.429 --> 00:52:57.689
that is really, really at the top of the market where they they compete.

00:52:58.129 --> 00:53:06.929
And oftentimes, these engineers are brought up in a culture where they think

00:53:06.929 --> 00:53:09.629
everything is centered around the product that they bring out.

00:53:09.869 --> 00:53:16.069
And all of a sudden, there is someone else coming into play and being taken

00:53:16.069 --> 00:53:18.289
over, or they are being merged with someone,

00:53:18.529 --> 00:53:24.449
or they are being asked to help on a merger where the board decided to bring

00:53:24.449 --> 00:53:26.129
another organization into the firm.

00:53:27.329 --> 00:53:33.449
And I have this example of engineers, but it's probably also in different areas

00:53:33.449 --> 00:53:39.809
is where there is this content or intellectual superiority and people judge,

00:53:40.389 --> 00:53:42.849
the whole transaction from just one aspect.

00:53:43.109 --> 00:53:47.289
And they say, oh, look, they cannot bring anything to the table,

00:53:47.309 --> 00:53:48.729
which we cannot do on our own.

00:53:49.069 --> 00:53:52.729
And then there is a big opposition. And if this doesn't work.

00:53:53.009 --> 00:53:57.829
And I think this is the big, this is the big challenge most organizations,

00:53:58.389 --> 00:54:04.189
have, and why many organizations struggle, even if they enforce the merger,

00:54:04.389 --> 00:54:11.269
because the CSUD decides to do so, or even more so the family owner just ever

00:54:11.269 --> 00:54:13.469
wanted this to have this company forever.

00:54:13.649 --> 00:54:17.309
And then there was this window of opportunity where you could buy it and bought

00:54:17.309 --> 00:54:20.529
it. And their organizations run in parallel for years.

00:54:20.749 --> 00:54:26.589
They are not being integrated for years because there is the opposition from

00:54:26.589 --> 00:54:33.249
within, from people who think that they are the ultimate drivers of success of the company.

00:54:33.369 --> 00:54:36.249
I think from my perspective, this is one of.

00:54:37.179 --> 00:54:43.979
This is a big mistake to make just one group of people believe that they are

00:54:43.979 --> 00:54:45.899
the ultimate drivers of success.

00:54:46.499 --> 00:54:50.279
And I have a very good example from a company where it's totally different.

00:54:50.639 --> 00:54:57.159
At Scania in Sweden, where I was surprised because Scania is sort of when you're

00:54:57.159 --> 00:54:59.899
in trucks, Scania is by many truck drivers.

00:55:00.039 --> 00:55:04.299
If you ask the actual people who drive this car, who many times don't take the

00:55:04.299 --> 00:55:06.599
decision to buy it, but if you ask the actual driver,

00:55:07.179 --> 00:55:10.039
uh they will they they consider scania to

00:55:10.039 --> 00:55:12.879
be sort of the the the premium car or the

00:55:12.879 --> 00:55:15.459
premium truck among the trucks they think they are the sort of the

00:55:15.459 --> 00:55:18.159
best trucks on the road and if you go into

00:55:18.159 --> 00:55:21.159
this organization and actually i i expected exactly

00:55:21.159 --> 00:55:24.359
the same to be in there right so think everybody will

00:55:24.359 --> 00:55:28.859
think our engine is the best engine and why would anybody why would we combine

00:55:28.859 --> 00:55:34.079
it with anybody else and it's very different and and the reason why is so different

00:55:34.079 --> 00:55:40.159
is that every person Every executive in the C-suite of Scania has been put in

00:55:40.159 --> 00:55:42.199
every position throughout his career.

00:55:42.439 --> 00:55:46.659
So everybody once was in the engineering team and once also was selling trucks

00:55:46.659 --> 00:55:49.119
to people and once was in the tax department.

00:55:49.519 --> 00:55:54.019
So they understand that it's a collaboration, it's a team effort.

00:55:54.239 --> 00:56:00.859
And it's not something that is built around an excellent, superior engineering team.

00:56:01.019 --> 00:56:03.099
But it's a whole thing.

00:56:03.939 --> 00:56:08.419
So that means collaboration in that sense is also a matter of your culture.

00:56:08.779 --> 00:56:15.099
But you mentioned about the engineers turning against change was nicely captured

00:56:15.099 --> 00:56:21.839
by the Spanish philosopher Ortega y Gazette in what he called the barbarism of specialization.

00:56:22.779 --> 00:56:26.099
And the issue there is that the specialist, the engineer...

00:56:27.007 --> 00:56:32.327
Has so much confidence in his own skill or her own skill that they just generalize

00:56:32.327 --> 00:56:33.787
that confidence to everything else.

00:56:33.927 --> 00:56:37.467
So they're completely blind to the complexity of everything else because they

00:56:37.467 --> 00:56:38.867
really know their engineering, right?

00:56:38.947 --> 00:56:42.527
So it's the barbarism of specialization, which, of course, I think is a huge

00:56:42.527 --> 00:56:46.827
challenge in organizations because everyone would have a sense of,

00:56:46.867 --> 00:56:49.427
if you want, superiority in their skill.

00:56:49.667 --> 00:56:52.967
And then to communicate with others who actually have very different activities

00:56:52.967 --> 00:56:55.827
can make collaboration extremely difficult.

00:56:57.007 --> 00:57:06.607
But so now to go towards the finish line, did this whole period of COVID-19 and also confinement,

00:57:07.647 --> 00:57:13.067
teach you important lessons about collaboration in the domain where you're active?

00:57:13.147 --> 00:57:16.167
Or is it still the same story, nothing changed?

00:57:17.587 --> 00:57:23.107
I think interestingly enough, I would think, especially from the communication perspective,

00:57:23.107 --> 00:57:30.927
the sort of video type of environment is actually helping to break through some

00:57:30.927 --> 00:57:40.587
historical or some situations which have been forever in a sense and which now change.

00:57:40.867 --> 00:57:46.167
And why is because there is in this corporate, the bigger the corporate,

00:57:46.367 --> 00:57:51.287
the stronger the corporate culture and the more the older the organization and

00:57:51.287 --> 00:57:52.887
the more established everything is,

00:57:52.887 --> 00:57:55.647
that they tend to be my clients historically because these

00:57:55.647 --> 00:57:58.587
are the big firms and the bigger this

00:57:58.587 --> 00:58:02.027
is the stronger this culture the more there is

00:58:02.027 --> 00:58:04.927
a ritual of how you

00:58:04.927 --> 00:58:11.027
know people enter rooms are invited into meetings talk first talk second and

00:58:11.027 --> 00:58:15.907
all this kind of ritual like it's like it's like when drinking green tea right

00:58:15.907 --> 00:58:22.067
in in in asia there's whole ritual of how you set up meetings And I think the

00:58:22.067 --> 00:58:24.067
video meetings actually.

00:58:25.117 --> 00:58:28.437
Are shifting this more into a

00:58:28.437 --> 00:58:31.237
more content meetings because you have

00:58:31.237 --> 00:58:34.717
to say something which catches people's attention relatively quickly

00:58:34.717 --> 00:58:37.717
because it's even because people tend to

00:58:37.717 --> 00:58:42.077
you know everybody tends to be a little bit more similar in front of a screen

00:58:42.077 --> 00:58:46.817
than when you sit there and have a room and there is a certain seat that already

00:58:46.817 --> 00:58:51.577
indicates that you're the most important person in the room sometimes it takes

00:58:51.577 --> 00:58:54.537
ages to people people to sit down because nobody somebody wants to take the

00:58:54.537 --> 00:58:57.197
seat that indicates that you're trying to sit in CEO's seat.

00:58:57.357 --> 00:59:02.317
And if the CEO happens to take another seat, it just confuses the whole room.

00:59:02.737 --> 00:59:06.737
And you don't have all of this in the video meeting. So it's really about what

00:59:06.737 --> 00:59:10.017
you say and the meetings are shorter.

00:59:10.337 --> 00:59:13.917
They are more to the point and more content driven.

00:59:14.117 --> 00:59:20.677
So that is on the positive side. I think that is something that a little bit

00:59:20.677 --> 00:59:26.417
makes the culture less hierarchical and more meritocratic over time,

00:59:26.597 --> 00:59:28.157
I think, from that perspective.

00:59:28.597 --> 00:59:35.617
Right. But on the other hand, you also, in some sense, you develop a model of humans, right?

00:59:35.657 --> 00:59:38.157
You develop a psychological model, which you look at humans.

00:59:38.157 --> 00:59:44.357
And if economic factors are the decisive one, we're back at this old idea of

00:59:44.357 --> 00:59:48.657
homo economicus, who just optimizes return on investment.

00:59:49.037 --> 00:59:53.977
On the other hand, psychology has shown very clearly that humans actually are

00:59:53.977 --> 00:59:58.457
not that optimal, and sometimes seem to act against this kind of optimization.

00:59:58.457 --> 01:00:05.657
So, what kind of model of humans do you actually then bias towards?

01:00:05.957 --> 01:00:10.597
Homo economicus in your domain or Homo unpredictable?

01:00:13.207 --> 01:00:18.567
I think in the middle, it's not homo economicus in terms of really return on

01:00:18.567 --> 01:00:26.587
capital, but it's homo economicus in terms of your social sort of relevance and position.

01:00:26.927 --> 01:00:31.787
And I think that is something that you can observe wherever is that people want

01:00:31.787 --> 01:00:37.327
to be heard, want to be a personality and want to be relevant.

01:00:37.327 --> 01:00:40.567
Relevant wherever they are they want to be relevant to

01:00:40.567 --> 01:00:43.487
the whole thing and to society at the very

01:00:43.487 --> 01:00:47.087
end and the feeling that you're irrelevant to society even

01:00:47.087 --> 01:00:53.787
if you have the capital on your side by for whatever reason i think on average

01:00:53.787 --> 01:00:58.467
is kind of making people feel unsecure in in where they belong it's really the

01:00:58.467 --> 01:01:02.907
the relevance and your role in the society and And the feeling that the society

01:01:02.907 --> 01:01:06.027
actually appreciates what you do and needs you.

01:01:06.627 --> 01:01:08.707
That's my take.

01:01:09.527 --> 01:01:10.367
That's very good.

01:01:11.447 --> 01:01:16.787
But do you believe humans, humanity, as we are with all our quirks,

01:01:16.787 --> 01:01:23.247
will we ever be able to really sincerely collaborate towards a sustainable future,

01:01:23.467 --> 01:01:25.887
sustainable society? Will we be able to do that?

01:01:27.755 --> 01:01:34.415
I tend to be an optimist and that's why I deeply believe theoretically we can.

01:01:34.595 --> 01:01:41.095
I think by nature we are collaborative individuals and I obviously sometimes

01:01:41.095 --> 01:01:44.775
when you look at the sort of geopolitical situation you struggle with the belief.

01:01:44.915 --> 01:01:54.055
I think it's a big challenge right and I think with one of the historians and

01:01:54.055 --> 01:01:55.135
philosophers of our time.

01:01:57.675 --> 01:02:03.475
Said, there is no option. If we fail on this, this time, the challenges and

01:02:03.475 --> 01:02:05.475
the complexity of the challenges are so big.

01:02:05.675 --> 01:02:12.795
But if we fail to collaborate on a global scale, we probably fail on our planet and many other things.

01:02:13.255 --> 01:02:18.875
And I tend to believe it is possible. I think in my micro sort of economic work,

01:02:19.135 --> 01:02:25.315
I've worked around the world and put transactions and And people together from

01:02:25.315 --> 01:02:29.535
very, very different parts of the world, in China, in Brazil,

01:02:29.775 --> 01:02:33.615
in German company, Brazilian company, German company, Chinese company,

01:02:33.735 --> 01:02:38.135
Chinese company taking over a German company, ultimately down to the individual

01:02:38.135 --> 01:02:40.595
person and individual acting humans.

01:02:40.875 --> 01:02:44.855
And I think there is more commonality than there is difference in the way we

01:02:44.855 --> 01:02:46.435
are motivated as human beings.

01:02:46.435 --> 01:02:52.855
We want a certain security around our lives, and security ultimately means also

01:02:52.855 --> 01:02:56.335
financial needs in our world.

01:02:56.535 --> 01:03:01.655
But then the other thing is about having the feeling that we are part of something

01:03:01.655 --> 01:03:03.795
that is important and relevant for the world.

01:03:03.995 --> 01:03:08.955
And I think this motivation is very similar, actually, from my personal experience

01:03:08.955 --> 01:03:13.215
across different countries and cultures. So I ultimately believe we can.

01:03:14.235 --> 01:03:19.335
But then if you could just change one thing in humans by magic,

01:03:19.555 --> 01:03:25.675
what would be the one thing you would change for them to be better capable in

01:03:25.675 --> 01:03:27.075
maintaining and building collaboration?

01:03:30.932 --> 01:03:33.892
In the wish to be the star or the hero i

01:03:33.892 --> 01:03:36.652
would change the hero culture and i wouldn't change it

01:03:36.652 --> 01:03:39.752
by magic i would i would change it by education and

01:03:39.752 --> 01:03:42.472
upbringing of our kids because when i

01:03:42.472 --> 01:03:45.492
read books kids books with my four-year-old son i

01:03:45.492 --> 01:03:48.752
realized that most of the books are around one

01:03:48.752 --> 01:03:51.632
hero and if you want to find a book that are

01:03:51.632 --> 01:03:54.432
that is not about heroes you need to go and

01:03:54.432 --> 01:03:57.952
search for one and actually ask friends and psychologists and

01:03:57.952 --> 01:04:00.832
to to to give you some books and i think

01:04:00.832 --> 01:04:04.312
this is our upbringing is our upbringing is um

01:04:04.312 --> 01:04:07.132
we try to believe that it's that it would

01:04:07.132 --> 01:04:12.492
be best to become the one hero and not the team hero or not part of a hero team

01:04:12.492 --> 01:04:17.432
but but sort of the one and only person who who has all the abilities and i

01:04:17.432 --> 01:04:24.592
think if we overcome that um or and and it's part Part of this is really how we are educated.

01:04:25.372 --> 01:04:29.952
And if we manage to sort of deal with that, and I think there are parts of the

01:04:29.952 --> 01:04:31.872
world where people tend to deal with it better.

01:04:32.012 --> 01:04:34.992
I think there are also cultures in the world that tend to deal with it better.

01:04:35.872 --> 01:04:40.212
And I think in our Western world, we still have some work to do on that.

01:04:40.732 --> 01:04:44.472
Right. Well, Eva-Maria Vico, thank you very much for this conversation.

01:04:44.972 --> 01:04:49.532
That was great. Hi, you listened to one of our podcasts in the series on collaboration,

01:04:50.832 --> 01:04:53.892
Produced by the Ernst Trommel Forum and the Convergent Science Network.

01:04:54.672 --> 01:04:57.552
You can find more episodes on our website.