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Issue Date: June 2007

The DNA of powering change

June 2007

Following on from his article 'Powering Change', Darren Smith, editorial director of Technews, reports on an interview with the CEO and CMO of APC-MGE.

Making successful acquisitions, is, of course, a key organisational competence. Done well, acquisitions can boost growth and provide an almost unmatched capability for rapid market entry; done badly, financial value, staff morale, and customer focus all can quickly drain away and take years to recover. Acquisitions can thus make or break companies, and the careers of the CEOs who run them.
Laurent Vernerey, recently appointed president and CEO of APC-MGE, describes how he plans to power change in his organisation, and amongst partners and customers.
Laurent Vernerey
Laurent Vernerey
In a 2006 interview published by Australia's CEO Forum, Vernerey was asked whether he thought companies underestimate the complexity of integration, given the high rate of acquisitions failure?
"Perhaps they get a bit impatient, and are unrealistic in expecting everything to go right first time," he said at the time. "My view is that there is always a phase two in post acquisition, meaning that all of the assumptions that you had made on the cultural side will have evolved and you will need to have a change in how you manage this over during the first three years. So you will need to change your approach for the second phase."
"Ultimately, acquisition success comes down to building relationships. I have been through various different styles of acquisitions, and I am not a big fan of the approach which says 'right, we have a very tight process here, and you are going to comply with that process whether you like it or not'. That approach tends to oversimplify things and is not our preferred approach."
"Ours could be considered a softer approach," he added.
"We do not come with a book of how things will be done, although this does work for many corporations. I believe that it is more about understanding what people are going through, especially when you come in as a big multinational and there is already a lot of anxiety in people's minds. Making sure there are no surprises in this context is very important."
"Managing post acquisition is always going to be challenging to your leadership skills. But it comes down to a few basic guiding principles: have a clear and shared picture on synergies, brand and integration objectives; make yourself available and known; communicate your intentions and set expectations; and always stay focused on your customers and the value proposition for them. It is all about building trust and relationships, not power and control. You also need to create a continuous feedback mechanism to track your progress and shortcomings."
"And then, the final dimension, important for any business and leaders but even more important in a post-acquisition mode; keep the passion and the fun in the business!"
Powering change
In expounding more explicitly on his priorities, now that he has been tasked with bedding down the APC-MGE merger, Vernerey spoke of some of his priorities.
"Take care of our customers. Take care of our people. The rest will take care of itself."
He went on to talk about three stories, which he dubbed:
* The customer story - what can customers expect?
* The financial market story - any merger creates expectations? What can the markets expect?
* The employee story - what can employees expect?
The customer story
Given the critical power issues the world faces today, Vernerey believes that integrated services will be key.
"It is really simple," he said. "Whilst hardware will always be there, available as a 'best of breed' offering, the real differentiator will be software management. The design, integration and management of energy systems will become THE differentiator."
"APC-MGE wants to be the supplier of choice on green issues and cost efficiencies. Today's data centre management systems are too restrictive, and there is a huge opportunity in building management system integration, integration with MES (manufacturing execution systems, a Schneider Electric core-competence)."
"APC-MGE will increasingly be able to offer solutions to specialised vertical markets - through partnerships with SIs able to offer software customisation expertise, through strategic partnerships, and through its commitment to standards-based open solutions."
Vernerey went on to reiterate that because business is done through relationships, "customers will deal with the same people: people they trust, people who have supported them in their business, people who have become their strategic partners."
"We understand that even the best on-line experience cannot take the place of someone you trust, so we are committed to the strong relationships established over the years and our intention is to have clients continue dealing with the people they have grown to respect."
Reiterating the need for continuity, Vernerey said that APC-MGE is "committed to minimising the impact on customers' planning cycles. So each company's products will continue to be available in the market and both brands will continue to stand in the market for world-class execution and customer focus."
"Last, but not least, the merger will bring about a larger services footprint, and though size has some value, it is the development of footprint, and improving quality of service that will be key to our continued success," he said.
The market story
Harking back to Vernerey's views on mergers and acquisitions, it is also important to note that, unlike some other companies who are buying businesses, Schneider Electric is not looking to trade businesses.
"All the acquisitions we make are strategic, in the sense that the businesses are intended to be retained long term and become part of our business portfolio. We do not buy and resell within a few years, so we are not looking at quick turnarounds and resale, as some other acquiring companies may be. In this case, the acquisitions process would be quite different from ours."
The aim is to grow the business at SMB level, but not at the expense of enterprise leadership. Laurent believes that the merged company will be able to improve margins, particularly in enterprise systems as the company takes advantage of the strength of the two companies.
Fixing supply-chain bottlenecks and extracting synergies, both revenue synergies and costs synergies by taking advantage of gaps in the product mix, is key.
"Of course," he concluded, "you will invariably find that, no matter how well you are prepared, some aspects of the integration process take much longer than others."
The employee story
Vernerey talks up education.
* "Train, train, train."
"You simply cannot manage change if you do not invest in yourself, and in our employees. APC-MGE is an international concern, the integration of which highlights the value of diversity, and particularly of managed diversity."
We aim to produce high-performance teams, and a leadership team given to acting as leaders in everything they do.
"Leadership which SERVES. Its customers, its stakeholders, and its employees. That really is our job as I see it. To serve, and to power change," he concluded.
The marketing view
Technews asked Aaron Davis, senior vice president and chief marketing officer, just where he saw the opportunities for APC-MGE's business partners as a result of the merger?
"We are very excited by the new opportunities for our partners brought to the table by the dramatic change in business management awareness of power and cooling issues. APC-MGE now offers the industry's broadest portfolio of solutions, broadest service footprint, and most aggressive spend in research and development in the industry."
"The time is right for partners to succeed," he said. "Rather than being an afterthought, CIOs and facilities leaders are together realising that power in to any device - from basic PC to the densest data-centre - requires a solution for the heat that comes out. When energy was cheap, partners and customers could cobble together component solutions that solved this issue with brute force, but now that the market has awakened to the fiscal and moral imperative to cut energy costs and carbon emissions, successful partners are selling complete integrated solutions as part of the mandate for an efficient enterprise."
Davis believes that the company's mantra, The Efficient Enterprise, is characterised by four Cs, namely:
1. Best in class components to ensure your best choice in power, racks and cooling.
2. A close coupled cooling design between the heat generating loads and the cooling system to neutralise the heat.
3. A containment system to ensure predictable airflow.
4. Capacity management software to ensure no surprises when it is time to add new servers or other equipment.
Says Davis: "The most successful partners of the new decade will realise that every single phase UPS sale is a chance to ask about density, cooling and management issues. More often than not, customers will be happy to embrace these new solutions as they remove headaches of today and anxiety about tomorrow."
That is all very well, but any acquisition of this size is fraught with danger and the challenges are immense. When asked about the MAJOR challenges faced by APC-MGE, if it is to fulfil the promise of its ambitions, Davis suggested that "The job we have ahead of us requires partners that embrace a new holistic view of the power and cooling problem, partners who are ready to accept with enthusiasm the new training and attitudes that will enable them to lead customers through this period of great change."
"We have the products, we have the people, we have the services, we have the mandate to drive the efficient enterprise vision. However, we simply do not have enough partners to support the new design criteria expected by the market. We encourage partners interested in these opportunities to work with us TODAY and help us save the market billions of dollars in efficiency while at the same time delivering more reliable and predictable systems." Powering change. Indeed.

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