Abbott’s Acquisition of St. Jude: What Every Technical Leader Should Know | Technological Leadership Institute

Posted on
January 20, 2017

The acquisition of St. Jude by Abbott is the latest in a series of large and high-profile acquisitions in the medical technology sector. Mergers and acquisitions (M&As) are a common and vital part of strategic growth in the medical device industry. M&A activity can significantly benefit management, shareholders and patients, but it is often a challenging time for employees at all levels. Indeed, as noted by Harvard Business Review, studies report that M&A failure rates across a broad range of industries are 70 to 90 percent. Having participated in a number of mergers and acquisitions during my 15 year career in the medical device industry, it has been my observation that Research and Development (R&D)/Product Development is often kept at arms-length during integration. While this strategy insulates these functions from the distractions of integration-related activities and has its merits, it can also put them at risk if it leads to isolation, loss of morale, project delays and missed timelines.

Here are 5 things technical leaders can do to ensure a successful integration:

  1. Actively participate in the activities leading to acquisition AND provide input to the plan that will guide integration. The planning and execution of a thoughtful transition plan is critically important to long-term success. Most technology leaders do not learn the mechanics of M&A nor the organizational processes involved. With the exception of the VP or R&D and/or Chief Scientific Officer (CSO) or Chief Technology Officer (CTO) and select members of their senior staff, technical leaders may not be aware of or involved in early due diligence regarding an acquisition. This is due in part to the need for secrecy, to avoid disruptive speculation amongst employees and public disclosure that could impact the companies involved, as well as to avoid tainting the respective R&D efforts of either company if the acquisition does not take place.

  2. Communicate frequently and effectively to your team about the details of the integration. During integration, the attention of much of the business will shift to administrative aspects of the integration, and this will draw focus away from future-looking product development and commercialization activities. There will be uncertainty about the survival of projects and the retention of individuals (including the leadership team) post-integration. This will create anxiety amongst team members. Recruiters and competitors will capitalize on this and personnel will find they have opportunities to leave.

    You must give your team members a reason to stay. It is your responsibility to do so. Your team members are amongst the most important assets being acquired. The long-term value of the acquisition will be impacted by their decision to stay or leave. What are the benefits of the acquisition to R&D and Product Development? Will there be access to new collaborators, new facilities, new opportunities to work on projects of interest, new opportunities for promotion? For relocation and personal growth? In the face of uncertainty, it is important that you craft a positive future for your teams.

  3. Draw on your culture, emphasize your core value, and use these principles to guide your work and the work of your team while the integration is underway. There will be questions about which procedures to follow and about the value of work being done in the eyes of new leadership. Definitive answers are not likely to be available. When rules do not apply, culture and core values dictate behavior. This is when you will be either rewarded for having a vibrant culture and strong core values or penalized if your core values exist only on paper and not in the hearts and minds of your employees. Draw your team members together, focus on inter-dependence and mutual support. Emphasize and preserve teams.  Individuals will begin to feel isolated in the face of new leadership and a new culture that is unfamiliar to them. Don’t ask team members to replace their current culture with a new one too quickly. Preserve existing team structure and allow groups to navigate the task of finding in the new company the foundations of their own core values.
  4. Speak with honesty about what is known and what is unknown, and actively counter rumors that are not based in fact. Leaders do not have all the answers. The integration team will not have all the answers. Since none of us likes to say “I don’t know” repeatedly in the face of uncertainty, questions go unanswered. Team members may be told that they needn’t worry. When the adage “No news is good news” is applied, the consequences are negative. Rumors will abound and employees will assume that leadership has answers but doesn’t want to share them because of the negative impact. When something may happen but hasn’t happened, honesty will provide the only comfort possible -- and with this honesty comes respect. If team members legitimately fear that they will lose their jobs, focus your team on the activities that will demonstrate their value to the new company and make sure teams know that they can influence outcomes through their work.

  5. Understand the value of your team’s work and be a vocal advocate for its preservation. This can be difficult when leaders themselves have an uncertain future. Advocacy should not be self-serving. As the steward of on-going R&D and Product Development, the technical leader knows better than most what is necessary to ensure success. Resources will be stretched, morale will decline, key personnel may leave, and you must be prepared to articulate your team’s needs to the integration team or risk finding resources are not be forthcoming. This would even further undermine morale, impact productivity and long-term value.

Mergers and acquisitions are often some of the most challenging of times; but they can also be the most exciting because they offer the greatest opportunity for personal and professional growth. The skills required are rarely taught and instead are learned by trial and error. With a bit of foresight, it is possible to navigate effectively and help preserve both the human and technological assets being acquired. That should be the goal of all R&D/Product Development leaders involved in the M&A activity they will undoubtedly face.

About the Author

Photo of Dan Mooradian

Daniel L. Mooradian, PhD

  • Honeywell/James J. Renier Chair in Technology Management
  • Senior Fellow
  • Director of Graduate Studies - MDI

James J. Renier Chair in Technology Management

Daniel Mooradian is founder and president of The Simpatico Group LLC, chief science officer at Innova Medical Design, chief science officer at Novum Therapeutics, and leads TLI’s newest graduate program in Medical Device Innovation. In addition to serving as director of graduate studies for this program, he leads partnerships and course offerings for students in the medical device industry.

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