Integration of Tippecanoe Laboratories

The right Resources, Competencies, Skills -- A post Acquisition Integration starts prior to signing

Thomas Ayres – VP Integration & Change ManagementKrannert Executive Conference for HR ProfessionalsPurdue University - September 23, 2011

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The nature of the transaction determines the integration approach

Evonik’s Scope and Imperatives on Tippecanoe’s Integration

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Tippecanoe Laboratories

Integration Imperatives

Utilize

Assets Skills Knowledge

Sustain

Site Core Values Quality, Safety and

Environmental Principles Supply to ELI LILLY

Develop Demanding Customers Flexible Workforce

and plant Competitiveness

Involve All Employees on Site Regional and

Global Services Business Unit/Line

Implement

Management Systems

Business Processes

Change

Personal Commitment

Business Model Cultural Mindset

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Eight-Step Process for Leading Successful Change(John P. Kotter)

     

       

         

   

             

               

                 

                   1 – Increase Change Process Engagement

2 – Build Guiding Teams

3 – Get the Vision Right

4 – Communicate for Buy-In

5 – Enable Action      

6 – Create Short Term Wins

7 – Don’t Let Up

8 – Institutionalize

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Understanding the Challenge of Change for the People who joined Evonik.

The Tippecanoe Perspective.

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Tippecanoe Laboratoriesis embedded into a Matrix Organization …

ELI LILLYCORPORATE

Joint Steering Team (contractual

obligation)

IntegrationProjectTeam

Integration Project Tippecanoe (temporary support

to line functions )

Business Unit

Business Line

Business Lineand Functional Responsibility

Controlling & Finance Sales & Marketing Production & Technology Supply Chain Research & Development Quality Assurance Human Resources

EVONIK Degussa

Corporation

• Compliance and Audit• ESH and Permits• Product Regulatory• Taxes

Legal Responsibility

Service Units

Shared Services

Procurement Communication IT Legal / Insurances Financial Services HR / payroll IP / patents Process Technology

& Engineering

LILLYTippe-canoeSite

Tippecanoe Laboratories

Lafayette Site

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Understand the New Business Model @Tippecanoe Laboratories

From cost center viewto entrepreneurial acting.

Not longer competitive with ELI LILLY’s sites in Ireland or Puerto Rico,

but with Lonza, Siegfried, Hovione, BASF et al

Measured by customers oncost, speed, flexibility, quality, reliability.

From pharma production for captive useto Contract Manufacturing for various customersSelf Image

Focus and Mindset

Competitiveness

Success Factors

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The Acquisition Process of Tippecanoe Laboratories

Key Learning Points.

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Key Learning Points

A Solid HR Integrations of Payroll, Benefits and Policies is the Foundation to a effective overall Integration Process. The lack of HR related problems allow the rest of the Integration process to progress without these issues getting in the way.

Do not underestimate the amount of resources that are needed for Integration (Management Capacity)

Expect that you will need to replace some key managers, do not develop

Key Manager Contracts that are longer then 6 months. They can always be renewed.

Have a solid communications plan. A Plan that covers not only Day One, but has planned and required Communications activities over the first 9 to 12 months of the integration.

Build in the opportunity to assess the progress of the Integration Plan.

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Key Learning Points – Change is more than a Phrase

Remember that Change is always with us, but it is not natural.

Change is always good when it happens to the other guy!

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Post Merger Integration has two Components:

1 Business System Integration (Project Management)

2 Business Management Integration

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Business Systems Integration

Examples

HR Pre-Closing Activities

IT Integration

Alignment with Corporate, Business Unit/Line and Region on Financial and ESH Reporting Requirements

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Business Management Integration

Business Management Integration is about organizational leadership.

Moving the mindset of the Tippecanoe Leadership from being a cost center of a large Pharma Organization to a Profit Center of a Custom Manufacturing Organization (CMO).

Changing the behavior of the leadership to allow for open disagreement and the delegation of authority.

Guiding leadership though effective utilization of networking in Evonik’s Matrix Organizational Structure.

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Business Management Integration versus Business Systems Integration

Can someone who is effective at Business Management Integration also manage Business Systems Integration?

Probably yes but not always.

Can someone who is effective at Business Systems Integration also manage Business Management Integration?

Probably no but not always.

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Competencies Business System Integration

What are the Competencies of a good Business Systems Integration Manager?

ManagementExcellent Organization and Project Management skills. There are many individual projects within the overall integration and all have to be managed effectively.

CultureGood understanding and sensitivity to the organizational and regional cultures of the groups who’s Business Systems are being integrated. The Business Systems Integration process is extremely stressful, people involved in completing this process are doing it on top of their regular jobs and they must be managed with “firm sensitivity”.

NetworkGood networking skills and a good understanding of Evonik’s Matrix organizational structure.

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What are the Competencies of a good Business Management Integration Manager?

EntrepreneurshipExcellent understanding of the business goals and objectives and an understanding of the BL’s industry and competition.

CommunicationMust be able to “speak to” and teach the new leadership about the business and how the acquisition fits into the business strategy of the acquiring company.

Intercultural SkillsMust have a good understanding of both the “business/organizational” and “regional” cultures of the acquired organization and the culture of the organization that made the acquisition.

AdaptabilityMust be able to “coach” both the acquired leadership and the acquiring leadership to ensure that the synergies anticipated by the acquisition are realized.

Competencies relevant for Business Management Integration

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Conclusion

The Business Unit must lead the Business Management Integration process.

The Business Management Integration Manager must be a good Business Manager!

Business Management Integration is a long term activity, 3 to 5 years.

Business Systems Integration should last 6 to 15 months.

Thank you for your attention!

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Questions and Discussion?