In the aftermath of the deadly Sept. 11, 2001 terrorist attacks, President George W. Bush and Congress approved two of the most significant government reorganizations in decades—the creation of the Department of Homeland Security (DHS).
DHS was a new super structure—the merger of 22 domestic and law enforcement agencies and some 180,000 employees—designed to shore up the nation’s internal defenses against terrorism. And the Office of the Director of National Intelligence (ODNI) was created to oversee and help coordinate the work of 16 separate intelligence agencies that often operated in silos with little information sharing. Both the domestic agencies and the intelligence community had been criticized for failing to detect and prevent the 9/11 attacks.
On the 10th anniversary of this mega merger, a report called “Securing the Future: Management Lessons of 9/11” was produced talking about the leadership challenges of managing a merger. It seems to me that these lessons map over to the private sector as well.
The report identifies four main lessons, which are enumerated briefly below.
Lesson 1- Chain of command is necessary, but not sufficient. Putting someone in charge is not sufficient to make any organization to operate effectively. Similarly, organizing all the boxes neatly on an organization may make it clear who your boss is, but it does not scratch the surface of creating an integrated organization that works well together. In the case of DHS, the leaders were held accountable ONLY for OPERATIONAL goals and objectives, but not TRANSFORMATIONAL goals. As a result, the integration challenge was not effectively addressed
Lesson 2- The soft stuff is often the hardest to tackle. Things like the vision, values and culture need to be created anew. In the case of DHS there were 22 separate cultures, ways of thinking, of making decisions, and executing programs. When these differences are not addressed, it helps promote divisions and tensions between departments, politics, and ineffectiveness.
Lesson 3- Management systems are central to mission. Just like in the case of Carly Fiorina’s fabled restructuring of HP, the DHS merger overlooked the same problem of realigning all the business systems in accordance with the new structure. IT, budgeting, planning, communications, pay and incentive systems – to mention a few, must all be realigned to fit the new structure. Without this, chaos reigns. In the case of DHS, “on the human resources side of the equation, managers had to reconcile 15 basic and 12 special pay systems, 10 hiring methods, eight overtime pay rates, seven different payrolls and benefit systems, five locality pay systems, 19 performance management systems and 17 unions.”
Lesson 4 – While structure is important, the organization’s super system may be more so. (This one is sort of related to Lesson 3 – though it doesn’t map over as prominently into the private sector. However, it is an interesting and significant oversight in the case of DHS.) Organizations do not function as islands. They are subject to external forces from outside groups, and entities. In the case of DHS, it still had to operate as part of a super system of approximately 88 sister departments, White House councils, czars and congressional oversight committees, who were influencing the various parts of the organization because of their former legislative obligation to do so. So while DHS was re-structured, the rest of Washington was not – leading to conflicting direction, priorities, and direction.
I think the lesson overall here is that even smart people, when they fail to think systemically, can underestimate the problems associated with a merger and make needless blunders. In my case, I executed a merger and 2 acquisitions, and several joint venture entities during my career. I can admit that I made every one of these four mistakes. In some cases I think I acknowledged the issues (intellectually at least), but vastly underestimated their importance. Reading reports like this, if we are smart enough to pay attention to them . . . can save a lot of time, effort, and money.