'Now incorporating': DAI on branding after an acquisition

Global development professionals tend to associate deeply with the place where they work, and the organizational mission they have helped to forge. But business is fluid, and the industry is changing. When a large development organization acquires a smaller one, what happens to the two distinct cultures that must now meld to become a single entity? How can leaders at both firms ensure the result of the merger or acquisition is a better overall product and — for an industry that asks its professionals to invest in a mission — a comfortable transition for those involved? In December 2013, Development Alternatives, Inc. acquired HTSPE. Since then, DAI has worked with HTSPE’s leadership to integrate the two operations. On Aug. 1, DAI finally retired the HTSPE brand. We spoke with Christopher Lockett, current managing director of DAI Europe and senior vice president of DAI, and former managing director of HTSPE, to learn about why it was the right time to make a change, and what comes next. Here are a few highlights from our conversation: What trends in the broader international development landscape made this move appear to be the right one, both for DAI and for HTSPE? Why was the timing right now, and looking strategically forward, why did this make sense? We’d kind of got to the point last year where the business had grown enormously. It had more than doubled in the seven years that we had honed the business. But we were coming across a barrier … In the wider market the projects are becoming much bigger. They’re becoming much more multidimensional, and therefore they’re becoming much more difficult for a smaller, stand-alone company to manage and deliver. What that leads you to do, is it leads you to start to create consortia to bring together people who can deliver the different aspects of the project for you. And the problem with when you start to do that is you start to lose control of your ability to effectively deliver that project. The one thing that HTSPE always prided ourselves on is we deliver really good projects. We will take the project. We will aim to deliver it. We will never walk away. We will never leave any loose ends. Our aim is always to deliver the best project we can … When you’re having to bring together a special-purpose consortium for each one, and you’re having to bring in more and more organizations, it becomes less possible to do that. We’d reached the stage where, for financial reasons, it was getting more and more difficult to fund some of the projects as a stand-alone … and it was becoming more difficult to guarantee that we deliver to the standard that we want to deliver to. So we really needed to do something to put ourselves in a stronger position to do that. When you say that projects are becoming bigger and more multifaceted, what do you mean exactly? Is that a shift in donors’ procurement strategies, or their choice of procurement vehicles? What exactly are you noticing? They’re just beginning to combine things … We’ve done a lot of land tenure programs, both for the [Millennium Challenge Corp.] and for [the U.K. Department for International Development]. We recently finished one in Rwanda, for which we won a British Expertise award for best development project … We did about 8 million parcels of land — we registered in Rwanda. When we went to do that project, it was a land program. We were asked to go and do a land program. We delivered a land program. We recently bid and won one in Ethiopia. It’s [a “making markets work for the poor”] program, of which land is one element. Well land is such a huge undertaking, to then add that as part of a … private sector development program adds a whole new set of skills that you need to bring to that project in order to deliver it. We are more than capable of delivering a land program, from doing research, putting initial legislation through parliament, building the infrastructure to manage this process, actually going out and doing the registration, even issuing the land rights, we can do all that stuff. But adding the dimension of M4P to it, for us, that was something that was a little bit outside HTSPE’s core, so we’d have to go out and find help for that. So it was about just the size of projects increasing and more things being put into them … bringing all those things together into much bigger programs that are much more challenging to deliver. How completely is HTSPE being absorbed into DAI? In addition to the way that DAI’s brand will now incorporate acknowledgement of HTSPE’s presence, will the two organizations’ cultures also shift to arrive at some kind of unified identity, or do you expect that the two businesses will remain somewhat distinct? That is a really interesting question … When I looked at it, there was a lot of similarity, particularly between HTS and [DAI] Bethesda, both very long-established companies. We’ve both got some very long-serving staff on our teams. But we also had a sort of ethos of client service, good service and delivering fabulous projects … For me there was a real fit there. In the U.K. they had a much more younger, much more vibrant, much more dynamic team, and to some extent that was one of the things HTSPE needed to improve, because we had become … very used to the way we worked and we probably needed to get an injection. What we got was the familiarity of Bethesda and an injection of energy and vitality coming into us from the DAI Europe team. In that respect it’s been quite refreshing. The blending in with Bethesda is in early stages still, because there’s obviously a big geographic distance, but we’ve had lots of exchanges going on … and I’m now beginning to work with the leadership team there to really make sure we don’t think about ourselves as delivering — this is Europe work, this is U.S. work, that we start to leverage across those pieces. Over the years to come, or over the months to come, we’re going to see a lot more people’s responsibility for an entire territory, and a lot more … joint working on projects. Do you expect the acquisition and integration of HTSPE will change the DAI brand? In terms of our ethos on delivery, they were similar, but I think it’s nice from the European perspective that the donors now won’t be seeing a delivery capability that’s coming from the U.S. They won’t be seeing what they would see as a U.S. company. They’ll now be seeing a truly international company with strong delivery capability in Europe as well as the U.S. If the majority of the back office facility was in the U.S., there’s a long disconnect between that and a program, which is being managed by, for example, DfID in the U.K. That ability to get out this afternoon and go and sit down and talk about my project is a little bit disconnected … We’re now bringing a lot more of that delivery capability much closer to them so it’s much more available to them. In terms of the practical aspects of implementing and rolling out this brand to your projects and your clients and your staff and partners, what do you think will be most challenging thing? I’m going to have to tell you the truth: contract novations … convincing clients to change your contract from this legal entity to this legal entity. It’s always, always difficult … Clients tend to recognize the brand as meaning the legal entity. From my viewpoint, the biggest challenge is keeping the best from the brands that we had and demonstrating that the value of the new brand is enhanced by the addition of HTSPE to it. Demonstrating that it’s not just the DAI brand but the DAI brand with HTSPE added to it and really demonstrating to clients that they’re getting extra value out of that. I think that’s going to be the challenge for all of us … The important thing for me is that we kept all of what we brought with HTSPE … really complemented what DAI had. We have not lost anybody. So you’re keeping your entire staff? Yes. What is the most important aspect of leadership during this process, and I’m thinking particularly in terms of leadership of the former HTSPE to ensure employees still feel like they’re a part of what they thought they were a part of? The most important thing for me throughout all of this is about communication, and about making sure that people feel comfortable with where we’re going and what we’re doing, and why we’re doing it … We’ve had a lot of exchanges going backward and forward between the U.K. and Bethesda. We have regular cross-working with the London team here … The real success has been in demonstrating to my colleagues in HTSPE just how much like us DAI are, and so they feel comfortable … There is real comfort in working with DAI. One of the early concerns was: Big company coming in to take us over — is this going to change the way we work? And that really hasn’t happened. It really has been a melding of the two cultures together. Yeah, there’s things we’ve had to accept that they want us to do, and there’s things that they’ve accepted that we did better so they’re going to take those. It’s been about making sure that everybody is comfortable with the direction of travel and making sure that we keep communicating with people. Are there signposts you’re looking ahead to, to be able to say if things are going well, or if you need to course-correct in some way? It is going to be interesting … The real achievement is going to be when we get truly connected bidding for projects. Already DAI in Bethesda has supported bidding in Europe, but I would like it to be more than just supporting. I would like us to be going much more for joint working on projects, and maybe see if we can bring some of the donors together on projects. I think there’s a real opportunity there. 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