Tag Archives: work

To begin, let’s face it, in the strategy development realm we stand on the shoulders of thought leaders such as Drucker, Peters, Porter and Collins. Even the world’s top business schools and leading consultancies apply frameworks that were incubated by the pioneering work of these innovators. Bad strategy, misaligned M&A, and poorly executed post merger integrations fertilize the corporate turnaround industry’s bumper crop. This phenomenon is grounded in the ironic reality that it is the turnaround professional that often mops up the work of the failed strategist, often delving into the bailout of derailed M&A. As corporate performance experts, we have learned that the process of developing strategy must account for critical resource constraints-capital, talent and time; at the same time, implementing strategy must take into consideration execution leadership, communication skills and slippage. Being excellent in either is rare; being excellent in both is seldom, if ever, attained. So, let’s talk about a turnaround expert’s view of proper M&A strategy and execution.

In our opinion, the essence of corporate strategy, involving both organic and acquisition-related activities, is the pursuit of profitable growth and sustained competitive advantage. Strategic initiatives require a deep understanding of strengths, weaknesses, opportunities and threats, as well as the balance of power within the company’s ecosystem. The company must segregate attributes that are either ripe for value creation or prone to value destruction such as distinctive core competencies, privileged assets, and special relationships, as well as areas prone to discontinuity. Within these attributes rest potential growth pockets through “monetization” of traditional tangible assets, customer relationships, strategic real estate, networks and information.

The company’s potential essentially pivots on both capabilities and opportunities that can be leveraged. But regaining competitive advantage by acquisitive repositioning is a path potentially full of mines and pitfalls. And, although acquiring an underperforming business with hidden assets and various forms of strategic real estate can indeed transition a company into to untapped markets and new profitability, it is best to avoid buying a problem. After all, a bad business is just a bad business. To commence a successful strategic process, a company must set direction by crafting its vision and mission. Once the corporate identity and congruent goals are established the path may be paved as follows:

• First, articulate growth aspirations and understand the basis of competition
• Second, assess the life cycle stage and core competencies of the company (or the subsidiary/division in the case of conglomerates)
• Third, structure an organic assessment process that evaluates markets, products, channels, services, talent and financial wherewithal
• Fourth, prioritize growth opportunities ranging from organic to M&A to joint ventures/partnerships-the classic “make vs. buy” matrices
• Fifth, decide where to invest and where to divest
• Sixth, develop an M&A program with objectives, frequency, size and timing of deals
• Finally, have a seasoned and proven team ready to integrate and realize the value.