What would you tell a friend who doesn’t want to know his/her cholesterol numbers or the results of a stress test? Even if the results of such medical tests suggest that he/she needs to make some changes, isn’t it better to know? He/she may need to pout for a little while, but then…
Competition on an international scale is a reality for most of us…even if we don’t look, deny it, resent it, or are busy pouting about it.
A few weeks ago, my blog included some observations I made while on a trip to eastern China:
Your responses were interesting! A few of you said, “You are so right. Even the smallest companies in Iowa will soon feel like their biggest competition is Chinese owned.”
Many of your emails expressed frustration. “These days…who has time to TRAVEL!? We are just running as fast as we can to survive.”
Others responded by saying “No DUH! CHINA is the BIG GORILLA in the room for most of us. Why should I travel there and give them any more money?”
And others said, “I can’t do anything about wars, the troubled economy, the rising cost of health care, or the oil spill in the Gulf of Mexico. Why should I spend time and money to see even more things I can feel helpless about?”
I feel your pain. Really. The impact of technological advances, increased expectations, globalization, the uncertain economy, etc. have left many (most?) business people feeling less in control … even helpless.
But think about technological changes for a moment. Even if they scare or overwhelm you, doesn’t it pay to move beyond the fear and just learn a step at a time? The same is true with globalization. Playing ostrich and sticking our heads in the sand won’t help our companies survive.
The shared mission of my various service companies is to help midsized companies to keep growing, so most of the readers of my blogs are executives leading privately held businesses. Like the guests on my weekly radio show, most of you (blog readers) have annual gross revenues between $20 and 200 million with the $1 billion/year target in the back of your minds…if not openly expressed as your goal. Also, many are family owned and operated. Many of your companies don’t hold formal board meetings of any kind…ever! So what am I talking about here?
You may THINK that you don’t have a board of directors, but you do. If you haven’t directly addressed the topic, whoever owns the business is de facto serving on your board of directors. The role of the CEO/President and the role of the Board Chair are very different. So, if you have never convened your board, you could start with having a board meeting with yourself. Ask the President (you) to report to you as the Board Chair. What results are being achieved? Where are things headed? What approaches are in place to address issues, prevent problems, and improve resilience? What does the President need from the owners, the board, and the investors?
Then report back to the President. What do you as Board Chair expect from the business over the next few years? How much profit do you and other owners require? What strategic direction do you propose for the business? Are there new markets, new products, diversified holdings, new partners or new ownership anticipated in the future? What do you need from your President?
It may feel weird, but the exercise is a needed wake up call for many Presidents, particularly during an uncertain economy. Without this exchange of expectations between the Board Chair and the President, the need for things like an acquisition, venture capital, geographic expansion, a new business model, etc. are not recognized and don’t get addressed. Folks keep going with business as usual when it may be time for a dramatic change.
And if you have all owners (particularly family members) or all employees (with a vested interest in the answers to strategic questions), it may be time to consider the addition of a trusted outsider to your board. Too often, Presidents look to their accountant or attorney to serve on the board, but they are already giving you advice.
If you are serious about continuing to grow your midsized company, look at the experience, skill set, connections, objectivity, and knowledge of your board members. Are you getting what you need from your board?
A deal is a sale with a non-customer.
Some deals help your company acquire new technologies or capabilities more quickly than trying to develop it yourselves. Some mergers and acquisitions are done between complementary companies to expand the product or service offering to better serve the best customers. Acquisitions can also be done to eliminate a competitor in an important market.
I noticed that the lingering recession has led some tired entrepreneurs to consider acquisitions and mergers as a way to get relief from their intense schedules. Unfortunately, this increases the vulnerability of the already tired entrepreneur. Wishful thinking takes over, and the entrepreneur convinces him/herself that an acquisition can solve their problems. Why not hire a strong “#2” and get centered again before considering any acquisition or merger?
I have become convinced that acquisitions are like marriage. When a tired single parent marries to “solve his/her problem,” new problems often develop. Acquisition, merger, and marriage negotiations all seem to go more smoothly when each participant is centered.
But what do you do when/if the two entities don’t seem “centered”? What if you thought you were negotiating a merger, and the other entity (key person) waffles, seems a bit too nervous, and withholds information? It pays to slow down and expand your view. Maybe the other person just wants to cash out and retire. Maybe he/she had become bored. Maybe the transaction will only involve the purchase of assets so you don’t take on their debt or “people” issues. Maybe you should only offer to pay a licensing fee and not purchase anything. I’ve seen acquisition negotiations end in simple subcontracting arrangements. We all know couples who concluded that they should just continue dating one another.
The best deals are when the leaders of two companies look for synergy (fit) and leave their options open…instead of starting the process assuming the answer will be an acquisition or merger. If there is not win/win fit, the title of the deal you don’t make won’t matter. It pays to leave the structure of the deal to attorneys. Whether it’s a strategic alliance, a joint venture, an acquisition, a merger, an asset purchase, or something else isn’t the most important question.
Should your company invest heavily in social media? Press releases to broadcast and print media? Tradeshow displays? Direct mail? Promotional items? Entertainment? You know the list. It’s a long one and the decisions are getting tougher and tougher about where to invest limited funds.
One of our clients is a community bank that chose to participate in Arianna Huffington’s national “Move Your Money” campaign. That decision led to an investment in billboards, lapel buttons, new pages for their website, print advertising, collateral material, and direct mail. And the most important investment was the training sessions for branch managers to more assertively encourage business owners to move their money from those huge financial institutions to a trusted community bank. Asking questions without the context of a broader campaign might have incorrectly led to the conclusion that they shouldn’t consider billboard advertising (when they clearly should).
New England’s energetic baseball fans see the exciting image of Granite City Electric’s (GCE) NIGHT TRAIN™ coming out of the left field wall of the stadium because GCE is the official electrical distributor for the Red Sox. GCE is an AMBLER client, too. The idea flowed from a strategic planning process. Then a marketing firm, Creative Marketing Alliance (CMA), helped translate the message into an exciting graphic image. Without the context or strategic logic, would you have thought that an electrical wholesaler should invest money in the left field wall of a baseball park? Hey…electrical contractors watch baseball games!
“Many businesses are spinning their wheels while they chase the latest trends, and in the process, they lose sight of their ultimate goals. Sometimes all they need to do is pay more attention to who their target audience is and what they care about to develop an effective marketing campaign,” says Jeff Barnhart, President and CEO of CMA.
Would you have thought that a fast food chain should construct large wooden animals to place in front of billboards? Perhaps you have noticed Chick-Fil-A’s very effective use of wooden cows encouraging people to eat more chicken.
These days, it seems like marketing is a bad game of Jeopardy™ where the answer has become social media. But what was the question? What is the strategy? What is the goal? It is highly likely that social media should be included in the mix, but if you don’t know why, it can also become a distraction.