Resultsman’s Blog

Opportunity is Knocking!

Posted in Uncategorized by resultsman on October 6, 2009

Opportunity is knocking for those who are bold enough to hear its call. Bold business leaders will recognize this fact and create their own opportunities. Followers wait for them to occur. It appears as though we have now experienced the worst of the recession of 2008/2009. Business conditions as expressed by economic indicators and the stock exchange indexes are improving.  

I recently read a blog posting in which the author wrote that a restructuring will take place among private equity firms due to the fundamental changes in financial markets.  The private equity business model will remain as an important part of the innovation cycle, but the opportunities will come from different places and be exploited by executives with a different set of skills.  During the last business cycle, many firms in the private equity sector enjoyed unprecedented growth and increases in return on invested capital as a result of financial engineering skills.  The days of easy credit and extreme leverage are behind us.  The mediocrity of executive leadership is being exposed!  In the future successful executive leadership will come from those people who have the capability to create wealth from (1) the reorganization of stressed assets and (2) to create wealth from the growth of new businesses. 

Opportunities will abound in the new business cycle. Corporate values are suppressed. For a while now, deals of necessity (bankruptcy or cost-cutting capacity elimination/consolidation) have been the only type of transactions that are taking place. This situation seems to be changing. Prudent risk is the part of any investment. Those who can identify the growth opportunities and implement plans to exploit them will be successful. Calculated risks taken now will be rewarded as we progress through the growth of the next economic cycle.

We are experiencing an evolution in the innovative growth model for businesses.   Large companies have a reduced willingness to make the investment in R&D than they once did. Growth in many large firms is coming by way of merger and cost reduction through consolidation.  The pharmaceutical and chemical industries offer two examples of this.  Pfizer is acquiring Wyeth, and Dow has completed the purchase of Rohm and Haas which it entered into before the financial collapse. In both cases cost reductions and consolidation will follow the transactions.

The period of consolidation is a challenging time for the new organizations.  Eliminating organizational redundancies can create an environment of fear and uncertainty for the remaining employees.  Once the work of eliminating organizational redundancies has been completed, organizations must quickly turn their focus to establishing a positive re-enforcing sales culture.  The sales culture will be the engine that drives the “organic” growth of a business.  A true sales culture is systematic, supportive, trains, motivates and energizes the sales force, recognizes that everyone in the whole company is in sales and finally creates the conditions to be the difference between average and astounding results.

 Small companies are being relied on to a greater extent to be the engine of innovative growth.  Many small pharmaceutical companies are being created as a result of entrepreneurial activity or as spin-offs from larger firms. Universities have been an ongoing source of basic research which is often followed by licensing and entrepreneurial commercialization in small startup firms. These small firms help the innovation process by mitigating the developmental risk and cost of guiding promising pharmaceutical compounds through the development and commercialization maze. The larger firms are then purchasing these small companies late in the regulatory process.   

The job of the leaders of small to mid-cap public companies to enhance the wealth of its shareholders by creating value (1) equity from “organic” growth and (2) payment of dividends. More often they are now taking on the second step of the commercialization process by making targeted acquisitions of these startups and small-cap companies from their founders as they enter into the rapid growth phase of the life cycle. 

It will be the ability of managers to create value by organic growth that will differentiate the stellar businesses from the average performers.   Those with the capability to assemble management teams that will create value from the assets being acquired will prosper in the long run. This is certainly going to be the mantra of the next business cycle. The time to move is at hand.


Time to Move On!

Posted in Uncategorized by resultsman on October 2, 2009

For people in transition, perhaps that hardest thing is to know when to move on. For some, it might be facing the challenge of dissociating themselves from a previous employer. I did not understand the concept of moving on until I experienced the challenge associated with giving up this dream of buying and running a company that I had identified.
I wanted to make something exciting and real happen. All of the coaching and guidance tells you to look for that right opportunity that you really want. I thought I found it in a small chemical company that is focused in a business segment that I was familiar with. The business was for sale and everything seemed to be falling into place to make a serious run at buying the firm.
Here was this great little company based on a business and technical model that I am familiar with. Sales into a growing market, low market share with an opportunity to grow, a good manufacturing cost position and strong supply chain; what could be more perfect?
I spent a considerable amount of time researching the competitive trends, market potential, supply chain, earnings, and potential for growth. On the surface, everything appeared to be in order. There were a few warning signals here and there, but nothing that could not easily be explained away. Certainly, nothing that could deter this unemployed executive who was intent on creating his own American Dream.
There is a moral to this tale. Do your home work and most importantly, trust your instincts. If little warning bells are ringing, listen to them. Make certain that you are comfortable with everything. As hard as it was to accept, as much as I wanted this to be the right company and situation, it wasn’t! Do not act in haste or on emotion. Make sound business decisions based on fact, but trust your instincts. They were probably right in the past and helped to make you a success in the past. For me, it is time to move on.
So, What Is Next?
Perhaps you have considered moving on and diversifying into new areas.
My answer, carry on. Plant the seeds for growth just as you would in making a sales call. Continue to establish the network contacts. Make your sales calls on target companies as you would on a prospective account that you want to do business with. Implement the marketing programs that promote yourself and will create a demand for your products. In general run the business of “Me Inc.” with the full expectation that conditions will recover. Opportunities abound, either to create a business or to find a position within a company.
Repeat this message at company after company just as you would at any target account in a territory. Work to sell at all levels in the organization. That is, don’t rely on any single person like an HR manager. Learn to cultivate them just as you would a purchasing manager. Couple this with organizational networking. Things will work out.
Show Strong Leadership and Persevere-
Times will recover and business conditions will improve. This is a time to show strong, positive leadership. Don’t be reckless. Businesses and people have to persevere. They need leaders to encourage them to do this. Stay positive. As a nation we can (and will) work our way out of this present situation. Recessions, while they hurt, can be good for the economy as a whole. They create the platforms for future growth. Remember, it took almost 9 years to really get into this recession. It will take time to recover.