Acclaro Growth Partners' M&A and Strategy Weblog

Examples of Strategic Research-Based Consulting Projects

After years of working on strategic research assignments, we recognized that a comprehensive list of project types would be helpful for clients and prospects.  There are nine types of strategic research projects that we have conducted.  Reviewing this list may help you in determining of you have a strategic research need, and how to describe the need to ensure a strategic research firm is focused on the appropriate task at hand.

New market entry Go/No Go support -- Assessing the size, growth prospects, opportunities and threats, critical success factors, trends and dynamics, customer needs and competitor capabilities and intentions can be extremely helpful in making a decision about whether a new market is worthy of entry.

Market map.  Particularly helpful for a CEO who is new to the organization and the industry sector, a market map provides a detailed primer on the landscape of the marketplace, customer segments, competitive positioning, market opportunities and threats -- as it all stands today. 

Prioritizing channel partners for quick wins and growth – We research and report on the down and dirty of which trade shows to attend, which journals to buy, where to promote and advertise, how to influence and build the brand for the marketplace, which partners to seek alliances with, etc.

Developing a three year plan with goals, tactics, milestones, champions, accountabilities – We create a tactical roadmap designed to fulfill the strategic goal(s) of the company or business unit.  After conducting external research, in tandem with management, we offer analysis, options, and recommendations.  After discussing our recommendations and managament's ideas, we collaboratively develop the actionable plan for management to execute over time.

Evaluating an existing business plan and suggesting improvements –   We have evaluated, after conducting extensive external research, the elements of the company’s existing strategy using simple evaluation criteria.  We then offer up recommendations of our own to augment this strategy. 

Prioritizing market segments for growth – No company can, or should, pursue every segment with equal energy.  We determine which product, end-use, or application segments represent the greatest opportunities for growth.

 

Prioritizing customer segments by geography, product area, or channel -- Extensive qualitative feedback from customers on expected purchase volume levels, loyalties to existing suppliers, unmet needs, switching costs, and purchase decision criteria can be quite helpful in deciding where to focus sales resources.

 

Merger/Acquisition Market Due Diligence -- We evaluate the target's marketplace to determine its attractiveness, their customers to determine loyalty, and the competitors to understand their capabilities and intentions.  In the end, we offer a "thumbs-up" or a "thumbs-down" on the attractiveness of the acquisition or merger target.

 

Help solve an external market, competitor, customer, or supplier "problem "-- Solving large-scale problems, that are not going away on their own, often requires facts and analysis.  We identify the opportuniites and lessons to be learned from a dying market, a major lost customer account, or a formidable competitive rival.

Considering each of these nine examples, are there situations or scenarios that your company is facing that could benefit from external strategic research?  If so, feel free to call Kit Lisle, our Managing Partner on 703.860.3355 with any questions or comments or feel free to contact him via email: kit@acclaropartners.com 

Our web address is www.acclaropartners.com

Organizing Sales Assets for Maximum Effectiveness

Primary research, which for us means telephone conversations with customers, competitors, and other market experts, can be extremely useful in determining how to orient salespeople.  Whether your salespeople are organized by geographic regions, product types, end-use markets or application areas -- primary research will result in cold, had, facts to help you decide where to apply more and fewer resources.  And doing so, will help you take advantage of opportunities you would otherwise be likely to miss.

From a geographic standpoint, suppose you have sales assets spread throughout Europe, haphazardly covering the continent largely based on where these salespeople happen to live.  Wouldn't it be nice to know that customers in the Benelux countries are most likely to have a high need for your product.  Or that customers in Scandinavia not only have a need, but place "Price" as very low on their hierarchy of purchase decision criteria.  Or that customers in Poland feel ignored because there are no suppliers nor sales reps appropriately serving that market...These kinds of insights, combined with the knowledge of where competitors are active, and where customers have relatively low interest levels, can be quite helpful in helping you decide where to allocate your sales resources.

And if your salespeople are organized by product area or end-use application area and not by region, it can be equally important to conduct primary research.  Rather than reactively assigning salespeople to product areas that have historically high levels of demand, proactively place salespeople where demand is on the increase.  The best way to do this is to have a qualified, objective, third-party develop insightful, dynamic, two-sided conversations with customers.  The issues to address with these customers, prospects, and lost accounts include unmet needs, trends and dynamics, purchase volume expectations, switching costs, purchase decision criteria, and so on.  Comparing the opportunities across major product areas will enable you to decide where to allocate more sales resources.

Similarly, if your sales team is organized by end-use application or end-use market served, you will want to conduct primary research to address these same issues -- unmet needs, trends and dynamics, purchase volume expectations, switching costs, purchase decision criteria.  And you will compare the presumed opportunities of each end-use application or market served.  The most exciting ones are obviously where you will apply more sales resources.

Applying sales resources based purely on historical sales volumes is worse than looking in the rear view mirror.  You may be missing out on opportunities in which the customer locks in a relationship or prefers a sole-supply situation.

Primary research results in the quantitative and qualitative insights that enable you to allocate sales resources proactively to take advantage of current, and future, customer requirements. 

High Level Retail and Consumer Trends (Based on 2009 Projects)

Considering our retail and consumer project experiences in 2009, we came up with a list of five trends that seem to be fairly pervasive.  Two concern retailer expectations for consumer product suppliers.  And three involve opportunities that retailers are seizing on their own.  Below we share with you our observations:

Retailers are increasingly relying on vendors for category management – A concept that Wal-Mart started decades ago is now the norm rather than the exception across almost all retail channels.  Retailers recognize that their vendors have their fingers on the changing pulse of the consumer in their category far better than they do.

Retail store layout changes are far more dynamic than in the past – Floor plans are changing more quickly than ever to accommodate emerging niches such as wellness, organic, convenience.  Numbers don’t lie and retailers will do anything to optimize their sales per square foot.

Green vendors are in demand – Green is rapidly becoming a critical attribute in almost every consumer category.  Expansion of ingredient labeling is bringing it to the forefront.  Supply chain optimization to reduce your carbon footprint now a major talking point.  Watch Earth Day 2010 as an indicator of this trend….

Consumer price sensitivity has professionalized store brand management – Generic store brands are bigger than ever.  Retailers are hiring top guns from consumer package goods companies to build their store brands and are using the same branded consumer product goods rigor to do it.

China is now more than just a source of cheap product – With US consumption in the doldrums, and western Europe not much better, many consumer product companies and retailers are looking east for growth.  While expectations are modest, getting the experience early is expected to generate leadership over the long run.

For a more detailed examination of the issues, to think through implications for your company, or to pose a question, simply give us a call or send an email.  Kit Lisle is the Managing Partner, and can be reached on 703.860.3355 x105 or by email, kit@acclaropartners.com

 

Considering New Market Entry? Learn the Eight Strategic Research Steps that Will Help You Decide on Whether to Pull the Trigger

As you contemplate a new market, put that market opportunity to the test.  There are eight simple questions to ask of your company and your potential new market.  Answering these questions may require some research, but will help ensure your company makes a sound decision.

 

1.    What are your core competencies and how well do they match the critical success factors for supplying this market?

2.    What is your unique value proposition for this market?  In other words, which of your core competencies are truly unique (versus competitors) and inherently valuable and necessary (to customers)?

3.    How attractive are customers in this market?  Do their purchase decision criteria align with your unique value proposition?  Are they willing to pay for your unique capabilities? Do they have consistent needs?  Are they willing to consider a new source of supply, or are they loyal to incumbent vendors?

4.    Is the price that your company expects to charge in line with customer expectations of value?

 

5.    Does your company have access to the channels necessary to reach end-customers?  How difficult will it be to access these requisite channels?

6.    Will your company be able to promote its unique capabilities effectively to build brand equity with customers?  Remember, customers brand you; you do not really brand your company.  And branding is a function of three steps: 1.) Customers must receive a clear message that is credible  2.) The message must convey uniqueness  3.  The unique characteristic must also be important and meaningful in the purchase decision process for the customer.

7.    Is your company truly unique versus the competition?  What are their strengths and weaknesses?  What direction are they heading in?  Where do they see the opportunities of the market, and how are they going after them?

8.    Is the market as large and attractive (in terms of growth and profit potential) as you think it might be?

 

These questions are not rhetorical; they require real answers.  And the answers should not be based on gut feel, historical experience and wishful thinking.  The answers should be grounded in facts, and lots of them.  So who conducts the research necessary to answer these questions? 

 

Acclaro Growth Partners is a research-based strategy consulting firm focused on helping clients make decisions based on facts.  New market entry is a typical decision in which we assist clients.  Contact me at kit@acclaropartners.com to learn more.

Portfolio Company Market Research to Support Actionable Planning

Portfolio Company CEOs who cannot articulate a clear, step-by-step path to growth over the next twelve to eighteen months are not being fired.  They are not being criticized.  They are not even evoking disappointment in the eyes of their board.  In fact, in this economy they are being supported, handed resources, and allowed time – time to conduct the fact-based research necessary to identify pockets of opportunity. 

 

The pockets of opportunity are out there – unmet needs of customers, prospects and even lost accounts speak volumes about opportunities, particularly when consistent themes emerge across customer segments.  And competitors who are asleep at the switch are missing out on market or customer opportunities – which presents opportunities for your portfolio company.  Moreover, competitors who are getting it right, who see a clear opportunity and are developing strategies and tactics to seize them, can be emulated.  Market trends and dynamics, constantly evolving, create opportunities for those who see the trends first and capitalize on them. 

 

While the opportunities are there for the taking, seeing them, gathering enough pieces of the mosaic-like puzzle to enable a clear picture to emerge, requires expert resources.  Look for research-based strategy consulting firms experienced in gathering detailed insights about obscure, niche sectors.  There are five critical criteria that should be evaluated when selecting a research-based strategy consulting firm to work with management to identify growth opportunities.

 

They should be able to gather plenty of data in segments where research may have never been conducted before.  And these research firms  should also be comfortable analyzing, developing options and presenting clear recommendations. 

 

These recommendations for management should be as actionable as possible.  Establishing rapport with management early, often, and with plenty of humility is a critical component of actionability.  If management does not feel comfortable with the messenger, it is unlikely to accept the message.  The analysis and recommendations should enable management to make a clear, simple decision based on plenty of supporting facts. 

 

The research should be designed, in other words, to test a hypothesis (do we enter this new market or not; do we develop this new channel or not; do we enter this new geographic market or not; etc.). 

In conclusion, there are five critical criteria to evaluate in selecting a research-based strategy consulting firmto work with your portfolio company:

 

 

 

1. Ability to design the project to test an hypothesis or hypotheses

2. Competence in developing rapport with management

3. Proven skills in conducting deep-dive research in obscure, niche markets

4. Delivery beyond research -- to analysis, options, and recommendations

5. Segue directly to a tangible, tactical roadmap to growth developed in concert with management, for management to execute

 

 

 

 

For more information about our processes, visit our website

Re-Diligence for Private Equity Owners

Private equity investors should conduct a strategic “Re-Diligence” exercise at least once every three years for each portfolio company.  Regardless of how well the company is performing from a financial standpoint, private equity owners should look for actionable next steps and consider carefully whether the time is right to re-invest in the business, milk it, or sell it.  The process involves strategic research and analysis, and reveals the action steps the owners and managers would take if they were acquiring the business for the first time today.

 

Below is a list of considerations owners and management take into account during a “re-diligence” exercise:

 

Go/No Go. 

·         If given the opportunity to buy the business today would we do the deal? 

·         If not, is now an appropriate time to sell? 

·         What should we do to improve upon the attractiveness of the business today, to make it more attractive for a prospective acquirer?

 

Strategy. 

·         Does the strategic direction of the company make sense, given internal competencies, and external market trends, customer needs and competitor capabilities and intentions? 

·         If not, how much of a realignment would be prudent at this time?

 

The Market. 

·         Are we competing in the most attractive segments of the market, where growth is more rapid, customer needs are more discreet, and competition is less intense? 

·         If not, what are the steps to serve this ancillary segment?

 

Customers. 

·         Given the evolving purchase decision criteria of customers and prospects, and their unmet needs, are our capabilities still aligned with their needs and interests? 

·         If not, how much of a change should we be making? 

·         Which customer/prospect needs should we be addressing first?

 

Competition. 

·         Are we at least as well positioned in the market vs. competitors as we were when we acquired the business? 

·         How have competitor capabilities evolved? 

·         What are competitor intentions in the market? 

·         Is there anything to learn from these competitors’ strategies? 

·         Should we be emulating them or carving our own path?

 

Human Resources. 

·         Given the size and stage of our business, do we have the right people in the right places doing the right things to accomplish our goals? 

·         Are the incentivized and motivated? 

·         Are they communicating appropriately? 

·         What HR changes would we want made if we were acquiring the business today?

 

Operational Efficiency. 

·         Across the process steps that must be carried out in order for the company to receive revenue, has anything occurred to make these processes less efficient? 

·         Are the steps being carried out in the most logical order?  Can some steps be consolidated or eliminated? 

·         Are there more efficient means of executing these steps?  If so, what are the costs and benefits of changes?

 

Summary.

Consider which of the above actions would rise to the top and need to be carried out. 

·         In terms of difficulty, how would they be prioritized? 

·         In terms of impact on addressing the strategic goals of the business, how would they be carried out? 

·         Who is responsible for executing each of these actions? 

·         What is the timeframe for carrying them out?

 

Executing this list of “re-diligence” action items on at least a three year cycle ensures that your investment remains attractive to potential acquirers.  And it is also likely to improve performance, which may have a direct impact on the bottom line in the near term, as well.

 

The Frantic Search for Market Share Numbers During a Recession

Are we losing share?  Revenues are down.  Future prospects are gloomy.  Is the market down as much (or more) than we are?  If we could actually gain share during this recession, it could have exponential benefits when the economy turns around.

Unfortunately, senior-decision-makers often place too much emphasis on the simple market share number.  Suppose your market share slips from 34% to 31% in a year.  Now what?  What is the actionable step your company will take to rectify the situation? 

Unless you have a solid understanding of where the pockets of unhappy customers are, and what their unmet needs are, it will be difficult to take action.  And, unless you know where the competitors are heading, and why, you won't know if you are fighting an uphill battle against a better-equipped enemy or seeing opportunities to take share from a clueless competitor that is driving itself off of a cliff.

While it is important to detemine market share, the exercise should take place in a broader context.  At the same time you hire a consulting or research firm to establish market share breakdowns, consider the following issues, as well:

• Market trends and dynamics
• Market opportunities and threats
• Market size and growth
• Market segmentation
• Customer unmet needs
• Customer (and competitors' customer) loyalty
• Customer purchase decision behaviors
• Competitor capabilities and changing competencies
• Competitor perceptions of opportunities and threats
• Competitor intentions to seize these opportunities (or not)

By gathering all of these insights, you will be much better-equipped to make rational decisions on concrete actions to take, given your changing market share numbers.

The Benefits of Competitive Analysis During a Downturn

When your market is not growing, taking share from competitors is even more compelling than it is during good times.  And it may be easier to win share during a downturn (when competitors are more focused on reducing their costs) than in a boom economy (when competitors are typically implementing growth-oriented tactics).  In other words, your competitors may be taking the eye off of the “customer relationship” ball during the recession. 

You may need to hire a competitive intelligence/analysis firm to help gather the data.  What you are looking for is a basic understanding of your competitors’ intentions.  Are they planning to reduce prices to gain share, restrict new product development, reduce customer interface activities, curtail marketing expenditures, adjust relationships with suppliers?  Through observations of their activities, reviews of secondary material (published articles), and, most importantly, conversations with employees, you are looking for evidence of their plans and intentions.

Once you understand the general direction they are moving in, you should try to discover their objective.  Where do they see opportunities?  If their intention is to reduce prices, is it because they see an opportunity with an emerging segment of the market?  Or are their activities motivated by opportunities they see internally to reduce costs?

If cost reduction is the opportunity they see, we may be interested in understanding the extent to which they are currently inefficient, and how that might change.  What kind of manufacturing equipment are they running?  If it is possible to determine line speeds or production volume, that would be helpful.  Are they using a sophisticated process of manufacturing or assembly?

These insights are obviously difficult to gather.  Perhaps the simplest way of gathering useful intelligence on a competitor is by talking to their existing and recently lost accounts.  What are their unmet needs?

By analyzing the directions that competitors are moving in, and comparing those insights to the needs of various segments of customers, you may discover pockets of opportunity.  Now your choice is to take advantage of the “white space” opportunities you see where no competitor is focusing, or to try to compete directly with a competitor that may be going after the same opportunity you see.  Best wishes!

What is Strategy?

While strategic planning is intimidating to some, we can break the process down into six simple steps:

1.  What is the primary goal we are trying to achieve over the next 12 to 36 months?  Be as specific as possible, but limit the answer to one goal.

2.  How will we accomplish the goal?  What are the three to five big-picture actions that will enable us to accomplish this goal.  We'll call these strategies.

3.  Now, take each of these strategies and think more specifically about how they will be executed.  What are the three to five steps that must occur in order for each strategy to be carried out.  These sub-sets of strategy can be called tactics. 

4.  Who is responsible for carrying out each of these tactics?  Mid-level managered probably need to be involved at this point.  We will call them "champions" of each tactic.  There are somewhere between nine and twenty-five tactics, so one or two people cannot execute them over the next twelve months, which is the time-frame our strategic plan refers to.

5.  Speaking of timelines, we will need to explicitly address when each tactic will be accomplished.  Some will take a lot longer than others.

6.  Results:  What are the measurements of carrying out each tactic?  In other words, can we quantify their impact on the Goal?  If a tactic does not seem to address the Goal, we may consider eliminating it at this time.  If the Goal is, say, gain a million dollars in ebitda by the end of FY2011, we would specify how much in dollars saved or earned each tactic impacts the goal.

It starts, and ends, with the goal.  Then we answer "how" we will achieve the goal.  And finally, we describe who performs each tactic, how long it will take, and what the expected result of each tactic is.  There, not that complicated now, is it!  Just visit our website for more background information www.acclaropartners.com or call Kit on 703.434.3597.

Coping with a Down Market: Eight Steps for Dealing with a Troubling Economy

When faced with a downturn in the economy, many companies continue to operate, business as usual.  What they should be doing is making eight simple adjustments. 

1.     Reconnect with your best customers in a formal way.  Make a point of telling them how valuable they are to your business, and ask them in no uncertain terms what you can do to make life better for them.  If the requests are reasonable, fulfill them.

2.    Consider new market entry.  Not every segment you serve, or could serve, is down.  There may be opportunities to become more active in a growing segment, or one that allows greater room for profit.  Now may be the time to make the move into an ancillary segment.

3.    Study your competitors to learn from their mistakes (and their strengths).  What are they doing so well that you should emulate them?  What are they doing so poorly that they are creating opportunities for you?  In a down economy, some competitors are destined to make rash decisions that negatively impact their customers or their brand.  Become aware of the latest opportunities and threats being created by competitors.

4.    Become Operationally More Efficient.  Evaluate the process steps your organization carries out in order to earn revenue.  Are all of these steps necessary?  Are they occurring in the right order?  Can anything be done to improve the efficiency of these steps?  Are there unnecessary costs involved that can be eliminated?  While the most obvious way to cut costs may be to reduce headcount, there are often opportunities for working smarter, as well.

5.    Communicate, Compensate, Collaborate (and Organize) – Are you Taking Advantage of your Human Capital?  While reducing headcount may be the only HR initiative that comes to mind when the demand goes south, your company has several options at its disposal for increasing the value of your human capital.  Communicate with everyone to ensure they understand their personal impact on the business and the business’ potential impact in real time (positive and negative) on them.  Compensation schemes may be adjusted to better reflect the realities of the economy, and to tie compensation to desired performance.  Re-organizations to help people focus on the specific strategic objectives at hand, can help, as well.

6.    Refine your Strategy to Define How you will Accomplish the Revised Goal, Given Current Economic Conditions.  It is important to get the entire team aligned and focused on the same priorities, especially when business is more competitive.  Who does what differently, when, where, how, and why?  How will they be held accountable, and how will they be rewarded? 

7.    Tweak the Brand Message.  It takes time to build a brand.  Customers and prospects brand you; you cannot brand yourselves.  We can merely influence the perspective that users have of our brands.  In a down economy, the message may need to evolve subtly to convey a real change in buying behavior.

8.    Forecast the Worst Case scenarios.  In order to be better prepared than competitors, it makes sense to think about the Wildcard scenarios that may occur in your industry, and then develop a planned response should they occur.  Doing so will make you more confident in the short term, and potentially more successful should disaster strike in the longer term.