Which of the six deadly diversions have you encountered?
HELP US RESEARCH THESE SIX CRITICAL AREAS FOR MID-MARKET FIRMS AND THEIR CEOS
- Strategy Fixation vs. Strategy Tinkering
- Acquisition Mistakes
- Liquidity Crisis
- Interminably Long Decision Cycles
- Operational Meltdown
- Tolerance of a Sub-Par Leadership Team
CEO to CEO, a management consulting firm and mid-market thought leader, is focusing a research effort on these six critical mid-market problems. Robert Sher, Founding Principal, will direct the research, building on his own experience acquiring and integrating four companies himself. Willing mid-market firms (revenues $10M to $1B) will be interviewed either by Robert or one of his researchers.
THE BENEFITS OF PARTICIPATING
Companies that participate in the research effort will be entitled to a private post-research briefing with Robert to share the details of the research and key findings. With written permission from the people we interview, success stories may be a part of published articles.
The interviews are confidential. Any articles/publishing from the interviews will be approved and fact checked by the subject prior to publication. Case studies may be disguised if preferred.
DESCRIPTIONS OF THE SIX DIVERSIONS
Strategy Fixation vs. Strategy Tinkering
The manner in which a mid-market company CEO guides his top team to execute the firm's strategy can become a huge diversion. On one end of the spectrum, if the CEO forces his team to adhere 100% to the original strategy and ignores feedback that requires altering the strategy -- then the strategy can go awry. The other end of the spectrum is equally disastrous: a CEO who continually tinkers with the original strategy, or who in fact keeps changing it fundamentally.
- Is the CEO/visionary strong-willed with a deep sense of direction and purpose for the company? If so, how does he convey that vision/purpose to his top team and company, and how is he able to course correct?
- Is the CEO entrepreneurial in nature and full of ideas and interests? Has the firm successfully scaled one service or business without too many distractions?
- Has the CEO surrounded himself with a certain type of executive that mitigates or balances his behaviors in this area?
Several research studies over the years have concluded that about 50% of all acquisitions fail to deliver on the original premise for the deal. We have little doubt the success rate is any better for mid-market companies (from 20M to 1 Billion) Our focus is to understand what it takes for any given strategic acquirer to improve the odds of successful acquisitions.
- Has the firm made strategic acquisitions, and how did they turn out? If so, please describe them. Start with the company’s strategy, how M&A factored into that strategy, how targets were identified, vetted and acquired, and how integration was run.
- We are interested especially in case studies of important acquisitions that went really well, or really poorly.
Mid-market companies put their ongoing business at risk if they have a liquidity crisis and come close to running out of money. Hundreds or thousands of people can go without paychecks. The amount of money typically needed by a mid-market firm that has drawn down its reserves is usually much larger than any founder or CEO can offset by cutting his salary. The firm can’t raise “dumb money” because the amount it needs is too large.
- Has the firm, during its mid-market phase (over $10M) nearly run out of cash?
- If so, what caused the liquidity crisis? (i.e. economic downturn, litigation, customer failure, over-leveraged, insufficient budgeting, etc.)
- Please tell us the story of navigating out of the liquidity crisis.
- What was the cost to the business (i.e. distraction, high interest rates, harsh RIFs, decreased growth, etc.)
Interminably Long Decision Cycles
As a company grows, there is more to lose. Some top management teams in mid-market companies start playing to “avoid losing” rather than playing to win. Decisions are either over analyzed taking too long, or poorly analyzed, causing a restart of the decision making process. It’s often because no one in these firms wants to make a bad call, including the CEO.
- Has decision making ever been too slow, or too painful in the firm? If yes, why did it happen, and how did the firm fix its decision making process?
- What is the firm’s decision making process? Think about strategic decisions, as well as decisions that involved two or more functional divisions.
There comes a point in the lives of many mid-market companies when they go from being hectic and rushed, to overwhelmed, chaotic and hopeless. This is when the wheels are fully separating from the bus. It isn’t pretty. The signs are ones of employees yelling at each other, customers yelling even louder, vendors cutting off supply, resignations without notice, and much worse. Common causes are insufficient infrastructure, fast growth, excess complexity and underdeveloped processes.
- Has the firm ever gone through a hyper-growth phase? Tell us how well the team executed.
- Who in the firm manages operations and builds internal systems? What are they like, and what is their background?
- Does the firm have highly customized products and services with high customer intimacy?
- How would you characterize the strength of the firm’s balance sheet over time?
- Does the CEO have a sales bias, an operations bias, or a finance bias?
Tolerance of a Sub-Par Leadership Team
Mid-market CEOs (especially) and the members of their management team are far more susceptible than their peers in smaller or larger companies to tolerating under-performing leadership teams. These can include toxic employees they are afraid to dismiss, or leaders that are “liked” but are no longer performing at a high level.
- In the last ten years, has the firm had a sub-par leadership team?
- Has the firm had executives that consistently underperformed, yet weren’t dismissed? Why?
- Tell us of any leadership level employees that had an adverse effect on the company culture?
WHERE CONCLUSIONS WILL BE PUBLISHED
The learnings from of the research work is delivered in several places. Most immediate is on my Forbes.com column. Deeper articles come out several times a year in my newsletter. Each of the six chapters of the book will begin as a detailed white paper, from which a chapter will be distilled. Lastly, my next book, tentatively titled, “Six Deadly Diversions for Mid-Market Companies” will be published in 2013/14.
ABOUT CEO TO CEO
CEO to CEO improves the skills of chief executives of mid-market companies who are navigating major shifts in their business or marketplace. We help these CEOs rapidly elevate their game and lead their companies to the next level and beyond.
Robert Sher, Founding Principal of the firm, is a columnist on Forbes.com and has published nearly 200 articles about mid-market business leadership and has written a book titled The Feel of the Deal: How I Built my Business Through Acquisitions. As an operating CEO, he successfully acquired and integrated four companies.