May 17, 2010

Is It Time to Change Doctors?

A 1987 episode of Cheers called “My Fair Clavin” included a snippet of dialogue between psychiatrist Dr. Frasier Crane and Cheers barmaid Carla LeBec, in which Dr. Crane inquires (speaking to another character, Rebecca Howe), “May I suggest something that seems to have worked for many of my patients?” and Carla interjects, “What, changing doctors?”

This nearly 25-year-old exchange offers compelling food for thought for today’s private equity leaders and executive management teams. Executives have certain outside “doctors” to diagnose situations and assist in overall corporate decision-making and the implementation of those decisions. In a rapidly changing business environment that increasingly punishes strategic mistakes, as we shift our focus from operating within an “economic downturn” mindset to an outlook of stability and perhaps even growth, we might want to give Carla’s recommendation some serious consideration and change out some of the corporate “doctors” we have looked to for counsel in the past.

While inside institutional knowledge of “how we got here” may provide short-term actionable perspective, with everything that has changed in our business climate within the past 18 months, fresh eyes focused on current conditions and a clear perspective of the future might result in more strategically relevant answers. 

May 3, 2010

Hanging On in 2009, Letting Go in 2010

I recently came across a quote from author and publisher William Feather that I believe aptly characterizes the underlying dynamics that determined winners and losers in the business climate of 2009: “Success seems to be largely a matter of hanging on after others have let go.”

But a tenacity-oriented mentality, focused on sustaining operations within an existing business model, or continuing the pursuit of long-held business objectives, does not appear to be appropriate as we approach the mid-point of 2010.  Because growth opportunities are now visible and business issues change rapidly, “hanging on” to irrelevant models or objectives can put a company significantly behind in terms of maintaining -- let alone enhancing -- a competitive advantage. Instead, the overarching strategy for 2010 centers around a willingness to “let go” at the most opportune time.

For private equity funds, this means turning up the merger and acquisition machine by shifting most of your attention from existing portfolio company operations to bolt-on acquisitions for the current portfolio and new platform acquisitions.

For family business owners, this means finding new roles or letting go of some existing team members who cannot grow with you and seeking out outside talent that has been through the next phase of growth in your company.

For C-level executives, this means changing your mindset from defense to offense. The macroeconomic environment has just punted the ball back to you after 18 months.