Vision & Execution’s Weblog

Despite the pipeline of 60 venture-backed companies currently in registration for IPO in 2012, M&A is still the most common exit for most startups.  And prognosticators forecast an improving M&A market after the slowdown in the 2^nd half of 2011.  So how do companies who position themselves for acquisition and those who acquire them deliver on the value they anticipate.  Industry data reminds us time and again that the failure rate for mergers and acquisitions hovers between 70% and 90% despite the annual $2 trillion spent every year.

A key criterion for success when acquiring for innovation’s sake, as opposed to scale economies, is laying the foundation for fundamental change in both the business model and the organizational culture.  Buying what could be considered disruptive or bleeding edge IP or products means that business as usual doesn’t cut it.  Few companies who go on buying sprees soften the beachhead internally for the degree of change required.  Incentives and other management metrics are not aligned in advance with the potential of the new technology so old and new management are caught in the crossfire while making important strategic decisions about budget and other business priorities.

Achieving the potential business value of an acquisition means losing the emotional attachment to the cash cow business(es) that enabled the acquisition in the first place.  It requires a clear understanding of where the creative destruction within the organization should occur and puts incentives in place for the organization to create a new business from the ashes.

Let Vision & Execution work with your teams to facilitate decisive action around new business models and product roadmaps as you plan for or seek to integrate innovative acquisitions.

Despite the bearish predictions for the economy from 2012 prognosticators, according to the December Economic Conditions Snapshot research sponsored by McKinsey, executives are more optimistic than they were in September.  Although not as optimistic as they were in June, the majority of North America executives expect corporate profits to rise; other regions are more conservative.  Concerns over low consumer demand appear to have executives holding off on M&A activities and capital investments.

Consumer demand presents greatest concern for economic growth

If concerns about low consumer demand hold true where will companies achieve their growth?  Market share!  Companies who better understand customer needs and deliver their solutions more effectively will stand to gain from their competitors.  While an obvious statement, it’s amazingly difficult to execute.  Systems, internal folklore, and politics all get in the way of staying focused on customers and meeting or exceeding their expectations.  As you think about your New Year’s resolutions, why not resolve to break down one of these barriers to growth?

Vision & Execution specializes in identifying how to address the customer needs that will propel your business forward.

The June 2011 McKinsey Global Survey on Economic Conditions suggests that executives expect to achieve corporate profitability despite lower expectations for their national economies to rebound. It appears that despite no growth in capital expenditures and stable or decreasing workforces that companies will increase their profitability. Well profitability yes, perhaps, but not top line revenue – fewer expenditures plus expectations for a reduced risk for inflation should keep costs in check.

In a separate piece of analysis by McKinsey – Sustaining top-line growth: The real picture – their data showed how tough it is to beat the market. Exhibit 2 shows that corporate revenues, on average, tracked neatly with overall market conditions. So how will your company beat the market, or are you content to ride the wave?

If you’re looking to beat the market, please contact Vision & Execution to hear about our many tools and services to help your drive strategic growth.

Vision & Execution helps companies align your marketing and sales initiatives with customer value to achieve your sales goals. We delivers the insights you need to leverage marketplace realities to drive higher sales with greater profit margins. We provide you with the strategic and tactical plans to achieve your growth objectives. Our broad business and technical acumen put you on track to realize your full revenue potential.