Discovering New Pathways

Today, businesses large and small are being buffeted by macroeconomic headwinds – rapid technological change, advancing foreign and domestic competition, constant pressure to improve customer value propositions, maintaining sufficient cash flow, growing revenues and profits, and accessing capital – which are all competitively threatening their very existence. In the face of impending U.S. budgetary economic cliff hanging and healthcare restructuring, this is especially relevant to the medical device industry sector.

Perhaps, throwing off out-dated cloaks, acknowledging the time proven maxim of “Thinking that we know – keeps us from knowing,” could be just what is needed to penetrate barriers and discover fresh pathways to not only resolve intractable business growth problems but to transcend them. One might consider it as modern day enlightenment wherein the limitations of conventional business growth approaches are earnestly questioned, or at the very least expanded, to include alternatives with groundbreaking potential by viewing them through a wider, clearer prism.

Conventional approaches to business growth typically cause enterprises to peer through a relatively narrow prism and only perceive two alternate pathways: 1) Organic or 2) Non-Organic. The alternatives appear to be black or white with nothing in between: either remain fiercely independent – go it alone or acquire to sustain necessary growth and competitiveness. Could these perceivers be missing a wider spectrum of higher potential – hybrid options presenting a wide range of strategic alliances – synergistic partnerships or business combinations that individually customized to their most pressing challenges?

Let’s look at an example where we have Enterprise-A that has been getting by in the past with relatively steady, flat, slightly increasing or slightly decreasing performance. The company is privately held with limited R&D, insufficient marketing resources, less than stellar sales organization, crowded distribution channels, intensifying competition threatening to nullify the core value of its – competencies/strengths. Concurrently, Enterprise-A’s customers are demanding more for less (after all that is what the competition is offering and the customer’s customer is demanding) while shareholder wealth is almost entirely concentrated in the business compounded by the financial risk associated with personal bank debt guarantees.

Trapped between a sincere loyalty to management/employees, family members driving the business and challenges similar to the foregoing, Enterprise-A finds itself in an untenable position that seemingly has no pragmatic solution, least of all a solution that satisfies ownership’s most important personal, financial, and operating priorities. Yet who wants to wake up and find they are a dinosaur?

Ironically in the same or adjacent industry, there is Enterprise-B, larger or similar in size experiencing related challenges but of a different nature and scope. When we open up a trust-based dialogue founded upon potential mutual benefits, we discover complementary product lines, talented human resource expertise, technologies, capital structures, customer bases, distribution channels, and compatible strategic visions. All of these can dramatically enhance each enterprises competitive strengths, reduce their weaknesses, drive higher levels of revenues and profitability – even expand management/employee career options all with less risk and volatility. Sound unusual? Situations like this, properly identified and nurtured are much more common than one might think.

The possibilities can be further illustrated by a recent real life development with two enterprises in the same industry. Initially each enterprise rejected the notion of combining their businesses for multiple reasons on multiple occasions, but progressively began to recognize the compelling benefits of combining forces. Shortly after they forged an alignment, one of the enterprise’s largest customers was touring the other enterprise’s plant and immediately recognized how the combined enterprises products/services presented advantages the customer could leverage.

During the introductory site visit, the customer revealed for the first time its long-standing reservations about the limited size, capacity, and capabilities of their previous stand-alone supplier. The customer then volunteered to help the combined enterprises expand their scope and volume of business in every way possible. Almost immediately, the business combination synergies exceed both enterprises’ expectations. They are not only both in a stronger competitive position – making more money – having more fun doing what they do best – but now performing better than ever.

Unbelievably, there are a multiplicity of business growth alternatives and solutions harboring the potential to result in 1+1 equaling 3 or even 1+1 equaling 4+++. To practically realize this potential and to transform growth simply calls for opening our minds to pathways we never believed could be navigated or to piercing growth barriers we never thought could be penetrated.

Middle Market Solutions LLC
Wayne, PA
www.middlemarketsolutions.com