• A company’s clients identified high value services that they wanted the company to expand. The company saw these services and activities as just an accommodation to the clients. As a result, the company reorganized and expanded their offering to facilitate these services and now gets paid for the value.

• Despite a very long and successful relationship, a company’s most important client expressed concern that the company was falling behind the times. The company was actually a leader in its industry, but it was not communicating that fact. It had a very stale website, and never communicated about their new services or about the important role they played in their industry’s regulation by the FDA. As a result, the company made a conscious effort to communicate its expertise through article writing and speaking appearances by the senior management. That same client recently called the CEO and said, “We hadn’t thought about you for this job until I saw you on the cover of our industry magazine today. Let’s talk.”

The catalyst in both of these situations was a strategic conversation with key clients. The results of this type of conversation should be examined together with external research, industry meetings, and internal knowledge collection. The patterns that emerge can become an excellent catalyst and inspiration for change in operations, marketing, service, communication with clients, and product mix.

If you are ready to undertake some strategic conversations on your own, please read our article in The Handbook for Business Strategy for practical hints on how to do it.

- Michael Oleksak (oleksak@trekconsulting.com)

Fatcow.com

The company we use to host our website is a real success story. The company, named FatCow (yes that is the company’s name), was started by Jackie Fewell in Albuquerque, NM, Mary’s home town. They have grown by more than 25% per year over the last few years with healthy profits. They had been approached a number of times in the last couple years to sell their business. Fewell reports that last spring, when she started to consider the possibility of selling, she made one of her best decisions ever; she prepared a book about her company that told the story of how and why they had built it. She controlled the message and controlled the process. In the end, Fewell had three bidders for the company and sold it to Endurance, a company based in Burlington, MA. Read more about this story in the New Mexico Business Weekly.

Fewell thought proactively about value. Investment bankers are great at maximizing value at the moment of a transaction. But at deal time, it is too late to make any significant value enhancements. The real money is in the work that company management does in the years leading up to a transaction—focusing on what will build the maximum value for the company.

Taking this perspective will ensure the long term success of your company and create realizable value for your shareholders. To learn more about this idea, read our recently published article in M&A Today (announced below).

How Industries Evolve
By Anita McGahan

The author of How Industries Evolve, Anita McGahan, spoke recently to the Institute of Management Consultants (www.imcne.org). Her presentation was intriguing and led me to read this very dense but powerful book. The conclusions are compelling because they are based on ten years of research, covering seven hundred industries. McGahan identified four basic industry trajectories, and she outlines the strategic choices available at different points in the evolution of each. The four trajectories are named: progressive, creative, intermediating, and radical. If you have ever struggled to understand your industry in terms of the product life cycle, you will probably want to learn more about these four models, only two of which follow the traditional life cycle of fragmentation, shakeout, maturity and decline.

McGahan asserts that an industry fits into only one of these categories at any given time; so identification of the applicable paradigm is critical. Her analytical steps for identifying the right paradigm are not simple enough to explain in this single paragraph but neither do they seem overly complex. These are ideas with which I look forward to working, and I promise to report back on them in future issues after giving them a test drive with some real-life situations. Also, I would love to hear from you about any experience you may have with this framework in the future. You can read the first chapter of this book by clicking preview at Harvard Business Online.

M&A Today just featured an article by Trek principals on building private company value called “The Ultimate Challenge.” Read the full text of the article.

We apologize to any readers who had difficulty with the newsletter last month. We experienced some problems with our web registration that blocked some of you from downloading graphics and/or clicking on some hyperlinks. Please know that a fully functional version of that newsletter is available on our website.

Next month, we will ask, “Are you satisfied with your performance this year or do you need a mid-year correction?