Strategy First!
Attempting a bold move without a clear strategy will rarely succeed. Following a disciplined strategy process ensures that tradeoffs are considered and that profitable opportunities are not ignored
Elements of a Strategy Process
At its purest level, strategy seeks to determine the optimal way of getting what you want in light of current constraints.
Articulate Your Goals
Clarity about the final destination will not only kick start your journey, but will also provide you with a benchmark for any potential strategy considered.
Evaluate the Status Quo
An impartial self-assessment is required to uncover new sources of value, identify opportunities, and mitigate weaknesses.
Consider Multiple Pathways
There is no one right way to achieve your goals. Each unique path offers a different tradeoff between risk, reward, speed, and effort. Explore each strategic pathway to reasses your goals.
Know Your Timeline!
Time is the most important constraint. Unlike capital or resources, time is the only finite resource. This is why Crossroads uses the timelines below to help clients formulate appropriate strategy.
1 Year Timeline
While transformation changes are impossible, operational improvements can help improve valuation and allow owners to ride out short term downturns.
3 Year Timeline
The three year timeline allows for significant improvements to be made to a company. Operational changes, strategic divestitures, or bolt-on acquisitions can be viable solutions.
5 Year Timeline
Order of magnitude jump in valuation is attainable. Transformative change is possible, long-term projects can be implemented, and vast resources are available for deployment.
The Three Choices: Buy, Sell, or Build
Operational excellence is the prerequsite of successful transformation. Yet, on their own, incremental improvements cannot take a business to the next level. Only a bold move can help you reach the next peak.
Buy
Buying a company, an asset, or a capability can rapidly transform an organization. The right acquisition can serve as a force multiplier for your current business, can help you overcome barriers of entry, and can also help you quickly take advantage of fleeting market opportunities.
GET STARTEDSell
At its most basic level, selling will allow you to monetize your business achievement. For organizations not looking to exit, selling a business unit or licensing out technology you cannot leverage organically, will let you regain focus, redeploy capital, and avoid a slow decline.
GET STARTEDBuild
Building a unique and successful capability, product, or business is the most rewarding thing an entrepreneur can do. Yet building is the slowest and can be the most resource intensive activity a company can engage in. With the right capital partner, building can offer superior results.
GET STARTEDCharting the Path Forward
Crossroads Capital offers a unique process blending market research with advanced financial modeling to help companies select the best road for their corporate development journey.
Step 1: Know Your Environment
Effective strategy is never created in a vacuum. You can’t change the world around you, and so, Crossroads recommends that all decisions start with a fresh review of the operating environment including: market size and trends, competitive dynamics, regulatory priorities, political risks, technological disruption, and changing customer needs.
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Step 2: Find Your Market Fit
The highest risk-adjusted value occurs when your company fully leverages its internal comparative advantages in the markets with the highest impact. To do so, Crossroads recommends that clients conduct an objective introspection of company capabilities, resource constraints, public perception, existing products or know-how, risk tolerance, and current shareholder goals.
Step 3: Generate Options
Once strategic choices have been made, these decisions reverberate throughout the organization and impact product R&D priorities, pricing, hiring practices, branding, market positioning, investments, and capital structure. Crossroads recommends that clients use a set of tools to generate as many ideas about how to attain the desired state, based on the strategy selected.
Step 4: Compare Options Quantitatively
Clarity of ideas is a prerequisite for formulating useful strategy. Financial models help decision-makers vividly picture exactly how an organization may look like in terms of profitability, capital structure, and investments required to properly follow the path desired. Crossroads recommends that organizations compare the viability of each option using metrics like IRR, NPV, or ROI using models to prioritize and “stress-test” options.
Take A Deeper Dive In Strategy
Crossroads Capital brings a corporate finance approach to strategy development.
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1655 N Fort Myer Drive, Suite 700,
Arlington, VA 22209Phone: +1 703 382 6357
Email: [email protected]
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