Princeton Management Associates LLC

Growth features prominently in many businesses' plans for the future, but unfortunately it is almost as often disappointing when evaluated in retrospect.  Too often the planning discussion between management and investors focuses solely on "the number" targeted for the upcoming year, or the proportion of business to be obtained from somewhat arbitrarily defined product or customer groups.  While valid and important, performance against these targets is usually clear only in retrospect, long after the opportunity to engage, adjust and support has passed. 

PMA has found it to be highly effective to help management teams and investors to engage in a structured discussion of not just the outcomes they would like the business to achieve - but why they believe those outcomes are possible, and what indicators are likely to provide guidance along the way to suggest whether their underlying assumptions are holding true.  The exchange can be difficult at first - with CEOs often reluctant to share too much of what they may be envisaging, out of concern that it may not be sufficiently supported, subject to undue scrutiny, or worse, used to justify even more aggressive targets.  Investors can be equally reluctant, wanting to give CEOs plenty of autonomy to ensure full accountability. 

However, where there are stakeholders who are genuinely committed to working together to increase the probability that goals are going to be achieved, the process quickly generates positive energy and momentum.  Differences in expectations and views on critical areas of focus are rapidly traced back to differing underlying assumptions about the logic underpinning their beliefs in the potential for growth.  Forging a deeper consensus on both the objectives and the "why" that underpins them helps to establish a common base of terminology and understanding of issues that in turn powers a virtuous cycle of faster feedback and response, vastly improving the probability of exceeding business goals. 

The business has a skilled, highly motivated management team and a vision for how they are going to transform an industry.  Even more exciting, their vision involves a fundamental change in the way that a particular product or service is designed, delivered and sold - taking advantage of game-changing technology and convergence across previously disparate markets and competitors. 

It sounds too exciting to simply "pass" on.  But on the other hand, there are way too many unknowns to feel entirely comfortable taking management's projections at face value.  Too often opportunities like these end up in a "doom loop" of traditional diligence.  The investment team runs iteration after iteration of sensitivity models, and successive waves of management meetings offer little additional comfort.

Strategic Due Diligence offers a better alternative.  By applying industry and domain knowledge, coupled with an extensive network of contacts across a wide range of industries, PMA conducts rapid, targeted interviews with thought leaders outside the target company.  These senior-level contacts provide an independent perspective on the company-to-company buying behavior that ultimately determines whether there is sufficient impetus for transformative change within an industry.  Strategic market feedback can help investment teams to triangulate and corroborate their impressions of the investment opportunity, while also providing a foundation for making progress post-investment.  Most importantly, investment committees can reach consensus decisions (either for or against) more quickly, helping to capture the deals that have the strongest independent validation, while moving on from those that don't. 

The most critical aspect of applying classical strategy to growth situations is often to make the approach dynamic - keeping the structure of the framework-driven approach while rapidly adjusting execution priorities according to internal and market "proof-points".  The structure helps to focus experimentation and learning, encouraging more informed risk taking while maintaining accountability.  It is ok for a new channel or product extension to fail to gain traction with target customers, provided the failure is understood quickly and accurately enough to inform an adjustment to execution plans. 

However, there is often cultural resistance on multiple fronts - a desire to "lock down" targets and activity plans despite high levels of uncertainty.  Middle-management teams are far more comfortable being held accountable for executing clearly defined activities than for insight-based measures such as better understanding of customer purchase decisions.  Success requires a shift in the dynamic of management team reviews, from negotiation to collaboration, from distribution of accountability to collective solving of the "sweet spot" of target customer, proposition and solution delivery that will power scalable growth. 

For the majority of its clients, PMA plays a faciltation role to help management teams become more famiiar and comfortable with the changes in how progress and strategy reviews are conducted.  Initial focus is on imbedding the growth strategy frameworks into execution planning and building understanding of key concepts like "proof points" on which execution priorities may pivot. Regular follow-up sessions help build comfort with rapid feedback of both good and adverse results, and understanding of how the overall framework helps to resolve tactical adjustments needed, without going back to "square 1" on the strategy and plans. 

Early stage businesses can realize significant benefit from a growth strategy framework.  Companies that have developed truly innovative solutions can be overwhelmed by the many different opportunities they can see that would benefit from what they have to offer. A logical framework based on a practical evaluation of alternatives and customers' buying approach can help clarify the choices of near-term product and market focus, while putting longer term growth opportunities in perspective. 

PMA recognizes that getting such clarity on near-term focus and longer term growth potential is often a prerequisite to securing the capital necessary to realize the plan.  Contingent fee and equity-based compensation arrangements for these assignments may be available, where PMA sees a sufficiently compelling case for investment.