Kindle Notes & Highlights
by
Jan Simon
Every customer wants to feel important, and some will take it as a slight if they are not in the know from the beginning (even if—or perhaps especially if—they are not one of the most important customers).
Not all stakeholders require proactive communication, and it may even be in the best interest of the company to play down the change in leadership (and ownership).
As practice, prepare answers for the most obvious questions.
Thus, the next three or so months will give you a unique, one-off opportunity to experience and learn, not to change and to disrupt. This is your ‘CEO-Associate Program.’ Embrace it.
by ‘action-bias.143’
Resist both temptations!
said:’ This is nice work guys. But it does not matter. Your task is to figure out how to sell… and sell more’.
Focus on execution, instead of strategy which will come later.
It is all about execution, learning how to execute and learning how to work through people’.
The first 100-days should also be used to do a second, deeper due diligence. This time, you have more access, data, and support.
outline an ‘action plan’ for the first 100 days.
It is therefore good practice for the new CEO to require signoff for any spending over a certain threshold. In many cases, this simply requires replacing the seller with the new CEO on the existing bank account or electronic payment approval process.
establish operational KPIs for the business.
This is why early KPIs should be almost ‘no-brainers.’ Work with your board to understand the levers of value creation and design KPIs for those. When introducing them, explain their relationship to value creation. Also, make sure that everyone who can directly or indirectly influence a KPI knows it, focuses on it, and understands how they can improve it.
there is a process behind and structure to the CEO’s knowledge assimilation
Sales growth (i.e., increasing price and/or volume) 2.Cost reduction 3.Deleveraging 4.Valuation multiple expansion (e.g., EV /EBITDA).
A consulting contract, whereby the seller is ‘on call’ allows you to step fully into the leadership role, while still being able to call on him when necessary
planning for the worst and hoping for the best.
purpose.
accountable
data.
dignity
radically rational CEOs have in common:
what needs to be done to grow the business to ten times its current size?
inflationary environments, increasing prices is easier than reducing costs, even relatively.
one will capture the kind of data and intelligence you need for your ambitious goals, but make no mistake: your objectives will include delivering on an agreed budget.
Clear, consistent, and repetitive communication of these goals is of the essence.
A-players in the company are in A-positions.
A-position is that it is crucial for strategy execution and there is high variability in outcomes depending on who performs the role.
By putting an A-player into an A-position, a CEO maximizes the output from roles with the greatest strategic significance to the firm. When identifying A -positions, keep in mind that they can have the potential for a large positive impact (e.g. a sales role), but can also be vital for preventing significant losses (e.g. a customer service representative).
connects the person’s capabilities with the task.
Do not mistake A-player with A-type personality. Also, avoid being a victim of confirmation bias, similar-to-me bias, or gender and racial bias when hiring, evaluating, and promoting.
Rewards for employees in A-positions should be higher than those in other positions.
You will get what you reward.
the CEO will have to find a way to both keep the top performer and make him an ambassador of the firm’s culture. It is what top coaches such as Phil Jackson (Michael Jordan and Dennis Rodman) or
properly challenged. What we have found out is that key hires that worked in larger companies always help drive growth faster. They have seen it and done it. They help smooth out growing pains. The balance between new/young DNA and experience is another healthy tension we pay a lot of attention to in our company.
problem confronting an organization is to engage in sufficient exploitation to ensure its current viability and, at the same time, devote enough energy to exploration to ensure its future viability’.
The democratization of IT means both that it has become cheaper
Digitalization can be a powerful tool in search fund acquired businesses.
‘Everyone has a plan until they get punched in the mouth’. It is true that the first years are often rocky and plans do not come to fruition. Keep in mind that, when you have a great strategy that is supported by a solid business and operating model while surrounded by great professionals and good financial management, the punches do not have to knock out you nor your plan.
The Entrepreneur’s principal motivation behind the entrepreneurial acquisition engagement is to be a great CEO by creating value for customers, employees, shareholders and other stakeholders as well as society. Why give this up after four or five years?
growing at 15% a year over 25 years will create 25% of the total value over the first 15 years and 75% of the value during the last 10. In fact, 13% of the value is generated in the last year. Let your profits run! In addition, taxes are avoided and transaction costs minimized.
how should you frame the capital allocation-decision? Using the book’s view on capital allocation, Mr. Buffett answers: ‘Increasing investments in areas that drive profitability’, while BCG states: ‘Shift funding from low low-return businesses to fund the most attractive businesses.’
Tushman’s and O’Reilly’s model provides us with a framework that assists in organizing the company in such a fashion as to both secure where profitability (Buffett) or attractiveness (BCG) is today (Exploit) and capture profitability or attractiveness in the future (Explore). This is done by configurating the organization in such a fashion that it can both exploit and explore simultaneously. In their words: ‘the organization has to be ambidextrous’.
‘Exploit’ and ‘Explore’. Diverting too many resources from exploitation to exploration too early will create a performance gap, creating too much risk for too little return.
As Marc recalls: ‘Completing the add-on acquisition of Pentapackaging was a significant step forward for Repli. Despite the many risks associated with add-on acquisitions, we thought we were prepared to make such step and were confident it was the best use of Repli’s capital.
it. Since our business was asset light and required no relevant CAPEX, completing add-on acquisitions became a preferred option.
Once you hit the 3-year mark, consider a yearly discussion on M&A with your board. First focus on business performance, growth and becoming a seasoned CEO. Because of the serious risk M&A involves (hence the generally lousy outcomes), it would not be wise to consider M&A before both board and CEO have a good understanding of the business and the CEO is ready to embark on the journey.
that increasing operational and financial risk at the same time is seldom a good idea and often ends up in tears.
away. In other words, when looking at cash flow post acquisition, bake a healthy margin of error into your cash flow model.
