Creating increased valuation and
an opportunity to exit is the ultimate goal of most technology companies' top
management and their investors.
All topline growth strategies must build toward the exit and the valuation required
for exiting. If the exit strategy is undetermined, the growth strategies cannot
support it. This is my job as a consultant: to keep all the strategies focused
and building toward the valuation and the exit, to save millions of dollars
as well as to make it.
The strategies for exit and valuation can seem very different from the strategies
which create market share and growth: strategies in marketing, distribution,
pricing, and positioning. But all strategies must align with the ultimate goal.
Clearly, to create market dominance we must get most of our strategies correct
the first time. We must understand the timing of the market's acceptance. We
must predict the market's true use of our product or service. Arriving too early
to the market wastes critical capital, and arriving too late makes us chase
our competition. And misjudging the actual use of the product by the market
can set us back for years while we reposition.
We must synergize our pricing, positioning and distribution channels to send
out a single message. We must create soundbites to explain complex technology
to the mass market. Sometimes our product or service is so new as to create
its own genre; this unique opportunity demands expensive positioning and education
of the market.
We must plan a lifecycle of products and services to target each market segment
as it develops, as well as anticipate new consumer behaviors resulting from
the adoption of our technologies. It is not only the development of the technology
which changes so often--the users' acceptance and response to the technology
can change the target market itself.
This is critical: not only does the technology keep moving, but so does the
target market. In a technology company, if we miss the target market by 5 percent,
often we have missed it completely.
This is a lot to get right from the beginning of our planning. And we must get
it right in context: we must understand all of these strategic issues in light
of the goal for exiting. If we mean to be acquired by a telecommunications company,
hardware manufacturer, or software empire, for example, we must position our
strategies and valuation to the unique needs of that industry, so that we become
valuable to the companies we want to notice us . We must create strategic alliances
with the very companies we wish to have acquire us. We must remember not only
the amount of our valuation, but our strategic value within the culture of the
industry that will acquire us.
If we are aiming for an IPO, we must present the company in the best light for
an offering to a public market which runs hot and cold about technology companies.
This is not just an issue of timing, but also an issue of what the public market
holds valuable: strong patents, effective strategic allies, experienced management,
wise policies targeted to growth markets; ethical behavior. It is not just the
market makers who make markets. The public has a say as well. Remembering the
focus of our exit strategy, particularly if it is aimed at a public market,
is critical at every stage of strategic planning.
Nothing is simple about growing technology companies, when both the technology
and the market keeps moving. Companies must integrate their planning with the
ultimate goal of increased valuation and strategic exit to optimize opportunity,
to conserve capital expense, to remain flexible in a changing marketplace, and
to achieve market dominance.
Joey
Tamer refines the vision, strategy and success of companies --
Fortune 1000, capitalized start-ups and investment fund.
www.joeytamer.com
(310) 245 5310 joey @ joeytamer.com