Advisory No 15 - Partner Smarter Grow Faster

A growing international business needs new staff and lots of them.  

It needs to have tried-and-tested suppliers to provide the products and services that it can’t deliver itself and it needs them fast.  

And it needs strategic partners to help extend its geographic reach and to build a network of customers that will deliver on the business plan.

What these three categories have in common is that every growing business is reliant on people and partners to deliver its strategic growth plans.
  

For start-ups and developing businesses, having the right team around us is critical to our growth success and it’s definitely not the time to cut corners.

As managers it is likely that we are busier than our peers of 10 or 20 years ago and the speed at which we are required to make important business decisions is accelerating. When we are working in start-ups, this pressure can be ten-fold.

It's time to call in the experts to support us.

However busy we are, we must appoint any new relationships with care, whether they are our staff, suppliers or strategic partners.  This is because our own success is ultimately reliant on the partners that we choose to represent us. 

Our partners success is our success and their failure is ours to own.

It’s tempting, but we should never make our decisions based solely on the candidate that we know best or is closest to hand.  In the rush to start-up and grow our businesses we often quickly grab our former colleagues and partners as a short cut to establishing a new team.  We have to be careful here.

We don't achieve something different for our business, simply by replicating an old model so it’s important that our partnership appointments are regularly given due-diligence and tested against alternatives in the market.

No decision is a valid decision until it can be compared against alternatives. A choice of one is not a choice at all.

It's always wise to properly review alternatives as the 'sanity test' to your preferred partnership choice and it's is time worth investing as it provides clarity, validates your decision and defends your position in the event of any conflict.  Most importantly, you develop a balanced approach as you are forced to consider the negatives as well as the positives of your preferred partnership choice.

When we take the time to fully review and make informed decisions on our business partners there’s every chance that growth will come stronger and faster than if we select solely from our inner circle.

Once established, it's also critical to review our partnership arrangements regularly to ensure that they remain effective.  

We regularly work with businesses who have set up partnerships to manage their interstate and international operations.  On closer review, we discover that they are not always delivering the maximum contribution to our client's business.  We recommend an annual review and health check for all partnership arrangements to ensure that they are performing to expectation.  There's always room for improvement.

The pressures of establishing, growing and maintaining your business are tremendous but be careful to take the time to establish the right partnership network as part of your business development strategy.

Be open minded to change. 

The Advisory Partnership assists its clients with business development and operational strategy, delivering outputs that are scalable to meet the challenges of technological change and International growth.

Post by James Douglas

www.theadvisorypartnership.com

More from us...

Over Promise, Under Deliver
Partner Smarter, Grow Faster
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TAP Case Notes 4 - Latin America Operational Review

Client               A Global Advertising Technology Business
Service            Operational Review & Remediation
Result              300% Revenue Growth

Background

The client was a technology business that supports the advertising industry with distribution and asset management services.  The centre of their Latin American operations was in Miami with sales driven from their satellite offices in São Paulo, Brazil and Buenos Aires, Argentina.   

The Miami regional office had been a successful start-up, managing international TV delivery throughout Latin America and servicing the Hispanic market in the USA.  

Our client's strategy had been to roll out local distribution operations progressively to each of the countries in South America each of which were emerging markets for their services.  However, after a strong start, the business had faltered and lacked sustained growth and profitability.

Challenge

The client's head office in London sought our advice on their geographic expansion and our recommendations into why performance had slowed.  They wanted to know whether the business should be expanded, maintained or wound down. 

The Miami office had not delivered on its target of 25% year-on-year growth. The P&L was showing a loss of $200k per month and operationally the office was failing in its service commitments.  The business needed a plan to secure continued geographic expansion whilst containing the costs of any new operations.  

Approach

Our approach was to place ourselves on site to develop insights into the day-to-day operations in Miami and how it was serving the existing satellite offices in Brazil and Argentina.  We exposed ourselves to every aspect of the sales, customer service and support processes and analysed team productivity.  

We discovered that the problem was partly the operational structure and partly that the business was still effectively operating in start-up mode and had not been equipped to service the business it had delivered.  

Our solution was to review and revise the processes and operational structure with only a moderate increase in investment.  Our recommendation was to fully equip the business for the next stage in its growth and indeed to expand it as a regional 'Centre of Excellence' for the Americas.

Result

Our review of the P&L solved a discrepancy where the costs associated with the South American sales offices were being applied to Miami but the revenue was reported locally.  This resolved the reporting discrepancy proving that the business was much healthier than the client had assumed.

We uncovered 10% in annual revenue leakage which we solved by developing new processes to ensure that all services and products were billed accurately. Our implementation of these processes revealed that Miami could operate at 20% EBITDA. 

Our strategic review revealed that the client had failed to tailor an implementation strategy for the individual markets within South America.  

We outlined cultural and operational differences across the region and built a roll out plan that prioritised each market by value.  This provided our client with a framework to invest in their South American business development appropriately and to minimize risk by linking new expenses with secured sales. This 'secure' revenue would be sourced from pan-regional clients already held by the business.

Our structural review revealed a need to revise the operational structure.  The business was still being managed as a start-up and needed the processes of a more mature business. We proposed a new structure within an expanded business that would act as a regional 'centre of excellence' for the Americas. This met the client's growth objectives while negating the need to set up costly operations in each country state.

The Miami office now operates as our client's model for their regional operations globally.  Miami now services all their requirements within the USA, Canada and Latin America.  It has doubled its staff and tripled its revenue with planned growth to support an ambitious new USA business case of $30M per annum by 2016.

Post by James Douglas

www.theadvisorypartnership.com

What we have learned developing global operations in India, SE Asia and Europe are captured in more detail the following articles:

Upscale your International Growth
Over Promise, Under Deliver
Partner Smarter, Grow Faster
International Strategy - How to Get an A in Geography

TAP Case Notes 2 - India - Business Review & Diagnostic

Client         Global Advertising Tech Business

Service     Business Review, Product Review & Diagnostic 

Location  Mumbai, India 2014

Result       Reset Strategy Delivering 20% Growth 

Background

Our client was a technology business that supports the advertising industry with advertising distribution and asset management services.  Its Indian operation was a start-up, completing its first year of operations focusing on TV commercial distribution and managing clients from media agencies and post-production companies. The business was failing to achieve its targets; it was third to market with two strong competitors; one local and one, a long established international business.  Lack of active customers and low price yield meant that the operation had yet to break even and was becoming a critical drain on our client's global resources. 

Challenge

The Indian business was trading at 25% of the monthly revenue budget and was being supported by head office at $250k per quarter. We were appointed to to provide a diagnostic on why the business was failing to win customers and why the price had been driven to levels 80% below our client's global average. We were further asked to make recommendations on either the closure of the operation or to continue trading at a loss for strategic reasons. 

Approach

Our approach was to base ourselves on site to develop an intimate understanding of the local business and its potential.  We spent time reviewing daily operations and interviewing customers, broadcasters and staff.  We knew there was a strong and highly qualified management team so our job was to close the knowledge-gap between the international strategic plan and the operational reality.  

The key problem we found was with the practical usability of the product unique to the Indian market.  Our analysis revealed that our client's inability to provide bespoke systems for broadcasters had led to TV stations becoming advocates for the competition.  Our client then commissioned us prepare a gap analysis and business case to revise their product interface with changes specific to India.  We cross-referenced our work and found relevance for our changes in other operations in SE Asia and the Middle East.  This further supported our business case and product development was commissioned for 2015.

Results

Our work revealed that the client's business plan had not adequately considered operational processes unique to India and that they had underestimated their competition. Our competitive review revealed a bias towards local businesses so we recommended that they partner with their local Indian competitor to provide the best blend of local insights with their international experience in the sector.  This recommendation effectively removes a competitor, reduces price pressure and provides a real benefit to the Indian customer with a system adapted to their specific requirements.  

Following our briefing the client has decided to retain a strategic investment in their India.

Once the product changes are implemented, it is expected that their Indian market share will rise from 20 to 40% and through partnership they intend to they will be able to fund a broader range of services to the Indian advertising community.  

Our success was to provide the client with market knowledge that they did not previously have, giving them a detailed understanding of their Indian operation and enabling them to make more informed decisions in future.

The Advisory Partnership assists its clients with operational strategy and structural change, delivering outputs that are scaleable to meet the challenges of technological change and international growth.

Post by James Douglas

www.theadvisorypartnership.com

What we have learned  in India, SE Asia and Latin American are captured in more detail the following articles:

Upscale your International Growth
Over Promise, Under Deliver
Partner Smarter, Grow Faster
International Strategy - How to Get an A in Geography

TAP Case Notes 1 – APAC Centre of Excellence

Client      Global Advertising Technology Business 

Service    International Strategic Development

Result     Creation of APAC Centre of Excellence  

Date          2014

Background

Our client was a technology business that supports the advertising industry with TV distribution and asset management services.  Following our strategic and operational review of their existing operations in APAC, the client accepted our recommendation to create a joint venture with an existing Asian partner to service the region. This business already had a long standing relationship with our client; it serviced their print advertising distribution and had an operational footprint in Malaysia, Singapore and Hong Kong. 

The project was firstly to relocate the client’s APAC operations from Hong Kong and secondly to form a regional ‘centre of excellence’ in Malaysia to allow for expansion throughout the region.

Challenge

Once the regional office was established, we were appointed to provide the framework for the client to roll out their service to 17 Asian markets generating USD $23M at 48% EBITDA within 3 years.  Our role was to ensure that the Asian operation was fit for purpose both as a regional head office and as a ‘centre of excellence’, able to lead the direction of the business in the region.  We were required to implement the best of the client’s international experience while ensuring each Asian market's unique processes were fully understood.  

At the same time each of the 17 markets were transitioning from analogue to digital TV services so, with an industry in flux, we were required to include strategies for change across a number of markets with diverse, cultures, languages and processes.

Approach

We had already proposed the client’s global and regional models and had completed the transition of the Hong Kong office from a regional to a satellite sales office so we understood the task. 

To build the centre of excellence, and to meet the growth challenge, we appointed a ‘SWAT Team’ sourced from the client’s most successful operators worldwide.  This team was important to help with the digital change required within the region and to quickly instill values consistent with the rest of the the client's business.  We then focused on hiring an experienced local leadership team to build credibility and deliver the skills to quickly deliver transactional revenue.  We ensured that the model we prepared was scaleable and easy to replicate on a market-by-market basis throughout Asia.

Results

The relocation of the regional office from Hong Kong to Malaysia created a strong regional centre through which the client could direct its regional growth.  Despite obvious disruption, no customer was lost in the transition of the operation from Hong Kong and within 6 months, the Pan-Asian operation was servicing markets in Vietnam, China, Singapore, Thailand and Hong Kong.  

Asian business sourced from the client’s global client network could now be managed through Malaysia, and each of the client’s country operations can now sell Asian broadcast services to their local clients.  This was a significant win for the client who could add Asia to their many international proposals and tender requests a potential revenue lift of 20%.

Initial revenue was not however as budgeted. This was due to the TV product having limitations in dealing with local business issues specific to Asian markets.  However, we prepared a product review and business case for interface changes that is scheduled for completion in 2015.   Revenue is forecast to meet expectations by June 2015.

The Advisory Partnership assists its clients with operational strategy and structural change, delivering outputs that are scalable to meet the challenges of technological change and international growth.

Post by James Douglas

www.theadvisorypartnership.com

Other Posts by The Advisory Partnership

Upscale your International Growth
Over Promise, Under Deliver
Partner Smarter, Grow Faster
International Strategy - How to Get an A in Geography