Secret SAUCE MARC EMMER ( ) Secret Sauce INGREDIENTS - - PowerPoint PPT Presentation

THE

Secret

SAUCE

MARC EMMER

% &

Required for companies to scale while preserving profjtability

Secret Sauce

INGREDIENTS

( )

2

THE BENEFITS OF SCALE

Median EV/EBITDA

3

WHERE TO GROW?

4

& Adjacencies %

Products & Markets

& Core % & Transformational %

GROWTH PORTFOLIO

IN THE LONG TERM, 70% OF VALUE COMES FROM TRANSFORMATION

70/20/10

5

Long-term Innovation Flexible adaptation Empowerment External focus Growth focus Short-term Effjciency Discipline Clarity of direction Internal focus Productivity focus

DIFFERING COMPETENCIES

CORE EXPLORATION

~2% OF FIRMS

6

7 COMPANIES DEFINE

INNOVATION

80%

INCREMENTAL

35%

RADICAL

ONLY 30 PERCENT OF COMPANIES FOCUS ON BUILDING “DISRUPTIVE TECHNOLOGY” 7

Growth companies identify sustainable growth opportunities that balance core and non-core growth, while understanding industry disruption.

Secret Sauce

INGREDIENT

( )

#1

8

Growth companies dedicate resources to innovation.

Secret Sauce

INGREDIENT

( )

#2

9

10

REAL STORIES

MONTE DAN RYAN URI

11

QUESTIONS TO ASK

About Adjacent Markets

w What data supports our position? w Can we protect – or even leverage – the core? w Is there a repeatable formula? w Can we manage the supply chain, as opposed to being an intermediary? w Will we be top dog? w Do we know the terrain? w Can we trade upstream into higher profjt categories once we enter? w What technologies can we leverage to improve customer experience? w Will our systems and processes support entering this business?

12

LEVERAGING VERTICAL INTEGRATION

12

Growth companies participate in multiple steps in the value chain.

Secret Sauce

INGREDIENT

( )

#3

13

14

ACQUISITIONS

15

WHEN DO ACQUISITIONS ADD VALUE?

Access to New Markets 55% Growth in Market Share 54% Access to New Products 56% Redirection of Operating Expenses 39% Enhanced Reputation 45% Access to Distribution Channels 39% 38% Access to Additional Mgmt or Tech Talent Reduction in Number of Competitors 77% Access to New Brands 72% Access to New Technologies 55% Access to Manufacturing Capacity 50% Entry to New Industry 69% 21% Access to Manufacturing Know-How 8% Reduction in Manufacturing Costs 27% Access to Suppliers

O B J E C T I V E S A C H I E V E D

16

THREE-YEAR GROWTH TREND

As of May 31, 2018

Median Three-Year Revenue Growth (LTM YoY)

CLEANING & JANITORIAL 

17

CLEANING AND JANITORIAL

LTM EBITDA As of May 31, 2018

Median Valuations

CLEANING & JANITORIAL 

PUBLIC COMPANY BENCHMARKS

Growth companies constantly reevaluate their service bundle and business model.

Secret Sauce

INGREDIENT

( )

#4

19

20

LIVING ON THE EDGE

Of The Ofger

Supported by education, warranty, confjguration, inventory support, training and support

21

MANAGING MARGIN

Through Mix

22

GOOD

L

BETTER BEST

$1.80

5%

$2.50

85%

$3.40

10%

L

23

TIERED PRICING

24

GOOD

L

BEST

L BETTER

Introduces new customers to the brand Provides opportunity to sell ancillary products Flanks low-cost competitors Provides preferred choice Makes it easy to make a decision High margin products Increases value

• f the brand

Improves stickiness Drives volume

• f better

25

B2B BUSINESS MODEL INNOVATION

(Transformation)

w PERSONALIZATION w ASSET SHARING w USAGE-BASED w COLLABORATIVE w SEAMLESS TRANSACTIONS w EDUCATION w CO-REVENUE w RADICAL PRICING w NETWORKS & PLATFORMS: Facebook Apple Amazon eBay Uber

High-growth companies leverage multiple profjt centers.

Secret Sauce

INGREDIENT

( )

#5

26

High-growth companies leverage technology for competitive advantage, usually by providing value-added information.

Secret Sauce

INGREDIENT

( )

#6

27

28

A WORLD DRIVEN BY ALGORITHMS?

How Will We Survive

28

29

AI IoT BIG DATA

29

High-growth companies build a synergistic relationship between sales and marketing.

Secret Sauce

INGREDIENT

( )

#7

30

31

OFFICE SPACE TRENDS

52%

Expansion

14%

Contraction

Health Care Sector

vs.

50%

Contraction

20%

Expansion

Technology and Financial Sector

vs.

32

THE SURVEY SAYS

By 2020

65%

• f facilities executives point to “disposal of surplus

space” as their top cost-saving initiative

51%

• f large tenants will have moderate to

substantial use of coworking spaces Expansion of desired offjce amenities (by Millennials): Wellness Facilities, Rest Areas, Daycare

33

HOW WILL BSCAI COMPANIES RESPOND

in a Contracting Market?

34

STAGES OF THE BUYING DECISION

Stage 3 VALIDATION Stage 1 RESEARCH Stage 2 QUALIFICATION

On average, clients invest 20 minutes per phase.

35

SELLING VALUE-ADDED SERVICES

Why Customers Buy

• 1. Free up time
• 2. Save money
• 3. Don't worry how
• 4. One less thing to worry about
• 5. More professional job
• 6. Lack the capacity
• 7. Dislike the task
• 1. More professional job
• 2. Free up time
• 3. One less thing to worry about
• 4. Overcome lack of capacity
• 5. Save money
• 6. Offmoad disliked tasks
• 7. Has necessary knowledge

Seller's Assumptions High Frequency Buyer Criteria

36

STAGES OF THE BUYING DECISION

What

Research

Qualifjcation

Validation Why

Client has reached a pain point. Find a pro. Make a decision. I need to feel good about the decision I made.

Activities

Buyers reach out to their network of business

• wners and advisors and

conduct digital research. Eliminate the pretenders. Talk to a representative to understand features and benefjts. They will confjrm details with

• vendors. The consultation begins.

Seeks data that supports their decision.

Seller's Focus

How things work: features, benefjts,

• comparisons. Use cases,

research. You are the professionals. Use specifjc examples. Introduce price range. Prove you understand. Reinforce opportunity cost (time), and total cost of ownership.

STAGES OF THE BUYING DECISION

Stage 1 Research Stage 2 Qualifjcation Stage 3 Validation Post Sale

DECISION MADE 

 

Permission to Upsell (2 Services)

VIEW WEBSITES 80% OF THE TIME INCREMENTAL COST OF ACQUISITION IS $0

38

BUYING PROCESS

39

INTEGRATED SALES AND MARKETING

SALES

Sales Management CRM Pipeline Management Inside Sales Sales Training Selling Tools

MARKETING

Market Research Web/Digital Assets Traditional Media Social Media Analytics Channel Strategy

Growth companies do not settle for idle claims; they prove their value.

Secret Sauce

INGREDIENT

( )

#8

40

41

SOCIAL PROOF

B2C B2B

Growth companies prove their expertise in sectors or industries.

Secret Sauce

INGREDIENT

( )

#9

42

43

INDUSTRY LANDING PAGE

44

FOCUS ON PURCHASE TRIGGERS

EMOTIONAL ENTERPRISE VALUE TECHNICAL FUNCTIONAL

VALUE PYRAMID

EMOTIONAL ENTERPRISE VALUE TECHNICAL FUNCTIONAL

46

MARKETING THAT CONNECTS

Growth companies are able to articulate their value proposition in simple terms that resonate with customers/clients.

Secret Sauce

INGREDIENT

( )

#10

47

48

EMOTIONAL CONNECTION

49

SAFETY

Difgerentiator

50

AUTHENTICITY

51

AFFILIATIONS

Difgerentiator

52

AFFILIATIONS

Difgerentiator

53

CULTURE

Difgerentiator

54

CULTURE

Difgerentiator

55

SIMPLIFICATION

Difgerentiator

Growth companies have a written strategic plan that unifjes management. They use the process of planning to prioritize what matters most.

Secret Sauce

INGREDIENT

( )

#11

56

57

KEYS TO SUCCESSFUL STRATEGY

w Include the right people w

Be outwardly focused before you look inward

w Make fact-based decisions w Be transparent w

Tie departmental goals and performance management to the strategy

w Gamify w Follow up very regularly/remain agile

58

MAKE YOUR KPIs COUNT

High-growth companies gamify the business, unifying their employees around their vision and rewarding based on results.

Secret Sauce

INGREDIENT

( )

#12

59

60

STRATEGIC ACTION STEPS

1. Plot your growth plan, being thoughtful about growth (by segment), risk and diversifjcation.

• 2. Actively consider what elements of the value chain you can serve.
• 3. Consider products and services on the edge of the ofger.
• 4. Consider platform attributes that can be applied to your business model.

5. Ask of your management team, "How can technology be a competitive advantage for our company?" If your team cannot answer the question, consider bringing in people who can.

61

STRATEGIC ACTION STEPS

6. Ensure you understand the phases of the buying process and have an integrated sales and marketing system. 7. Review value proposition and difgerentiators with your sales and marketing teams to ensure a consistent message. 8. Develop content that proves your value, including dedicated landing pages for every sector you serve. 9. Make sure that your strategic plan is written, clearly understood, and unifjes your management team.

• 10. Ensure your measurements refmect your strategic intent.

62

MANAGEMENT CONSULTANTS

Specializing in Strategic Planning

www.optimizeinc.net/blog (661) 296-2568 www.optimizeinc.net marc@optimizeinc.net

63

REFERENCES

Slide 3 The Benefjts of Scale: US Middle Market Monitor, FactSet Flashwire US Monthly, November 2018 Slide 5 Growth Portfolio: "Managing Your Innovation Portfolio" by Nagji and Tufg, HBR May 2012 Slide 6 Difgering Competencies: ted.com, Knut Haanaes Boston Consulting Group Slide 7 Companies Defjne Innovation: USC/Vistage Innovation Study Slide 11 Questions to Ask About Adjacencies: "Growth Outside the Core" by Zook and Allen, HBR December 2003 Slide 15 When Do Acquisitions Add Value: 5 Frogs on a Log

64

REFERENCES

Slide 17 Living on the Edge: The Edge Strategy by Lewis and McKone Slide 19 Good Better Best: Priceless: The Myth of Fair Value by William Poundstone Slide 21 Good Better Best: “The Good Better Best Approach to Pricing” by Rafj Mohammed, HBR September 2018 Slide 28 Selling Value Added Services: ECSB Research Slide 36 B2B Value Pyramid: “The Elements of Value” by Almquist, Senior and Bloch, HBR September 2016