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More Alignment, More Value

From assessment to exit, how organizational alignment leads to maximum value.

In working with a broad range of founder-led companies, it’s not uncommon to discover that functional areas of the business aren't aligned with each other. This happens more often with tech companies, where the product is usually further developed than other parts of the business. The result is misalignment—and missed goals.

The key is to focus on areas that drive the most value. When founders look at their business in search for areas to fix, they tend to focus on places where their expertise lies. However, since they already know those areas, they’re likely not the problem or the places that are going to get maximum value. 

A recent McKinsey report notes that it’s important for founders and their advisors to work closely together on this issue, suggesting the way “to foster trust with a management team is to ensure clear alignment on the cornerstones of the asset’s strategy, priorities, and timing—even when everyone doesn’t see eye-to eye.”

There are five areas where we see this alignment having the most direct impact on value:

  • Strategy challenges or opportunities – The company vision needs to align with market opportunity. This must be completely defined in a strategic plan, with all options considered.
  • Revenue challenges or opportunities – The overall business model needs to connect to targeted markets and ideal customer profiles. This should line up with marketing/messaging, the sales organization, and channel partners (if applicable) to drive efficiency and predictable revenue.
  • Talent challenges or opportunities – The approach to talent and culture must be synchronized, so that coaching or talent management, compensation planning, and skill gaps can all be addressed.
  • Product challenges or opportunities – To align product, it may be necessary to reposition or refactor for scale, execute product-led growth/pricing or validate product-market fit.
  • Operations challenges or opportunities – Operational alignment should include a rigor on measuring key indicators and a strategy for continuous process improvement, which will drive efficiencies and operational excellence.

Each of these areas is critical to alignment, and because of the interrelated nature of business, often more than one lags behind. For example, Orchid Black was engaged with one well-known fintech company with product offerings that helped customers identify new opportunities while limiting risk. Although it had 30,000 customers, the company’s current organizational structure, strategy and growth trajectory were stagnant and threatened to diminish its valuation. Interestingly, the team was making concerted efforts to re-energize growth, but they were focused on the wrong things.

A careful analysis showed that drastic misalignment between the board, investors, CEO and the management team had resulted in an uneven vision, strategy and roadmap. Further, inconsistencies in the strategic plan led to considerable mismatches with company KPIs. Despite good content, tech, and go-to-market engine, the misalignment within the company created problems in the hand-off from sales to operations and then delivery.

In another case, a cybersecurity leader approached Orchid Black to analyze their Pricing and Packaging (P&P) for their IAM solution. Immediately we saw misalignment. Their packaging concepts differed from market needs with a complex SKU system and complicated pricing. In addition, there was friction selling through their primary channel. Finally, they were trying to move traditional, long-time customers from term-based to license-based models.

In both cases, the companies were doing a lot right. But, in both cases, misalignment was a significant drag on the business, limiting maximum value.

Assessing Where Value Lies

In the growth services process, these big aha moments come from an assessment of  value creation, where the team uncovers unique growth opportunities. This assessment is a core piece of Orchid Black’s Value Creation Platform, specifically designed to provide proprietary tools and knowledge toward value acceleration.

In the fintech case, an analysis showed strong opportunities to leverage the company’s presence in the consumer market through a  B2B2C strategy). This approach would allow them to gain access to new consumers and also market toward brokerage platforms, and then partner with these brokerage platforms to scale the business.

In addition, the company learned the product pricing model they were utilizing—lifetime subscriptions—were far less valuable than implementing a recurring revenue strategy, such as monthly or yearly subscriptions. During the analysis, we also identified that many of the firm’s customers were wealth management professionals who were B2B focused. If the company had understood this, they could have created a more appropriate pricing strategy, as well as more customized offerings. Tactically, the assessment also revealed the organization was at a $23 million maximum valuation, a dramatically different price than they had hoped. Many organizational fundamentals would need to be leveraged, both strategically and operationally, in order to increase the value of the company. 

Based on the assessment, a revised go-to-market strategy, accompanying investment and exit strategy was executed with Orchid Black partnering side-by-side with the company. Through the implementation of this seven-month growth services engagement, the company and Orchid Black executed on a new go-to-market strategy that realized an ROI of more than 4,000 percent.

In the case with a cybersecurity leader, our research revealed that new competitors were being viewed as “cloud-built” with deeper capabilities than this market leader. Yet, the company had one of the most comprehensive Identity Access Management
(IAM) solutions available in the market.

We also noted that conspicuously missing from the company was an “easy-start, cloud-first” offering, which competitors were using and having success with. This discovery led to a P&P strategy that would utilize the “easy-start” to reduce sales friction and effectively compete for new sales, as well as lay the foundation for expanding with their customers' evolving needs.

In both cases, once the decision was made to partner with Orchid Black, our seasoned team was able to draw on its deep experience with data-driven processes and methodologies to drive an integrated strategy through our Value Creation Platform. The comprehensive process made a foundational impact on both companies, and quickly and dramatically increased valuation.

About the Author

Jim Barnish is a strategic change leader with over 15 years of leadership experience in global and integrated operations, M&A, and strategic go-to-market planning. Drawing on deep operational and investment experience at startup and scale-up businesses, he’s created and curated a collection of proven, data-driven processes and methodologies to help companies build scalable and fundable solutions—accelerating organic growth.

Jim can be reached at: jb@orchid.black.