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Middle Market Strategy in the Age of Disruption


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Strategy, particularly in the middle market, is under attack from many sides. This article outlines the benefits to middle market leaders, investors and other key stakeholders in making the commitment to a strategic mindset.

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Middle Market Strategy in the Age of Disruption

  1. 1. Middle Market Strategy in the Age of Disruption July 2019
  2. 2. “You must understand that there is more than one path to the top of the mountain” ‒ Miyamoto Musashi, The Book of Five Rings Abraxas Group LLC 2
  3. 3. Overview Strategy offers leadership, boards of directors, investors, and other stakeholders a framework for filtering out the noise of the moment and remaining focused on the optimal value maximization path for an individual company. Abraxas Group LLC 3 Disruption is inevitable, but the reaction to it is not. Strategy-minded organizations are best positioned to recognize disruption early and make the necessary adjustments. Source: Burst
  4. 4. Core Elements of Strategy Abraxas Group LLC 4 • Self-Awareness: A value creation mindset focused on an understanding of the character of a business. Having the right question while knowing that the answer is likely to change. • Business Model: Testable hypothesis of the key drivers of a business and a commitment to foster continued improvement in those drivers. • Goal: Plan to achieve an objective outcome or set of outcomes that incorporates resource limitations, known obstacles (competitors, market volatility, etc.) and the likelihood of unknown challenges. Self- Awareness Business Model Goal Strategy is a process, not an endpoint
  5. 5. General Motors Alfred Sloan’s reorganization of General Motors, leading to a century of dominance in the U.S. auto market. Lego Microsoft Jorgen Vig Knudstorp’s turnaround of Lego Group, fostered by an understanding of the organization’s intrinsic strengths. Satya Nadella repositioning Microsoft for a cloud-centric future. Strategy in Action Abraxas Group LLC 5
  6. 6. Abraxas Group LLC 6 Innovation Dislocation Change is, by its very nature, Janus-faced; with new capabilities and business models on one hand, and dislocation and value destruction on the other. While the pace is uncertain, change is inevitable. The Nature of Change Source: Wikimedia
  7. 7. Threat of Disruption Capital Providers Threatens to undermine investment thesis, resulting in significantly diminished upside or outright losses. Employees Endangers career prospects as opportunities for advancement shrink. Suppliers Imposes significant opportunity costs through lost growth prospects. Disruption represents different but equally terrifying threats to the varying constituencies in a company: Abraxas Group LLC 7 Leadership Challenges ability to achieve performance goals.
  8. 8. Abraxas Group LLC 8 Disruptive Change Source: London School of Economics
  9. 9. The Cost of Waiting Abraxas Group LLC 9 Source: McKinsey & Company Source: BCG Henderson Institute Cost of Disruption Benefits of Preemption Though change via disruption is inevitable, it is within the power of a leadership team to determine how an organization will face change, when and in whatever form it comes.
  10. 10. David Johnson is a career change agent who has served as interim manager or financial advisor on over $5 Billion of middle market transactions. In his 20+ year career, David has served as an advisor, board member, interim manager, and operator at organizations ranging in size from pre-revenue startups to Fortune 500 organizations. David has several publications to his credit and is a regular speaker on the topics of change management, performance improvement, turnaround, restructuring and value creation. He received his MBA from the University of Chicago and completed his undergraduate studies at Fairleigh Dickinson University. Role Highlights • Developed and led execution of a strategic turnaround plan • Developed growth strategy in support of an M&A process • Supported leadership in strategic plan development and execution • Interim CFO, Construction Company (Sponsor-Backed) • Financial Advisor, Industrial Staffing Company • Strategic Chair, Behavioral Healthcare Organization Email: Ph: 312-505-7238 Background David Johnson Abraxas Group LLC