Perspectives – Marc Cooper – August 2022
Strategic Advice in an Age of Disruption
by CEO Marc S. Cooper
It doesn’t take great power of observation to point out that the macroeconomic environment in recent months has been marked by uncertainty, complexity, and change. Geopolitical tensions, elevated inflation, rapid interest rate increases, and waning U.S. consumer confidence are stress-testing the business models of startups and industry stalwarts alike. As I make the rounds with clients, there’s a lot of talk about how these unparalleled times will cause many businesses to reassess their core assumptions about strategy, workforce management and long-term investment priorities.
In times of disruption, companies have an opportunity to recalibrate their strategies to enhance their competitive strengths and shore up any weaknesses. Knowing what one needs to do and when to do it gives businesses an edge against their rivals. As other companies adopt defensive postures, there may even be opportunities to transform one’s business with investments, innovative initiatives or breakthrough acquisitions. In my experience, companies that simultaneously manage costs while making forward-looking investments to leverage their strengths reemerge from a slowdown stronger than ever.
It’s precisely when the business climate is challenging that the value of a strategic advisor is put to the test. What exactly are clients looking for? Alternatively, how might a strategic advisor’s guidance and expertise help business leaders preserve, or even create, shareholder value during a period of enhanced risk?
Near the top of my list is deep industry expertise. Clients want someone who speaks their language and understands their industry’s unique dynamics. The current economic climate is impacting industries in different ways and to varying degrees. Getting the nuances right is crucially important. Looking over my three decades in the industry, the best insights have come from advisors who thoroughly understand the details of an industry and see opportunities that others might overlook.
That in turn requires taking a long-term view. Corporate leaders need to assess the impact of their decisions over multiple time horizons. Quality advisors understand and will conduct transactions from the perspective of partnership – clients and advisors working together as a team and not just someone looking to get a deal done.
That’s why the integrity and honesty of a strategic advisor should be the foundation of any relationship. Transparency is critical and clients deserve to see that from the initial pitch through every phase of a transaction.
I’m a believer in the old adage: innovate or die. Strategic advisors are in the idea generator business and the best ones bring an entrepreneurial sensibility to their guidance. Advisors should always be on the lookout for creative ways to help clients improve their businesses organically as well as by seizing entirely new opportunities for value creation. A fresh, outside perspective can identify the missing piece to optimize a business strategy or model.
In periods of economic uncertainty, the challenges and opportunities that arise will vary from industry to industry. For highly-leveraged and cyclical companies, cost management and risk aversion may make sense. For enterprises with strong balance sheets and robust cash flow, financial market volatility may present an ideal opportunity to reposition a business for accelerated growth when the economy improves. But in all circumstances, strategic advisory services may be even more essential than ever as companies strive to preserve and create shareholder value.
