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Growth and the Lens of Company Definition

“It is not the strongest of the species that survives,
not the most intelligent that survives. It is the
one that is the most adaptable to change.” 

― Charles Darwin 

Growth is the essential element for creating shareholder value. Initiatives associated with growing revenue drive more value than any other action. Growth is more important than cost structures or margins. It is better to get revenues up than costs down. Higher growth drives a greater market capitalization and is the key predictor of success over the long term.

Every business needs a strategic plan that includes new avenues for growth. Our strategy is to recalibrate your company definition, reframe your knowledge space and identify new growth opportunities. 

The Lens of Company Definition

A business exists to serve its customers. In essence, a company is a pipeline that provides goods and services to its customers within a knowledge space. Therefore, the company should be defined by its customers, not by its products or services. Specifically, a company should be defined by the problems that it solves for its customers.

A knowledge space is the area around which a company has expertise, credibility and knowledge. In addition to its skill set, the company has knowledge about customer needs, problems and solutions. Customers develop trust for the company within this knowledge space. 

Many technology companies consider their knowledge space too narrowly; thus, the road to growth is too narrow. These firms need to re-evaluate their knowledge space in order to broaden it and open up the company to new kinds of growth opportunities. 

Company definition and knowledge space set the boundaries of what a company can achieve. How a firm defines itself can either limit or broaden the way that it perceives its markets, its customers as well as new growth possibilities. 

Company definition is important because it underpins your growth strategy. It impacts strategy because it helps you decide what new products to add, what services to add and which acquisitions to make.

The Problem

Software and technology companies are notorious for having extremely poor company definitions. Their focus is inward and self-centered. It is about them and their cool technology and their cool products. This is the opposite of what it should be. Their focus should be outward on the marketplace—on the customers and solving the customers’ problems.

Company definition is not a mission or a vision statement. These statements are vague and fluffy. A business exists for one purpose—to deliver value to its customers. An effective company definition describes how the company delivers value and to whom.

Rethink your Business Model

New technologies produce new products and services—and they change the way that products and services are delivered. Thus, the nature of the market changes. When the market changes, a company must adjust its business model.

A business model describes how a company creates and delivers value. It defines the value proposition and describes how the company organizes itself in order to produce value.
Changing a business model means delivering value in new and different ways. It means rethinking the value proposition. It means that the company needs to modify the way that it defines itself.

Strategic Clarity

Achieving strategic clarity is hard. Good communication is more than important—it is critical. Leaders need to communicate what the company is about to its customers and future customers, employees and future employees, investors and to the community at large. It is not a trivial thing.

Identify New Opportunities

We recommend a two-phase project to propel your growth strategy. First, we reframe your company definition and second, we identify new growth opportunities.

  1. We recalibrate your company definition and broaden the scope of your knowledge space. 

    As part of recalibrating the definition, we address several key questions—Why does your business exist? How do you define your market? How do you define your customer set? And most importantly—what problems should you solve for your customers in the future?

  2. In the second phase, we identify growth opportunities—new product lines and services to add, niche markets to enter and companies to acquire.
Our methodology includes both a targeted search and an opportunistic exploration. The targeted search seeks specific product lines and value-added services. The opportunistic course of action is an exploration. We explore adjacent and tangential markets. Who are the players there? What needs are they solving for their customers? How do these needs and solutions intersect with your company?

Acquisitions can help a company establish beachheads in niche markets, acquire new capabilities, new talent and new customers. These are usually small acquisitions —less than $30 million. The transaction structure is typically a straightforward purchase of assets.


Copyright 2018 T.V. Metz & Co., LLC  All rights reserved.