Channel Daily News

Building a transition plan

A recent study conducted over a four-year period by researchers at Harvard University and Dartmouth College concluded that two-thirds of senior executive teams did not meet their goals.

The study concluded that often the cause of the failure was that the CEO did not understand team dynamics and that members of their management teams were allowed to engage in short-sighted and self-serving behavior.

The study went on to provide five conditions that are thought to be needed for a senior management team to succeed:

1: Clear, compelling direction established by the CEO;

2: Creation and maintenance of an appropriate organizational structure to achieve the goal;

3: Hiring and retention of correct people;

4: Emphatic support of the senior team by the CEO;

5: Ongoing development championed by the CEO.

Let there be no doubt that the CEO of a partner and the processes that they define and drive has a huge impact on the development and success of the organization’s Transition or Growth Plan. The term Managing Director can be substituted for CEO throughout this article.

The focus of this article is on the critical events in the development of a successful Growth Plan.

Critical Events

There are several critical events in the development of the Transition Plan: Creation of the Transition Plan, articulation of the Transition Plan to employees and investors, investment in and modification of the partner’s Functional Underpinnings to enable the Transition Plan to be successfully executed and actual execution of critical components of the Transition Plan.

Of vital interest to partner management is how much lead time is required by companies prior to the actual execution of activities consistent with the Transition Plan, and how much cash is required.

Three models emerged for the development of Transition Plans by CEOs:

CEO as source — sometimes assisted by outside consultants or members of the board, the CEO acts as the architect and author of the Transition Plan

CEO as catalyst — the CEO serves as the catalyst for a process, which led the senior management to develop a Transition Plan

Crumbling into place — the CEO leads the partner through some sort of notional planning process that creates a Transition Plan that fails to adequately address what will be done or what it needed to support the plan in execution.

The first two models of plan development work better than the third model.

Successful articulation of Transition Plans to employees and investors seems to be most successful when treated as an “adult education” problem and not simply an internal public relations exercise. In order for employees and investors to commit to the plan, the tactics and the activities in the plan had to seem legitimate. Things have to make sense.

Clear and compelling plans are just that – clear and compelling. Dream or fantasy based plans do not work.

Employees and investors needed to be educated as to the whys, hows and why nots of a Transition Plan before they throw their unbridled support behind the plan.

The beginning of the process of investing in, and modifying the Functional Underpinnings of the partner is an extremely critical event in the development/execution of the Transition Plan. Regardless of the Plan drivers, by this point the decision has been made. The parts of the company that are to grow, shrink or disappear have been determined. The “make” or “buy” decisions have been made regarding internal or external growth. The specific target growth business for the internal and/or external growth have been determined.

Profiles have been created to drive the alliance/partnership/merger/acquisition program. Fundamental determinations have been made regarding where the Functional Underpinnings need to be shored up or established.

Two models seem to surround this cluster of critical events. Often, the process seems to have been started much too late. We observe partners where the growth had gone on without adequate Functional Underpinnings, only to have the results of the Transition Plan collapse on the organization.

The second mistake we observe is a systematic underestimation of the amount of investment and/or modification that is actually required for a Transition Plan to be successful. In short, too little time and too little money is being invested to support the plans that were on the partner’s books.

The first moves towards actual execution of the Transition Plan appear to be critical. In the most successful partners, management told employees/investors what they were going to do (and why they were going to do it), they did it, and then they told employees/investors what they had done and how it had worked.

Changes

The organizational and functional changes driven by the Transition Plan are critically dependent upon the drivers of the process, the decisions made by the CEOs, and the sequencing of the critical events.

Bruce R. Stuart is the president of ChannelCorp, a management consulting and executive education firm focusing on partner profitability, business model transformation and vendor channel strategy improvement.