Strategy: Understanding the Strategic Plan

Anderson Williams: Welcome to Bigger. Stronger. Faster. the podcast exploring how Shore Capital Partners brings billion-dollar resources to the microcap space. In this episode, we hear from the Shore Capital Strategic Planning team about their process and how they partner with Shore Portfolio Companies to create, manage, and manage their And iterate on strategic plans that help maximize value creation.

They share insights from doing over a hundred strategic plans, each unique, but each also benefiting from the lessons learned across the portfolio.

 

John Murdock: So we’re here today to talk about what we do as a Strategic Planning team. We’ve done over 104 sessions as of this recording with different portfolio companies throughout Shore.

In that process, one thing we have not yet run into is a management team that knew what we did before they met with us. And oftentimes, they had some sort of preconceived notions, understandably, about what we might do that were actually probably more misperception than they were understanding. And largely because they were basing that off of their experience with similar things out in the market and in the environment that sound like us or maybe look like us, but are significantly different from what we actually do.

And so I want to share a little bit about that with you all with the audience today so that they can come into a session and an engagement with us and understand a bit more. So I’ll provide a high level framework of our work. And then we can all have a bigger conversation about some of those misperceptions and some of the focused areas that we dive in.

So at a very high level, our primary job is to add value. We want to help our management teams and our portfolio companies maximize their value creation during the whole period and to minimize the avoidable stress they experience throughout that process. We do that by helping them engage with their stakeholders, the management team, board members, and investment team to create to align around and then to execute against the best possible strategy, high level strategic plan, and high level operating plan.

Now, different people have different definitions for what those three elements might be. Strategy, strategic plan, and operating plan. To us, what we mean is the strategy is that high level set of questions that any business needs to know that’s at where we might play, right? So we want to know what industries, what niches, what product categories we’re going to compete in. We want to know how we’re going to win in those industries. Is it low cost? Is it product differentiation? Is there some way that we compete on quality that we think is unique and sustainably valuable for us? And who are we? What’s our mission? What’s our vision? What are our values? What’s going to guide us as a company? What’s our North Star? What does success look like?

That’s kind of the high level strategy every company needs to have that we help facilitate. But below that, we want to make sure that links to actual activities that they can monitor and engage in over time. And so we help with the strategic plan, which is where we prioritize those activities. What are the key activities we’re going to do over time? What order will we do them in? What’s the resources we’re going to commit to them? And what’s one more level of detail that helps us get actionable?

All of those things, we generally create and then reassess in a yearly meeting that includes the management team, The board and the investment team, we call those strategy sessions.

Additionally, we help those teams operationalize the strategy further by understanding what quarterly operational milestones and goals they need to hit that will tell them they have been successful and are on track towards success and know when we need to modify the strategy going forward. And so we do that in what we call our strategy management process throughout the year, which includes a series of strategy review meetings. At a high level, that’s the work that we engage in. We do it for every portfolio company at Shore, and it significantly contributes to better outcomes over time.

John Murdock: So, one of the misperceptions that I hear sometimes going into a session is that if someone’s bought in to all the value we say we can help them unlock in that strategic planning session, they still have the worry of, will this be a waste of time?

Is it actually possible to get that many people in a room and have a productive conversation and engagement that makes really good use of a day? Because it is an expensive meeting if you think just about the value of all the people that are taking a day or two days to just evaluate strategy.

So, what would you say to that person?

 

Sarah Giblin: Yeah, um, I mean, I think first and foremost, people might have had that worry coming into session, but we’ve never once gotten that feedback leaving session. We’ve never heard, that was not a good use of my time, my team’s time, or the board’s time. We just, we just haven’t heard that. Um, and we do a ton to make sure that the time spent in session is a good use of time.

Uh, we start planning for sessions, you know, really like four months in advance of the session. Um, we speak to key leaders before the session even begins. We surface the conversations that are most important and most critical to have in session. And then we use. that information to design a pre session survey that gets feedback from the management team, board, and investment team.

All of that information, plus our market research, plus everything we know about the company to begin with is what shapes the agenda and the way that we spend our time in session. And so we, we spend a lot of time up front to design the, the most productive day. And then while we’re in session, we make significant adjustments if we need to, to reflect the conversations that have happened.

So we both have a really solid plan going in and then we adjust things, you know, in session on the fly based on what’s happening. Um, I think if somebody says, is this going to be a waste of my time? I actually think that the opposite is true. I think that if you don’t engage in a session like this, that will waste more time because it allows. everyone to get on the same page about strategy so that leaving session, um, CEO, board, investment team is clear what everyone is working on and make sure that those activities are in are the most, um, promising or productive activities.

 

John Murdock: So Sarah, I love A lot of that, that response there.

And one of the things that really sticks out to me is just the intentionality in design. So you’re talking about the topics that we will discuss in the order in which we will discuss them is debated and determined by our team in advance based on a whole lot of intel gathering and feedback from the management team and the investment team and the board and all those stakeholders.

John Murdock: What are some of the things that we do in the session? So we know what the topics are. We’re going to adjust in session if we need to, but to make sure that it’s a good experience for the participants. Some things maybe that we’ve added over time that weren’t a part of the process in the beginning, but we’ve learned from this environment.

 

Dane Drobocky: Yeah, we’re going to have our team there to personally facilitate through each exercise. Now again, John, just like as you outlined, these are highly thought about and structured agendas with key exercises that are going to drive value in order to extrapolate, double down on that even further. We’re going to have one of our team members there to facilitate the group through that exercise in order to derive all expertise, get more value and make sure it’s a productive asset going into the next conversation.

 

John Murdock: Yeah, there’s a ton of things that we do to make sure that it’s the most productive possible day, right? Because it’s too many topics, it’s too difficult a subject to be able to kind of just wander our way through, right? And so one of the ways that we accelerate conversation, for example, is we have breakout groups throughout the day.

So we’ll alternate between full group discussion, that’s going to be, you know, the 10 to 20 people that are part of the main group. And then they go into breakout groups of five, maybe 10 people, and they talk about a focus topic. Another group breaks out and focuses on their topic. That way, more voices are heard at one time. They come back with a consensus, and then we regroup as one full team. Uh, and then in that moment, they’re able to weigh in on each other’s outputs and conversations.

Also, those breakout groups are timed, right? So, there is a timer, it’s gigantic, on the wall, saying you only have 15 minutes, or 20 minutes, or 7 minutes. And the amount of minutes is determined by, You’re welcome. What we’ve learned is best from the other 104 sessions. And then also what we’re learning from observing people live in that moment.

Uh, we also have at the tables individual facilitators that handle each breakout. So that if a group is starting to go left or right, or if somebody’s starting to over talk, or somebody’s under talking, then we have a facilitator there to pull it out, um, or to redirect and to make sure that the output that we need, the answers, the conclusions, the consensus, is gathered, So that by the end of that session, the end of that breakout, we have what we need to be able to make a really good plan at the end of the overall session.

So there’s all sorts of things like that. I don’t know if there’s any others that y’all want to point out, but there’s a million things that are both technology and process and people that we have iterated over time to make this work really, really well for you to make it the best use of time possible.

 

Adam Shibley: Yeah, I think one thing to add there is that we have a doc

(document) camera that is able to display every single exercise that takes place throughout the strategy session. So if you were in one group and not participating in another exercise, that group will have a representative report out to the entire, uh, audience on what occurred during that breakout exercise.

And everyone’s able to visibly see it on the screen and process the information in a very digestible way.

 

Sarah Giblin: And then while that’s all happening, um, our team is It’s essentially transcribing the activity and the events of the session in a document that becomes the detailed output that we end up sharing with, uh, the session attendees.

So we’re working on that throughout the entire day, both, um, everything that is said as well as the big conclusions from each exercise. Once the session concludes, if it’s a two day session, we actually take all of that material and turn it, um, overnight to make it, uh, in a format that the session attendees can digest the next morning.

So we have opportunity to share back and say, you know, Hey, here’s everything that happened yesterday and with a little bit of space and a little bit of time to process, then folks are able to review and respond to that and, and basically say, yeah, we still agree. We still think that that’s the direction we want to go in.

And that for, for me and from my perspective as one of the most, uh, useful assets and useful, um, the, the value that our team provides, um, and, and that really pushes forward the group.

 

Dane Drobocky: Yeah. Everyone loves the timer. I think we hear that in every session. They’re going to implement it in their own meetings, too.

But just to get at people who think it may be a waste of time, in all the strategy sessions we have facilitated, board members have been there who have done these sessions before in the past. They have been in wasted time strategic planning sessions. I challenge you to go ask our board, reach out to the Shore board, if you may know them, expand your network, and ask them what they thought about the session, if it was a waste of time.

We have regularly heard that it is the best facilitated strategic planning session they have ever been a part of.

 

Sarah Giblin: Before I came to Shore, um, I ran a network of schools and so we thought we had a really great process that we used, uh, annually and then quarterly to decide on our focus of the year. Um, we called it priorities, not strategy, but we had that, you know, a way that we did that. Um, and what was really challenging about that is that we were both engaging in the conversations and the ones who are facilitating the conversations. And it’s really hard to do both of those things. It’s hard to facilitate and push the group forward while also being a participant.

So from my perspective, that’s one of the greatest values we provide is this group of people. We are the facilitators. We are the ones asking the questions, documenting the conversations, and sharing back what we hear as the major conclusions that are happening. Um, and we’re not the ones contributing our ideas.

Um, so that, I think, is the value that we provide.

 

John Murdock: And part of that, that we’re able to accelerate from all of the reps in the unique environment of Shore, and all of the unique reps in the environment of the most acquisitions in the world. Four years in a row is that we see the patterns and are able to identify the questions that need to be asked that are not being discussed yet.

More quickly than a group would be able to find if they ever would. On their own in a one day session for sure. Uh, so you see the. M&A person talking about how excited they are for this wide, wide, wide funnel. And you see the integrations person on the other side of the room is shrinking in their seat. And it’s a, hey, maybe we should talk about how these two things align.

You know, you see the organic sales person talking about how they’re going to go and target a certain set of customers. But you know that those customers aren’t actually in the geographies that the M&A person is targeting. Uh, for acquisition, so it’s not, they’re not in alignment, but they’re working in silos, right?

So, we see these sorts of things all the time and can help them help the teams identify that quicker to be more effective. But yeah, there’s just so many things that we put in place to make it an efficient day, uh, for sure.

 

Adam Shibley: And also, as we mentioned in the microcap space, you’re wearing so many different hats as a management team member to be able to put four months of dedicated time into planning a strategy session the way that we do with the level of detail that we have, it’s nearly impossible.

I’m willing to argue that it is impossible. Uh, our team is here to directly serve our portfolio companies and we are here to work for you 365 days a year. With that mindset and with that mentality, we are going to make it valuable for you and your company. That is a promise.

 

Sarah Giblin: Yeah, interestingly, I think we, so I said, We’ve never once heard that engaging in a strategy session is a waste of time.

What we do often hear is, wow, the amount that we got through in one day or a day and a half was impressive. I never would have thought we could have gotten through all of that. And from my seat, it’s because of the, the process that we rely on. And the way that we advance conversation, we’ve found, um, that, you know, we can have a 15 minute conversation about organic growth strategies, or we can have a 45 minute conversation about organic growth strategies.

And the difference in those conversations. We’re not really getting to much better of an outcome with 45 minutes as opposed to 15. And so what we find is by, you know, capping the conversation, bringing the group back, having someone report out and share the major conclusions, um, pretty quickly leads to alignment, um, and therefore ensures that we’re not wasting anyone’s precious time.

John Murdock: Yeah, those best ideas usually come out quickly, and then If there’s space given, they can be iterated on effectively. So it’s, you know, we’ll revisit that in two hours. And then, okay. Great answer. I love seeing that in session.

So Adam, along that lines, what would you say if we’re talking to a management team member or a new CEO that’s looking at the session and thinking, you know, I’ve run a business effectively already using my own processes that did not involve a strategic planning process that was formalized or that was anything like what I understand yours to be. What would you say to, to that person?

 

Adam Shibley: Our stance is that at Shore, if we are partnering with a portfolio company for a new platform, we believe in the founder seller or the CEO of that business. You have done a great job to get your business to where it is today.

However, to get to where you are today and where you need to go in five years for a shore exit are very different things. So the processes, the technology, the levels of communication, the granularity of what you’re reporting back to the investment team at shore or your board members is going to be probably pretty different from what you were doing over the past 15, 20 years, whatever your hold time before sure was.

What derives from a strategic planning session is going to help you with that communication back to the investment team and the board. As Sarah mentioned, we have many different outputs that are memorialized from our conversations and the exercises that occur at a strategy session. And we’re able to meet with you on how to prepare those to message that correctly to a board.

Um, and we’re really here just to help you. with that adjustment to the new ownership group at Shore.

 

John Murdock: Yeah, no, I love that. And I think that theme of, we’re here to support you, right? So, they were chosen because they were great. We know they’re great. We’re just here to help. And the notion that what got them here isn’t what is going to get them there, uh, really resonates for me.

I know I was having a conversation with a CEO a few weeks ago, and it was a founder seller who had, He built a really great business, a good three, four million in EBITDA dollar business. Took him about 10 years to get there and had made a really nice living for himself. Like if you’re a sole owner of that type of company, you’re probably doing pretty well, right?

Um, but he needs to get to $30 million in EBITDA in the next five years. So in half the time, he needs to grow 10X the EBITDA that he did before it. And so it, it was a realization on his part that he shared with me of like, you know, I did a good job, but I need to learn new ways to do things to be able to build what I want for this next stage.

And the fun part is, for the CEOs we normally target partnering with at Shore, is they’re growth oriented leaders. And so, this is a really cool opportunity for you to expand your skill set. You’ve already proven you can do the other thing. So, now you get to prove you can do the new thing and learn what it takes to do that.

And I bet you’ll do it. Uh, and we’re excited to support them while they do.

 

Anderson Williams: If you enjoyed this episode, be sure and check out our other bigger, stronger, faster episodes, as well as our microcap moments and everyday heroes series at www. shorecp. university slash podcasts, or anywhere you get your podcasts. This podcast was produced by Shore Capital Partners with story and narration by Anderson Williams, recording and editing by Austin Johnson, editing by Reel Audiobooks, sound design, mixing and mastering by Mark Galup of Reel Audiobooks.

Special thanks to John Murdock, Sarah Giblin, Dane Drobocky, and Adam Shibley.

This podcast is the property of Shore Capital Partners, LLC. None of the content herein is investment advice, an offer of investment advisory services, nor a recommendation or offer relating to any security. See the terms of use page on the Shore Capital website for other important information.