What Makes a Great CEO: Part IV | Executives Bill Clendenen & Michael Burcham on Defining, Executing, and Adapting Your Strategy

Anderson Williams: Welcome to Bigger. Stronger. Faster. the podcast exploring how Shore Capital Partners brings billion-dollar resources to the microcap space. This episode is part of a series in which I talk with Shore Executive Partner Bill Clendenen and Shore’s Chief of Strategy and Talent Development, Michael Burcham.

So far in this series, we’ve looked at what makes a great CEO, what makes a great CEO specifically in a Shore portfolio company, and how a CEO should think about building and developing the team around them. In this episode, we’ll talk strategy. We talk about what it is, what it isn’t, how to think about it, and how to use it.

Welcome, Michael and Bill. Thanks for joining me today.

 

Bill Clendenen: Thanks, Anderson.

 

Michael Burcham: Good to be back with you.

 

Anderson Williams: So, can we just start by defining what is strategy from your experience and perspective? And then, what is a strategic plan as it relates to that strategy?

 

Michael Burcham: So, a strategy is a decision of how you want to win. In your chosen marketplace, having a strategy really requires us to think about the market dynamics, the product or service we have, and given the competitive landscape there, the approach we want to take to win and grow. The strategic plan, on the other hand, engages with all the different decision points and resources needed to execute that strategy, which will include resource needs, people needs, which geographic locations does our product need to be priced as a premium and set with really great additional value beyond the competitors?

Or are we looking to match? Where the competitive landscape happens to be and offer at a more compelling price. So all of those smaller decisions, which are usually time bound and often predicated for some degree of change is the plan. Here’s a very simple way to think about it and Bill, as I finish this part, I’d love to hear your view.

A strategy could be, I want to go from New York to California. The strategic plan is what roads will I take, where am I going to stop for an overnight, I might need some food along the way, probably need to fill the car with some gas, or hey, I may just take an airline and fly, but it’s going to cost me a lot more.

That’s the plan, is the fundamentals of executing to get to California, the strategy was I want to get to California.

 

Bill Clendenen: I completely agree. I use a different analogy. Like, I’m a water guy, so I like the sailboat analogy, right?

I’m in Boston, and I want to go to London. So, who do I need? Do I need a navigator? Who’s my person that’s going to tie my knots? Who’s my shipmate? So, you know, you get the crew. What do I need to eat, right? But once you set off and go into the ocean, right, the winds change. You might actually have to sail away from London to actually go up to Canada to get to London versus just going straight.

You may have pirates come and attack you, your competitors, they come in. How do you mitigate those things? So the plan, I want to get to London from Boston and sailboat is great, but once you set forth from that harbor, everything changes, right? And that’s how you need to think about strategic planning because the circumstances change once you set off and start going.

 

Michael Burcham: I think then, if I stay with Bill’s analogy, choosing the right financial partner is really important early on, because if you’re going to leave Boston and go to London, are you going to go in a rowboat? Are you going to go in a 15 footer? Are you actually going to have something that can actually cross the transatlantic well? And not fall apart somewhere in the middle of the ocean. So the right financial partner probably matters a bit if you’re gonna set out from Boston to London in a sailboat versus a rowboat.

 

Bill Clendenen: It matters a lot.

Anderson Williams: So as former CEOs, as board members, as lead independent directors, as CEO coaches and mentors, Michael, maybe you start. Walk me through what it looks like when a CEO uses their strategy and their strategic planning process well.

 

Michael Burcham: So no plan matters if it’s not being executed. So I think the most important job once a plan is in place is to understand who on your team is going to be leading which initiatives. What is the time frame for those things to be accomplished? What resources are going to be needed? I mean, a CEO’s job is always the plan, the resources, the people.

If we get those things right, you can typically execute a plan. But if you get those things wrong, you don’t. You can’t have a strategic plan that calls for great data, and you have no resources and tools around collecting and having great data. You set your team up for failure, and you set your company up for failure.

So, the plan has to reflect the people and the resources that you’re going to need, and the time frames within which you expect things to happen. Things will change along the way, and a best practice is at a minimum a quarterly review of where are we compared to where we thought we would be. I encourage Shore CEOs to do this about three weeks ahead of their board meeting.

Because updating the board on how a market might have shifted, or how some of our early assumptions have not proven to be true, or even the initial investment thesis by Shore and where some challenges might be in that investment thesis. Those are best discussed with the board because the board has already signed off on your strategy and your plan without that quarterly review and without really keeping the board apprised.

I think companies run amok. CEOs get so in the weeds working in the business instead of on the business and six to nine months in, you don’t really know they had a strategy or not. Because they are basically responding to things coming at them every day. They’re certainly busy, but they’re not working on the priorities that drive enterprise value in the company.

 

Bill Clendenen: Yeah, I would agree with that completely. And I think one of the great benefits as a CEO of being not only dedicated to the strategy and the strategic planning process is you get true alignment from management, from your board, from the private equity firm, Shore, and from your stakeholders. And what I’d like to talk about a little bit, how you can make that come alive.

And when I was a CEO, probably one of my biggest mistakes was doing a strategic plan and then putting it on a shelf. Right. And I’ve seen many CEOs do that. Right. So I’m not saying or advocating that at all. One of the keys to my success of being a 16 year private equity backer. CEO was not only focusing on strategic planning, but making that come alive operationally, right?

So how does that happen operationally? Like you spend two days with Michael and the team and you’d developed this great plan, the boards and alignment you’re moving forward. You can use then the strategic plan to drive your annual budgeting process, your annual goal process, your quarterly goal process.

We used to host monthly operating reviews. And what we would do is we would review each one of our pillars every quarter in advance of the board meeting so that we could update strategic plan on a quarterly basis. This is how we’re tracking, right?

It’s similar. We’re going from Boston to London. Where am I in the ocean right now? Right? So being able to communicate that your mission vision values, that’s a communication tool to your stakeholders, to your employees, to your customers. How do you celebrate success as a part of the organization? How do you identify and celebrate failures? Right? Some failures are good, right?

What do we learn from that? So in my experience as a CEO, I’d say the biggest transformation for my success was a dedication to not only a strategic plan, but making it come alive operationally.

Anderson Williams: As I listen to you guys, it sounds to me like you’re talking about a strategic plan as much as a communication tool and an organization tool as it is some kind of a roadmap.

You’ve talked about review and communicate and adapt and make sure your board knows this and you’re planning ahead. Make sure your team knows how to operationalize it. I just think that’s an interesting perspective because I don’t think most of us think of it as a communication tool. We just think of it as, OK, here’s what we said we’re going to do.

Now we go follow it.

 

Michael Burcham: It’s a communication tool for the team you have. It’s a communication tool for the individuals you are going to hire over the coming quarters. It’s a powerful communication medium to future customers and future stakeholders you may not even have today. It really helps guide. the behaviors of the company, the behaviors of your team.

And if done really well, Bill mentioned team alignment. You can pretty much set everyone’s quarterly and monthly goals right out of the strategic plan so that everybody’s working on the right stuff, not just stuff. It also keeps your board in check. So they’re not throwing a million ideas at you every quarter.

Every board member wants to be helpful. If you as the CEO are really thoughtful about how you continuously reinforce and bring your strategic plan to every board meeting, where you are, lessons being learned, what’s being accomplished, you, your board, and your investors, those of us here at Shore, will continue to stay aligned.

And rather than coming up with five new ideas of the month, we’re doubling down on how do we go when, in the space we all agreed was important to achieve the objectives we have for this company.

 

Bill Clendenen: I think one other thing, too, that if you do this well, and there’s tools we have in the strategic planning process that help us capture this is, but what’s changing in our markets, what’s changing with our customers, what’s innovation happening, right?

So, you know, Wayne Gretzky said, you know, don’t go where the puck is, go where the puck’s going to be. Within the strategic planning process, you can work with your team and your customers and your stakeholders to figure out where the puck is going so you can best position the company to capitalize on that.

And there are multiple, multiple examples of people changing strategy midstream because the environment’s changed, right? In my own example, as a Shore CEO, the original investment thesis and strategy was we were going to open up de novo. So 80 percent de novo’s 20 percent acquisitions. Look, once COVID hit the environment changed, doctors wanted to sell their practices.

They didn’t want to deal with PPP loans, ordering PPP, human resources issues. So they were like, look, if you want to buy it, we’ll sell it. And so we actually changed our strategy because the environment changed to become more of an 80 percent acquisition, 20 percent de novo.

 

Michael Burcham: And sometimes it isn’t as significant as a pandemic, but lots of things change in your marketplace.

Or, you start typically a business with 75 percent assumptions and about 25 percent of the facts. And if you’re doing your job, over time, the fact pool gets bigger and the assumption pool gets smaller. But you find some of those things you assume to be true aren’t true at all. A best practice we have instituted at Shore that has dramatically helped our CEOs is twice a year, every industry, sector, and vertical we are invested in, we do a market update that is informing the CEOs in that space how has the competitive landscape changed?

What’s going on in this industry? What new things have happened through either others merging or new entrants or new innovations that’s changed customer expectations have occurred that really requires us to shift the strategy a bit. And I have found just in the last year having that as part of the quarterly review and the annual review we do with the companies has been very powerful.

So not only do we do the quarterly check ins with the CEO, But the once a year where we actually sit down again together for a day and update and look forward two to three more years and where we want to be keeps our eye on a North Star. But also we don’t get so naive to think the market looks just like it did two years ago because no market is static.

They’re all always shifting and changing.

 

Bill Clendenen: Yeah, that’s the reason why you need to do an annual refresher. You have to keep that up to date, right? The strategic plan essay is a living document, right? It’s not one and done, you know, every day, every month that changes once a year, you need to look at it and refresh it.

Anderson Williams: And you guys have talked about that refreshing process and the need to update and adjust in terms of changes in the market. For example, external forces that and assumptions on the market and the business that have changed. What about just an inside out view of how that early stage company grows and matures over time and then the strategy maybe gets more refined because it’s less assumption or how does the strategy and how does the approach to strategy and planning change again as you go through that planting, growing, harvesting cycle sort of independent of external forces just because the business is different?

 

Michael Burcham: It’s quite common in microcap to start with one very tight core product and then you find as you grow adjacent spaces that add new potential revenue streams or give you a larger share of wallet of the same customers and sure we call this the honeycomb and it’s just a visual of it in the very middle what was the core thing you started with?

And if we do our jobs well in growing the company, we will identify adjacent opportunities that can really help the company exponentially grow. Sometimes that also includes horizontal growth and acquisitions. Sometimes it may mean vertical, where we’re picking up elements of our supply chain or stronger elements that lead out to the terminal customer, or it could simply be adjacent products that are quite complimentary to what we have as the core.

So I think as you hit the growing phase, you get that luxury. Once you’ve proven in the planting phase, you’re really good at the core. Then at the harvesting phase, you really want to say based on our success and our reputation in the market and how we have financially proven our ability to acquire and scale and grow and lead, what else could be done?

Because that becomes part of the selling narrative when you’re looking to place your company with a larger partner who can fund it to even a greater degree than sure did. They want to know what’s next. And if you can’t answer what’s next, it’s really hard to have a great transaction.

 

Bill Clendenen: And for me, I think about the analogy of the sailboat, right? When you and your team first set out to go to London, if you’re two to three degrees off on your compass, you’ll be off course, but you’ll be able to course correct, right? You might not have the wrong crew, right? You might have to promote somebody from within who’s better.

So those first, you know, few months, year, you know, you’re really learning the ship. The closer you get to your destination, right? You have to kind of narrow your focus, right? A three degree off towards the end of the trip, you might run aground, right? And so I think the sooner you kind of understand where you’re going, things you need to get there, your strategy, the tools you need to get there, the people you need to get to, the processes you need to get there, the easier it will be to get to where you’re going.

 

Michael Burcham: I agree, Bill.

Anderson Williams: Bill, you mentioned before thinking about the strategic plan as a living document, and I want to go back to a previous conversation CEO and building a team and scaling a team. As your team grows and evolves, how do you keep the strategic plan alive and present down through the organization?

How do you communicate that consistently that when you’re adding several employees a week or a month or that even gets faster, how do you keep that alive?

 

Bill Clendenen: It’s a part for me as CEO. It was a part of the fabric of who I was and the company I was building. And so as a part of their onboarding process, right?

We had our mission, vision, values, right? So they knew who we are. We actually used our values as a recruiting tool. This is who we are. This is what we stand for. Come work for us. So even before they became employees, that was a part of our recruiting tool. Once they come on board, we very clearly lay out the strategy.

And so as a part of our onboarding process, that would be explained to them. Maybe not in exact detail, right? They’re not getting the pillars, but they would get a framework of, hey, look, we’re going to London. We need you to go from Boston to London. They would know that. Then beyond that, what you do, you know, from a general employee perspective, every month at our monthly staff meeting, I would review our strategic plan, our mission, vision, values. You’d actually celebrate and champion those people that celebrated our values.

So if our core value was compassion and somebody demonstrated that for a customer or a patient, we would celebrate them individually. If one of our core values is continuous improvement and somebody made a mistake. We’d celebrate that mistake, but talk about what they did to correct it, right?

There was one story, I had an employee who misshipped something, a critical package to somebody, and they sent it to the wrong state. And so what they did, they didn’t ask for permission. They drove a package to the airport, bought it a ticket and sent it. It was that critical. And like, I didn’t get mad at them for typing, you know, fat fingering the state code.

I celebrated them because they took the initiative to fix their problem, right? And so part of our strategic plan, our mission vision values, Where we’re going are specific initiatives on a monthly basis, quarterly basis, annual basis. Those were all shared not only just as a management team, but also as an entire staff.

 

Michael Burcham: Anderson, a really good CEO understands that for an individual team member, wherever they are in the organizational chart, whether they’re your direct report or they are further down the organization reporting to one of your direct reports or even a frontline team member for them to embrace the strategy as a living, breathing thing that matters.

They not only need to hear the strategy, they need to hear and understand how their individual role contributes to the strategy and why it matters. If the CEO and the various leaders in the company never forget to do that with their team. The strategy will actually live all the way down through the organization.

Because now as an employee, I know, yes, this is our plan. This is why my work matters. And this is how my work contributes to our overall success in doing what we set out to do as part of our mission and vision. But without that, as you go down an organization, the strategy looks more like a set of slogans.

And my job is just a to do list job. And that’s why so many companies have frontline turnover. It’s the strategy never transcended down to the frontline. And people simply have jobs. They’re not part of making an impact or a difference in an industry. When you at the frontline know the strategy, you know why your work matters and how it contributes overall.

You’re making impact, and when you’re making impact, the amount of effort you put into delighting your customers, supporting your team and being part of something is just fundamentally different.

 

Anderson Williams: If you enjoyed this episode, check out the other episodes in this series at www.shorecp.university/podcasts or anywhere you get your podcasts. There you will also find episodes from our Microcap Moments as well as Everyday Heroes series, each highlighting the people and stories that make the microcap space unique.

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 Bill Clendenen and Michael Burcham.

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.