Platt Perspective on Business and Technology

Rethinking exit and entrance strategies 1: managing transitions through business change and discontinuity

Posted in strategy and planning by Timothy Platt on August 26, 2015

Every effort or enterprise has an initial starting point or entrance, and every such endeavor eventually reaches an ultimate ending point or exit. And given the universality of this, entrance and exit are usually thought of in that order. But functionally and as a matter of continuity, it makes more sense to think of significant transitions that take place between those ultimate beginnings and endings, as processes in which one phase or stage ends and a new, next one begins. Those transitions take place as endings shifting into new beginnings, and as exit to entrance transactions. This posting represents a first installment to a general discussion of business transitions: a commonly occurring and recurring event that can arise in a wide number of ways, and lead to a variety of significantly distinct outcomes, but that categorically always have at least some constraints and some governing issues in common:

• They are governed by and explicable in terms of what at least in retrospect, follows a clear path of causality,
• And with that causality explicitly accounted for, when and where a transition is in any significant way strategically planned out and executed. (So I am not discussing flip of a coin decision making or its consequences here.)

And I begin this series’ discussion with the fundamentals, and by establishing some basic parameters:

• I assume that any significant transition at least ends with a serious attempt at strategic assessment and planning, and with operational execution that is grounded in that analysis and planning.
• Sometimes the most pressingly significant transitions are forced upon a business and its leadership by circumstances that were not and that even could not have been predicted in advance. But even there, making a transition work effectively, always means planning and executing with care in identifying and understanding a starting point now, and in developing towards a stable, competitively viable next stage for the organization to transition into from it.
• Developing from that point, I assume as a given that a wide range of types of business transitions are at least in principle highly predictable, and subject to careful analysis and planning going into them, and even way in advance of when any true commitment points are reached in following through on a next stage strategy and course of action.
• Some of those transitions are routinely expectable, as for example when a new business leaves its initial startup stage moving into an early business stage, and when it moves past that stage into an early growth and development stage as a now-profitable enterprise.
• Some of these transitions become predictable only when and as they are approached,
• And they can arise as transition events that are more business context-driven and perhaps even in ways that are more unique to the business at hand, for key details.
• And some transitions, as for example when addressing a sudden unpredictable crisis, arrive unplanned for and unavoidably so.
• The more predictable a transition is and the more lead time is available for planning and preparing for it, the more strategically it can be entered into
• And at least usually, the wider the range of options that are going to be readily and cost-effectively available for exiting it and entering into a new, ideally more stable and favorable next stage.

I recently offered some generally stated thoughts concerning business transitions, in a startup and early stage exit strategy posting: Planning for and building the right business model 101 – 11: exit strategies, entrance strategies and significant business transitions 1 (and a subseries Part 2 to that discussion will soon follow.) I focused in that already live posting, on a very specific set of transition types, but offer these points again here (with some reorganization and rewriting), for their wider relevance to this series’ more general topic:

• Business transitions are complex processes and even complex systems of processes.
• Setting aside fundamentally one sided transitions, at least for the moment, such as initially planning and launching a new business enterprise from scratch or closing down a business and selling off its remaining assets piecemeal where everything that went into that business as a once viable enterprise per se, now ends, they generally include within them exits where an Old is being closed down and transitioned out of, and entrances where a New is being developed and transitioned into. I will discuss both one and two sided transitions in this series to consider as wide a range of transitions overall, as possible.
• But focusing on two sided transitions again for now with stage exits leading to next stage beginnings, those events are marked by both a need for explicit exit strategies and exit operations, and entrance strategies and entrance operations.
• And making a transition work smoothly and effectively is all a matter of smoothly and efficiently switching out of old, outgoing goals, priories and understandings and their accompanying operational and strategic frameworks, and into a new for all of that. I will be discussing the business process and the business negotiations and communications issues that enter into making all of this work, in this series too.

My goal for this series is to expand upon these more generally stated and abstractly offered statements, doing so in a more business case study and example-based manner. And my goal there is to frame relevant general underlying principles in more of an explicitly real-world business context, and to offer approaches for thinking through and executing more effective, due diligence-aware transitions as a consequence.

Up until now in this blog I have primarily addressed these issues in the specific contexts of startups and early stage businesses, and their transitioning out of those business development stages and into an early profitable growth stage. See, for example:

Online Store, Online Market Space – Part 18: exit strategies and long term planning,
Understanding and Navigating Burn Rate: a startup primer – 11: exit strategies and their implications and consequences – 1 and its Part 2 subseries continuation, and
Building a Startup for What You Want It to Become 5: exit strategies and goal directed strategy and planning.

I add that I have also at least briefly and selectively touched upon the issues of business transitions, also primarily from the exit from old side of them, in other contexts as well. See, for example:

Acquisitions and Divestitures 4: exit strategies and the sale and acquisition of complete businesses 1 and its Part 2 and Part 3 subseries continuations.

I am going to continue this series in a next installment, starting its working example based discussion with crisis management, and with transitions that arise without warning. And in anticipation of that, I note here that I will discuss the issues and challenges of knowing and understanding what might have suddenly become a very real but totally unexpected and uncertain new here and now, that is going to have to be transitioned out of. I will discuss the more open ended what-if due diligence planning that can be done in anticipation of this type of event, and I will also discuss how blue sky exercise emergency response planning breaks down when actually needed – as it usually does. After that I will add in predictability and opportunity for more focused, and hopefully more useful specific preparation. And in the course of all of this I will discuss operational and strategic issues and a detail that I mentioned in passing by name above, but that I have yet to really delve into yet and either here in this series or in this blog – up until this series at least: commitment points. And as promised above, I will also discuss one and two sided transitions and I add other relevant issues too.

Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 3 and also at Page 1 and Page 2 of that directory.

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