It has been a while since we have prepared and sent this letter, but we suspect we are not the only organization attempting to develop a sense of the “new normal” to best serve clients and customers. We wish you the very best for a developmental and prosperous 2023. Many of us enter 2023 in the midst of great uncertainty. But- we have the “goods to succeed” if we access them and pay attention. We have all taken in the choppy good [business]  news bad [business]  news cycle over the past several years.  As expected, governments’ spending to keep the economy afloat during the depths of COVID, accompanied with [should have been expected] physical supply chain imbalances and disruptions that caused flareups in the normally steady [ier] supply/demand equations and – of course, price increases and  the specter of inflation emerged.  Throw in the sad and immediate losses of the invasion of Ukraine, and then the longer-term impacts food safety, energy imbalances, and a real mess (technical term) emerged as we move into 2023. And it became a really big mess- against which all good business leaders had to plan and act to thrive. Despite the choppy news cycles, we have also experienced the steady sensationalism of the business and common press conflating the cause, effect and possible remedies presenting more disorientation and fear that certainly advances “viewership”, but hampers clear thinking, action, and the ability to motivate employees and others to gather resources and focus to deal with the main event-of working on their organizations and become overtaken by the side show! If that’s not enough, throw in that we were nearing the end of a long run of technological opportunities, really cheap money and young companies emerging and more seasoned companies struggling to keep up – but adding programs, projects etc. to embrace emerging opportunities.  Couple that with the fact that leaders of these businesses were young, smart ambitious, positive, and largely inexperienced in leading in environments where the “arrows were not pointing up”  These tech companies have begun to respond and the interpretations of their responses are co- mingled with:  “is there real fear of the future”, or “is this a correction to the exuberant innovation spirit and yet to be commercialized innovations of the last 5 years”?  Many of the actors are unwilling to say, but the business press continues to oversimplify what might be going on and cause additional doubt about our economic futures, and stymieing  organizations from clear thinking and action. At PMCC Ventures, our focus has always been on value creation- early, often, continuously, and fast.  We are all shaped by our experiences and ours is partly shaped by our work with  organizations  that had lost their way and the challenges they encountered, as well as by organizations that kept their eye on the prize, continuously adjusting and the things they were able to accomplish by increasing their value [and confidence] for markets and customers, owners, employees, stakeholders, and their overall ecosystem.  So, in this year’s letter we attempt to provide some context around our current conditions- and inspire confidence that we have experienced, weathered, and really succeeded in dealing with similar circumstances in the past.  But, we have come to realize that our focus and mantra to continuously improve the business of Your Business is not enough.   We are adding the lens that has developed from our work in helping organizations on both the buy side and sell side of transactions- and think that Business Leaders need to start running their business’s each and every day like they are for sale and will sell for strong prices and with great terms and conditions.  What this really means, is that organizations have to be increasingly discerning on what they  hear and read and how they incorporate that into their thinking-and have to look hard within their own operations, capabilities and capacity to effect positive value creating operations and results. We love to discuss and help organizations create value (and get a bit cranky when we see value creation opportunities fritted away). If you want to talk more about value creation give us a call or text  215.680.7331 or email: pat@pmccventures.com    Thank you for your support and friendship and best wishes to you and your organization for a value creating 2023 and beyond! Read on for more in depth thoughts We decided to delay sending this note until Ground Hog’s day- for a few reasons beyond wanting to know the “weather forecast” and a need to justify our proclivity to procrastinate Did you know it is Phil’s 60th birthday?  Also did you know that the Punxsutawney Phil (“P.Phil”) event has gone on for most of the past 137 years? Like many of us, Phil has experienced a lot and is hopefully relying on that experience and wisdom to make his prognostication- happy birthday to Phil. We were trying to gain as much perspective as possible to better understand the current situation we and our clients are experiencing. Over the past years, we have been bombarded with really challenging, table flipping situations, reporting of those situations that seemed only to focus on sensationalization, which then unfortunately resulted in obfuscation. Makes it tough to assess, think and strategize. As native [ fill in the blank] companies emerged, seasoned folks left the workforce etc., we now have a leadership class that has not had the learning [hardening?] of significantly working in business downturns. Similarly, since many of these folks “came of age” when the sky was the limit- they may have had a tendency to over invest, entertain decent ideas that could not commercialize at scale and be understandably  swamped with many different/similar/competing technologies [with no real standards to accompany them-and enable commercialization at scale]. But if you have been around long enough, you have seen that before- and hence why Phil is a good mascot for leading into 2023. 

We are in the midst of it and have to weather this storm smartly- and overcome the “forecasts that are supposed to help”!

We are interested in seeing whether or not conflicting economic headlines promoting hand wringing will continue.  Probably, like you we wearied of the competing side by side headlines:·

• Rampant Growing inflation
• Interest rates out of control
• Housing prices are falling

Or the other themes:

• Consumer prices are growing up
• Supply chains are knotted
• What are [the] governments doing wrong- and why are they doing this to us?  Why won’t “they” fix it?

It is scary that no one seems to reflect the tightly wound systemic nature of these problems, nor the cause/effect/[attempted] remedy cycle- and the call for a government intervention across multiple and global supply chains.  These are intricate challenges and simplistic headline [grabbing] only serves to confuse, prolong and exacerbate the challenges of the remedies. But, But But…. we also learned in our research that P. Phil has only been right about 40% of the time….  We have to become more discerning about what we hear, read think and apply to our thinking about our organizations.

Paying serious and unilateral attention to prognosticators causes freezing!

• • •  If you are almost as old as Phil… you have experienced this weather and been to this play before- you have experienced high interest rates, you have weathered them and have prospered – on a personal level. 

On a business level, you have been to the play before as well-

if you are near Phil’s age- you have seen a lot of different cycles, you have weathered them and have likely prospered.  You experienced the moves to make- and in many cases orchestrated them and were able to help your organization see its way through to a productive outcome.

So, you know that these themes will not persist- but it is the time for every good businessperson to get back at the helm—and do what good business people do- Assess, Plan, Execute, Repeat…. Until you get it right and are navigating towards prosperity.  But for some context on how we might have gotten here- and for some courage to embrace the future smartly- remember these things:

 

Many of us have been there- but- as we look back at our most recent situation, there is a challenge.  Many of the folks  in leadership positions today: swinging the baton, allocating the resources, making critical and mostly data and experience free decisions (through no real fault of their own- they simply did not have the data or the experience to overcome a lack of data) did not have the benefit of these perspectives.  And, the Advisory class of Investment bankers, fund leaders etc., mostly and similarly lacked that same experience.   

So, as you look at your shadow and prognosticate about the future- consider these questions

• Should we be surprised to find ourselves in this condition? What do you have to do to “unfreeze”
• Why don’t leaders understand and act upon the systemic interdependencies in their businesses and plan to act upon them?
• Why was the business press conflating causes, effects, and remedies- what impact does that have on your ability to motivate and mobilize your team?
• What are you doing now to set up for maximum well-being and prosperity

·

But these questions and these answers are not enough. The areal question for great business leaders is how do I get from here to where I want to be.  Conjure up the Yogi Berra quote for some inspiration:

 

Don’t be fooled- this is hard work- and for many of us our initial instincts might be well intended:

 

We live in a 130+ year old house so we are particularly guilty of this as a starter… And we commiserate with a lot of friends, colleagues and clients and realize just how this might be- but we are all faced with the common reality- we don’t have a choice but to deal with it!

 

Startups and greenfields are frequently easier to deal with!  What do we need to consider to overcome the continued freezing suggested by P. Phil from Punxsutawney, PA?

So- given what we have learned- what’s the best way to proceed to set up for success in 2023 and beyond? 

• Prognosticators might not be right
• Some leaders, despite a lack of experience, are fully committed and articulate about their point of view
• and you as a business leader today- are charged with doing your job- which is to take the hand you are dealt and create the most value possible.

Our suggestion is to take all of the info you can for balanced consideration and then stand up and take action with your team, for your situation, and your unique opportunity to create value.

For the many that know me well, you know my mantra has been:  “Work on improving the business of Your Business”.

Given the changes we are all experiencing, and the uncertainties we face- positive and negative, we continue to believe there is no time like the present to double down and continue to focus on improving the business of your business by sharpening thinking about how you create value through:

• Focus
• Strategy
• Filling customer wants and needs
• Filling employees wants and needs
• Filling other key stakeholders wants and needs
• Delivering returns
• Simply becoming as good as you need to be to deliver on your vision and goals for your organization

 But in many instances, that does not seem to be enough guidance or an adequate lens to appropriately motivate management teams to address future prosperity. 

 

For 40+ years we have worked helping companies in various stages of a deal process: Buy, Improve, Sell.  Over the past several years our work has morphed to another range of the deal process:

1. Decide to sell
2. Assess what am I selling and is that worth enough?
3. How do I make it worth it?
4. Take it to market
5. Reap the benefits of a lot of hard and smart work.

So-there  is more–  we are adding to our mantra: you have to run your business each and every day like you will sell it (at the best possible price and terms) tomorrow. 

Simply- you have to put a lot of your spirit, smarts and will into your organization to thrive!

As we size up businesses for purchase, and think about positioning for sale, these are the thoughts that are shaping our work, effort and thinking.  We hope you will find some value in these thoughts for your organization no matter what you are thinking:

Reality check: ·    How important do you believe these considerations are for your business? How much time and effort have you spent working on these matters- As a Leader to shape your thinking With your teams to develop a shared understanding and focus Do you think you are prepared to deliver the results you want? If not, what are you willing to commit to get it done?

We have spent a lot of time in the past years in various transactional roles- buying, selling, and fixing when folks actually bought something different than they thought they were buying, or the expected synergies did not pull through. 

The dynamics of buyers really wanting to buy (FOMO and Needing to put money to work) and seller’s desire to cash out or take chips off of the table, and the speed with which these dynamics built to a crescendo, caused a lot of frenzy, so there will likely be a concussion blast of disappointment on the horizon. 

But on the bright side- the reduction of the FOMO pressure will allow owners to take stock, make the necessary moves to create value- and wait until the moment is right for them.  am not sure whether it is age (we prefer the experience concept) or the times, but as we write this note this year- we are armed with more questions than prescriptions.  We hope that the questions provoke more thought, introspection, and beneficial outcomes than prescription.

As we enter 2023, we think there are few certainties:

• It will be a choppy year
• Main St and Wall St economies probably won’t synch up (sending a lot of mixed signals-which are problematic if you don’t have a paradigm to assess them)
  • There are likely to be many Main St economies not all moving in same time and place
• Inflation and Interest rates (one of the primary tools to combat inflation- so why all of the wringing of hands- which would you prefer?) will continue as uncomfortable bed fellows 
• Employment levels and access to the appropriate folks to fill required roles will continue to be a challenge for a long time- so what are you going to do about that?
• Cash flow-and the cost of funds, like the old days will be increasingly important
• Extended supply chains will continue to evolve (see cost of funds challenge above re financials) creating uncertainty in systems that tend to work best in homogenous environments (do you remember when we spent a lot of time and a gazillion $ to make them the fastest, lowest cost efforts ever?)
• Employees, Leaders, and Organizations will struggle with finding the right mix of work styles to deliver both for customers and employees
• Aging workforce, people checking out, slowed immigration and changes in worker knowledge, skill, and experience necessary for success will continue to put pressure on getting the right people in place at the necessary time
• The markets in which we operate will evolve, change, or wither. 
•  Organizations in your value chain will deal with challenges  and opportunities at different times and paces (and will discuss with varying degrees of understanding and candor)- which will seem to amplify uncertainty—(but life cycles will govern, and we can better understand if we hang change and challenge onto a lifecycle model)

We are clearly operating in a time of change- giving up and seeking new This list is obviously daunting- but abbreviated and will have to be modified to be completely relevant to your organization, however there are no real surprises in the list- and most have surfaced in some measure in the past for most organizations (and we coped, and we are still here).

However, some listing like this is necessary to frame the future for which you are planning success.

Reality check: How much effort and quality time, have you spent preparing and assessing your list? What are the most critical certainties/uncertainties for your organization? Have you catalogued? Have you weighted? Have you considered them systemically? Are you comfortable that all of the people in your organization responsible for the future and allocating resources Have sufficient understanding? Understand the ramifications for your business? Have a shared and systemic understanding and appreciation for the conditions you encounter? How prepared is your organization to plan and [change] operate in this environment?

With all of the thinking about uncertainty and planning future, we can’t take our eye off of the ball today- the day job continues– we have to continuously create the resources today to enable us to compete tomorrow.  We have to Live To Play Another Day (LTPAD), so as you think of the future are you thinking about attitudes and capabilities for success? 

• Are you thinking more about
  • the HOW you do something vs the WHY and the WHAT you are doing? 
  • Could a different WHO or WHERE provide a better result for you?
• What are the hurdles slowing you down today– that will also slow you in the future if you don’t deal with them?
• Do people on your teams have the necessary curiosity and inquisitiveness, to “get behind the transaction or event” to understand it- and process that insight for continued improvement?
• Do people on your teams have adequate command of the business tools at their disposal
  • Do they demonstrate capability and competence- do they strive to use them more and more creatively?
• Are you mired in data- or do you have the capability and sensibility to mine and mold data into information, insight, and foresight?– Or are you starving for meaningful data about your organization and supply chain?
• Are you thinking more about
  • • the HOW you do something vs the WHY and the WHAT you are doing? 
    • Could a different WHO or WHERE provide a better result for you?
• What are the hurdles slowing you down today- that will also slow you in the future if you don’t deal with them
• Do people on your teams have the necessary curiosity and inquisitiveness, to “get behind the transaction or event” to understand it- and process that insight for continued improvement?
• Do people on your teams have adequate command of the business tools at their disposal
  • • Do they demonstrate capability and competence- do they strive to use them more and more creatively?
• Are you mired in data- or do you have the capability and sensibility to mine and mold data into information, insight, and foresight?–
• Or are you starving for meaningful data about your organization and supply chain?
• Are you having more conversations about transactional tools and process than data and information creating tools and processIt is scary that no one seems to reflect the tightly wound systemic nature of these problems, nor the cause/effect/[attempted] remedy cycle- and the call for a government intervention across multiple and global supply chains.  These are intricate challenges and simplistic headline [grabbing] only serves to confuse, prolong and exacerbate the challenges of the remedies.

Please accept our best wishes for a healthy and terrific 2023 and beyond. And thank you for all of the learning you have helped me accomplish over the past 40+ years. The rewarding thing about this Beginning of Year Note is that we know most everyone that will receive it (and hopefully read it)- and are having fun handicapping the reactions! pjm@pmccventures.com

text:  215.680.7331