You’re standing on stage at an award ceremony and the event host hands you a microphone and says: “Five years ago, your company wasn’t making money and nobody knew who you were. Last month, you sold the business for millions to a large firm and everyone knows your brand. What one thing made the difference to investors and to the staff?”
The answer might surprise you: it’s a one-page strategy or visualisation.
A clear, simple and visually articulated strategy can positively influence investment decisions and might add six or more figures to a company’s valuation, according to research by academics Freek Vermeulen and João Cotter Salvado.
The duo wanted to know what really determines whether investors believe in CEO presentations?
Analysis of 654 large deals in the United States from 2012 to 2017, found that one seemingly simple, but significant factor emerged.
“When presentations were accompanied by a slide illustrating the strategic rationale for a deal, investors were more than twice as likely to give it an immediate thumbs-up.
“The positive impact of strategy visualisations, as we will call them, on post-announcement valuations was four times larger than the impact of other visual tools such as photographs, maps, logos, and even bar charts and line graphs.”
Four-times the impact is a big reward for a little picture. Yet the researchers found despite the powerful effect that a strategy visualisation can have “only a quarter of corporate presentations on deals include one, and when they do, it often isn’t designed to have impact”.
Fewer than “20 per cent of visualisations do an effective job of describing companies’ strategic decisions,” they found.
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“When executives present strategy, they often do so with the aid of visuals, particularly PowerPoint decks. But they need to understand how much the design of their slides matters.
“Strategies are the key mechanism through which people co-ordinate and create value. Communicating them well – with the right visualisations – allows everyone to travel the business landscape in tandem rather than work in isolation.”
Sharpens focus
How could something so simple have so much impact? Well, it’s not simple at all. From my experience, a one-page strategy takes months, if not years of thought, deliberation and research.
It’s the distillation of all you know about your product, service, market, product-market fit, business plan, financial situation and most of all, your customer’s needs and willingness to buy what you’re selling.
Andreea Wade, a general partner at venture capital firm Delta Partners, has seen and delivered many pitches as both an investor and entrepreneur.
“Simple things are hard to achieve. CEOs and founders are so close to their day-to-day and to what they’re building that it’s hard to step back and look at the business,” she says.
“Strong storytelling – verbal and visual – is crucial and it differentiates the CEOs frankly.”
During a pitch, the founder has to project clarity and certainty even though things will naturally change over time. When done right, that extra layer of clarity gives you confidence around the founder’s ability to execute the vision, she says.
“This is an art. Doing this [strategy visualisation] work, anchored in your knowledge of the industry, market and customers, can’t be an academic exercise, it has to be done with precision.
“As a possible investor, it gives you trust that they know it really well and they’ve considered everything. It also helps you to convince your colleagues to invest.”
Signals culture
Wade says a founder’s storytelling and visualisation prowess tells her a great deal about them and the organisation’s culture.
“It differentiates them as people who are open to learning, to understanding how they can do things in a better, more efficient way. It’s a green flag that these are open-minded people who are continually figuring things out and understand the value of thinking big.
“It’s also a mark of good leadership, from start-up to scale-up and from SMEs to large multinationals, to communicate well, so staff know what’s happening.”
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Five years ago, Wade’s Opening.io, an AI recommender engine based in Ireland, was bought by recruitment platform iCIMS. Terms of the deal were undisclosed.
After the acquisition, Wade says they needed to show offices around the world what the change meant. “When we redid our own strategic pillars, methodologies and framework, we created posters and smaller pages suitable for the desk. This helped us outline the five things we’re about and to say this is the direction we’re going in now.”
Visualisation “gives the strategy a place, a home, in your mind”, she says.
When everyone is on, literally, the same page then it’s quite easy to see the direction of travel. If you want to go from A to Z in five years, you need to draw the map to show staff the way there.
The other nice thing about a one-page strategy is that it increases focus and gets rid of busy work. At one glance, employees can ask themselves if what they’re doing is linked to the new strategy or a holdover from the previous one.
In an early stage company, Wade believes everyone should be involved in designing the one-page strategy. “As you grow, it gets harder to consult with all staff but looping back and asking for participation remains important.”
Connects staff
Entrepreneur and mortgage expert Karl Deeter, who recently sold his OnlineApplication business (called Artificial Intelligence Finance) to Software Circle in a deal worth up to €9 million, believes clarity connects staff, too.
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“If you want to get a team to go over the top of the trench with you, they have to have a vision they’re following.
“A simple mission, vision and strategy are in the ‘biz speak’ world what Apple design is in the tech world. There are lots of iterations but you know when it’s right.”
Deeter believes staff involvement in this approach helps when you have a global team. “For us, having a clear vision and mission is where it’s at. We have regular weekly meetings about the company with someone different presenting each week.
“It’s a high distributed team – from South Africa, Europe and Pakistan to Bangladesh and the Philippines – so that’s a good way to make sure you have cohesion and understanding.”
Simplicity of purpose also helps the money find you. If you’re getting traction in your market, investors will “find you and when they do, a clear sense of purpose will help”.
“They won’t look at your business in the way you do,” he adds.
“They have a different perspective on growth: is it sticky? Is it a strong vertical? So, if you can’t communicate your vision to them rapidly then every one of those Tinder-style investment swipe calls will end in tears.”
Let’s leave the final word to Vermeulen and Salvado: “A well-designed visualisation could easily double the stock market’s reaction to a strategy, immediately adding tens, even hundreds, of millions of dollars to a company’s market value.
“And it can have a far bigger impact on the long-term performance of the employees tasked with implementing the strategy.”
Margaret E Ward is chief executive of Clear Eye, a leadership consultancy. margaret@cleareye.ie
