Understanding the Decagon
(taken from Chapter 1 of "The Decagon Theory" by Mark D Gagné)
When I formed Decagon Partners many people asked me the same question: What's a Decagon and why did you pick that name? It all started with two basic beliefs that I had developed from many years of operating companies:
- Ignorance is not bliss: knowledge is the power to innovate and create.
- A man with a plan beats a man without a plan more often; so plan the process and process the plan.
So what do I mean?
- All facts matter: Effective decision-making starts with knowledge of the facts and their interrelationships. Any significant decision will typically have more than 10 facts (like the facets of a decagon) that will impact making an informed decision.
- Making an informed decision requires involvement of all constituents to ensure you have clarity of understanding of the strategy, goals, objectives, timelines and measurement points as part of a plan. The plan is created based on an input of all the facts. The plan must be implemented through a process that provides a mechanism for effective communication.
- A process yields more consistent and predictable results.
- Understanding the desired results is integral to the plan. The desired results must be evaluated in terms of the expected return on investment. (ROI)
Okay, so this sounds simple, and you are right; it is if you are committed to making informed decisions. However, for some reason companies around the world continue to ignore the facts and not plan. This creates opportunity.
Unfortunately, the opportunity created is for their competitors.
Let's review a real life example, you are the CEO of XYZ Company and want to build a new software product. You just had a 2-hour meeting with your senior management team to discuss building the new software product and believe you are ready to move ahead.
But are you? Let's take a look at the decagon and review just a few of the facts that need to be addressed if you want to successfully build, market, sell and ship your software product.
Accounting and Finance: software product development budget, GAAP, revenue recognition, billing systems, credit policies, contracts terms, pricing, ROI, capital expenditures, Wall Street expectations, maintenance and support contracts, etc,
Legal: intellectual property rights, trademark research, copyright research, licensing agreements, maintenance contracts,
Human resources: sourcing development and product management personnel, what is the recruitment budget, are we paying signing bonuses, what is the available pool of stock options, what will be the organization reporting structure, who is creating the position profiles, etc.
Product marketing: starting with one major item: the marketing requirements document, what is the budget for analyst research, what is the market size and opportunity, who are the competitors, what are customer requirements, white paper creation, market assessment, technical options, hardware software requirements, more detail on product specifications: intended audience, descriptions of functional components, standard rules for implementation, security, management, migration, documentation, performance metrics, etc.
Operations: what are hours of support, how is software being shipped, are we planning web based downloads of software, will we be accepting credit cards, what is the return policy? What are requirements for education, system integration, support, documentation, distribution, etc?
Sales: what is the commission program for the sales people? Does the commission program include support and maintenance agreements? How about commissions on services? Are we planning any special promotions? What are our pricing parameters? Who are the targeted channel partners? How does their pricing compare to our direct sales?
Marketing- marketing collateral needs, trade shows, booth creation, website creation, etc.
Development- scope of development effort vs. marketing requirements document, staffing plan, development schedule with milestone dates, product roadmap, deliverables, developer incentive programs, virtual developer equipment needs, other dependencies, new software development licenses, SDK creation, technical documentation, etc.
Business development: current partner/customer communication, training programs, distribution rights, channel conflict, etc.
Vendors and consultants: involvement of bankers, lawyers, accountants, outside consultants and more.
Great now we have lots of facts, which have created lots of questions so what's next?
Critical to our success is our belief in knowledge/fact-based decision-making combined with process. Effective decision-making requires an understanding of all facets of the Decagon and how they interrelate. Through our FADE methodology we leverage our experience and knowledge with a process to deliver informed decision making and a Plan for Success.
Decagon Partners methodology is proven and effective. After defining the scope and objectives of the engagement with our clients, Decagon Partners designs and executes a specific plan to achieve these goals. The plan utilizes our FADE methodology to focus on the Decagon.
For example, utilizing our FADE methodology for an M&A engagement we would plan the engagement as follows:
Focus-establish goals and objectives for the engagement (strategic, financial, operational and cultural) with involvement of key management team members
Analyze-establish strategies for achieving goals and objectives: determine sale or acquisition criteria, screen and prioritize candidates, prepare valuation and deal structure alternatives, select targets, agree on a candidate approach strategy, etc.
Develop-specific tactics and action plans: form the deal team, coordinate due diligence, prepare bid tactics and strategy, etc.
Execute-prioritize the timeline, manage the deal, and get it done
Decagon Partners has the knowledge, skills and experience to provide the highest quality strategic Mergers, Acquisitions and Advisory services to our clients. Our comprehensive range of services include Buy Side, Sell Side, Advisory, Valuation and Integration Services. All services are specifically tailored to our clients needs and to provide for value maximization.