Employing Lesser-Known Corporate Development Strategies While Avoiding Problematic Blind Spots

Abstract

The marketplace is frequently approached via direct head-to-head competition, which tends to drives prices to “sky-high” levels. All too often the winners in competition like this suffer from the “winner’s curse,” and its corresponding negative financial consequences. There is a better way; namely, investing in areas where competition is the weakest, and preferably nonexistent, while bypassing areas where competition is the strongest. While this may sound easy to do, it is not; in fact, even when it is done well, it may not even be obvious after the fact. This kind of strategic “blind spot” has caused many executives to overlook unconventional opportunities, which other select executives have profited from. Such opportunities can appear incidental, as they are often indirect, and thus their utility is often difficult for many executives to “see” in real time. To compensate for this blind spot, some executives employ the “10th Man Rule” by having someone senior argue the “no side” of initiatives that are unanimously agreed upon and to source opportunities that are currently overlooked by conventional outlets and analyses. Like all initiatives, the 10th Man Rule requires the support of both the executive team and the Board of Directors to succeed over time. With such support over time, thoughtful unconventionally indirect strategies can help executives to achieve their profit and growth goals at minimal levels of risk in all macroeconomic environments.

Keywords: Corporate Finance, corporate strategy, mergers and acquisitions, resource utilization

JEL Classification: G11, G34, L21, L25, M21