Your manufacturing business is your biggest portfolio asset

Ed Marsh | May 20, 2016


Macro, secular, cyclical & economic trends that will impact every company

If you read this blog even occasionally you've probably caught references to John Mauldin (@JohnFMauldin.) I'm a big fan of John's for several reasons:

  • consistent creator of great, thought provoking & insightful content
  • authentic voice (not the faux authenticity we're coached to embrace, but the real deal discussing family, past struggles, mortality, business, politics & more)
  • embraces big ideas and acknowledges the uncertainty and fallibility of those musings
  • refuses to be locked into some doctrinaire set of boiler plate positions
  • politically pragmatic
  • active engagement with others - you get John's take on a variety of expert opinions
  • optimistic about the US in the long-term
  • secular focused & cyclical aware
  • seems like a genuinely nice, reliable and honorable guy (at least as best I've been able to discern without ever speaking to him but relying on his authentic voice)

Now I'm going out on a limb...I'm investing three days next week at John's Strategic Investment Conference. Why? Good question.

Why an investment conference?

After all, my focus is B2B companies - particularly industrial manufacturers. What's that got to do with investments? Investment thesis?

Well, for all you owners of middle market manufacturing companies that exercise board oversight or occupy daily executive management roles; or even non-owner execs that are banking on your long-term earnings and equity opportunity, is there any bigger investment in your portfolio than the company that you're charged with shepherding through the tumults of today's world?

We both know the short answer - NO!

Now that doesn't mean that the latest methods for measuring alpha on any given equity have any bearing. But the same secular / macro trends that will impact investments over the next two decades will also impact your business. Demographics, domestic & geopolitics, economic growth, global markets, technology and interest rates are examples of trends that will at least shape the world in which your company and products/services must thrive, and possibly the very products themselves, and markets into which you sell.

If I'm going to speak with credibility, and offer insights of some enduring value, you should expect me (or any consultant) to be considering any recommendations in the context an evolving world. 

Consultants - Breathing their own exhaust

Too many (dare say most) consultants focus on a narrow range of engagements and outcomes. That means they grow little from engagements and create little value for clients beyond a narrow technical scope.

You may say "Well that's all they're paid for." And you may be right; but I disagree.

If you're a lean production expert brought in to help a manufacturer implement best practices you should also understand change management and be able to help the executive management team see the broader the context of how similar approaches can be applied to business processes.

Similarly if you're a pricing or commission structure expert, you'd better be able to envision potential market scenarios several years out so you don't simply solve for today's specific situation, but structure solutions that can endure and evolve.

Yet in all my practice areas as management consultant, export advisor, digital marketing consultant and sales process expert I find that often clients and prospects have often been hobbled by myopic advice, or their hesitance to engage consultants based on previously disappointing experience.

Simply put, find & replace word docs and power points just recycle the same stale "solutions."

I believe that every situation needs to be considered in a larger context. And the client can decide if that's an important perspective. But consultants that don't bring that are simply technicians in specific areas and not drivers of organizational value.

Great lineup of speakers

So John's pulled in many of the folks that he cites in his work. There are some classic finance types. But they are joined by some diverse thinkers:

  • Neil Howe (discussing major demographic trends)
  • Patrick Cox (pretty dialed in on a broad range of technology changes that will impact industrial manufacturing)
  • Lois-Vincent Gave (former French infantry officer and astute observer of Asia)
  • George Friedman (interpreter of geopolitical realities)
  • Niall Ferguson (historian...with perspective)
  • Pipa Malmgren (economist focused on how technology will change economic markets)
  • James Grant (predicting the unintended consequences of interest rate policy)

Hopefully 3 days in Dallas will yield value for current and future clients. I'll plan to tweet insights from the event (I'm guessing #SIC2016.) Want to follow the speakers in the meantime? Here's a list of those that seem to have handles.

Translating insights into strategy

John's theme for this event is "Decade of Disruption - Investing in a Transformed World."

For every manufacturing company owner, return on investment decisions should consider return on capital, and the evaluation should include not only relative merits of various investments to grow a business, but also to compare those results against the potential return from investing the proceeds of a business sale or liquidation.

So investment decisions - whether personal portfolio or corporate retained earnings - should all be subject to the same rigorous analysis.

And it translates into interesting parallels in areas of business - strategy and marketing for instance.

So we'll see....I'm banking on John's event to provide ideas for a number of articles. If I'm right, you'll see them. If I'm wrong, I'll just keep quiet!