S-6 JANUARY 19-25, 2015 CORPORATE GROWTH & M&A Advertisement TRENDS PwC’s new book offers important insights for M&A BY JOHN SVIOKLA AND MITCH COHEN Since 1987, self-made billionaire wealth grew more than three times faster than the world economy. Yet in that same period, business leaders have struggled to find and pursue opportunities that bring breakthrough value. While researching for our book, “The Self-Made Billionaire Effect,” we found that more than 80% of these entrepreneurs earned their wealth by disrupting highly competitive industries such as apparel, beverages and hospitality. Companies can apply the approach of self-made billionaires to create massive value, and M&A can be a key strategic weapon in that effort. In particular, self-made billion- HOW SELF-MADE BILLIONAIRES CREATE MASSIVE VALUE Empathetic imagination Patient urgency Producerperformer partnership SVIOKLA COHEN KELLY MATTESON aires have five habits of mind that make them “Producers.” First, they exhibit “empathetic imagination,” a deep understanding of the future needs of the customer and the vision to develop a new product or service that will address those needs. Second, they display “patient urgency”: they develop their offerings waiting for the market to ripen, then seizing the opportunity. Third, they exemplify “inventive execution,” bringing their ideas to market in new, creative ways. Fourth, unlike most people, they have a relative view of risk, assessing risk on the basis of what they stand to gain rather than what they might lose. Finally, to bring their vision to life, they each work closely with a “Performer” partner with complementary skills who is good at optimizing already Producer Mindset Inventive execution Relative view of risk established functions or processes. These five habits of mind enable Producers to envision something new, bring together the resources to create it, and sell it to customers who did not know they needed it. Most companies encourage and promote their high-potential Performers to the exclusion of Producers. However, those skills are not adequate for companies that wish to disrupt their industries. To create massive new value, organizations need to attract, nurture, and retain more people with the Producer mindset. But it doesn’t mean that the CEO has to be a Producer. For some companies, it makes sense for that position to be filled by a Performer who will work closely with a Producer in another top position. These findings should spark some new thinking about M&A. Both private equity and corporate development executives need to be able to profile key talent of a target organization to identify the real Producers. They need to be thinking about talent during the integration. All too often, companies put newly acquired Producers in Performer positions, driving those Producers to leave once they receive the promised payout. So it’s important to determine the roles that need to be created in order for Producer talent to stay and thrive in the newly merged organization. It’s also important to think about which Performers should be paired with those Producers. Acquiring the right team should be one of the top criteria of any M&A. There’s little doubt that the ability to profile key talent at a target organization with a view to the traits of self-made billionaires offers companies a powerful new weapon for their M&A arsenal — one with the potential to revolutionize the way M&A are done. Dr. John Sviokla is head of global thought leadership at PwC (PricewaterhouseCoopers LLP), and Mitch Cohen is vice chairman. Contact them at billionaireeffect@us.pwc.com. Contact local PwC partners Brian Kelly at 216-875-3121 or brian.kelly@ us.pwc.com or Thorne Matteson at 216-875-3441 or thorne.matteson@ us.pwc.com. Learn more at www.pwc. com/billionaire. DAILY NEWS ALERTS FROM CRAIN’S Register for free e-mail alerts and receive: The Morning Roundup: The day’s business news from Ohio’s daily papers Breaking news alerts Daily headlines: Crain’s-produced news and blog items Real Estate Report: A weekly guide to real estate news. Published Monday. Health Care Report: A weekly guide of changes in the health care industry. Published Tuesday. Manufacturing Report: A weekly guide to Northeast Ohio’s manufacturing sector. Published every other Wednesday. Small Business Report: A weekly guide to small business news. Published Thursday. Shale and Energy Report: A weekly guide to the energy industry. Published Friday. Crain’s Cleveland Business Custom Publishing