RESEARCH TRIANGLE PARK, N.C. – How can you take your company to the “next level”?

Al Childers, a veteran triangle entrepreneur, will be one of the panelists at Local Tech Wire’s Aug. 14 “Executives Edge” event. He’ll be discussing his own challenges and successes in a discussion led by Ron Williams of the Kenan-Flagler Business School at UNC-Chapel Hill will lead the discussion.

Childers, a co-founder of Magellan Labs which was sold to Cardinal health, Rich Lee, chief executive officer of Hosted Solutions, who recently sold his company, and Greg Pelton, chief development officer of a relatively new program at Cisco call IRIS, make up the panel.

Williams recently exchanged ideas with each of the panelists on several key areas. Here are the questions he posed and Childers’ insightful responses. Of course he and the other panelists will have much more to say at the event, so be sure to register to attend.

Williams: "My research has taken me down the growth path of partnership or sourcing,” Williams explained in talking about the upcoming event. “The reasons for that are multi-fold but in a nutshell I would contend that there are a set of powerful global market shaping forces that are rendering old industry models obsolete. Those forces include shifts in regulation, new emerging technologies, and a growing shift to modularity in both products and processes. This means that all companies must build, buy or partner to gain new capabilities that will assure profitable growth. Following are the options and some issues:

“1. Buy – 70% of all M & As fails because companies frequently try to buy revenue instead of capabilities and waste a lot of time and resources trying to mesh to organizations that have different cultures, processes and technology. If you are going to buy growth, buy smaller companies with specific capabilities and make sure you have the capabilities to leverage those capabilities.”

Childers’ response:

"Glad to join in the conversation. As a quick intro, I am one of the original founders of Magellan Laboratories Inc. We grew our company from the two of us to about 700 employees in about 10 years. In the initial years, we grew organically. In latter years, we grew both organically and via acquisitions. In our 12th year we sold the company to Cardinal Health. We stayed on for two years integrating 9 sites world wide and about 1600 employees into a single Cardinal Health Pharmaceutical Development unit. During this time, we also did several acquisitions. After we left Cardinal, our organization lost momentum and shrank in size. More recently, Cardinal sold our former unit to the Blackstone Group along with several other units.

"I agree and directly experienced your item 1: Buy. Our unit was successful while we stayed on board. We were successful integrating corporate names, bringing a new facility on-line and bringing Magellan’s QA and business systems to the new facility. During this time Cardinal was mostly a holding company. They choose to become an operating company. They brought on Corporate QA, IT and business systems. They were expensive and did not always fit our operating mode and culture. We departed shortly after this. And the rest is history."

Williams’ Point Two:

“Build – In today’s fast changing world companies will have build some new capabilities to remain competitive but they do not have the time or resources to build them al and others have already perfected them. They must therefore be very selective in what they choose to build to assure they really generate value.”

Childers’ response:

“As for item 2: Build. Much of our growth was organic via expansion of existing services and via new services. Our organic growth was easy because we had a great foundation to build upon (QA and business systems). We were usually limited by hiring experienced staff that could continue to provide our existing expertise. In out latter years, it often became more difficult to grow organically as our existing services defined us and customers had a difficult time thinking of us as experts in our newer services (i.e, difficult to pull customers away form existing providers). This is often when acquisitions played a role as when a company is bought, there customer base, history and reputation comes with it; hence, instant recognition in a new service. Acquisitions bring on a whole new set of issues, such as creating a successful transition (human issues, QA and business systems), yet, most of our earlier acquisitions had successful transitions. They were successful for many varied reasons, the company wanted to be acquires or the company lacked systems and wanted to incorporate ours, culture match, etc. “

Williams’ Point Three:

“Partner/Source – This becomes the logical alternative. With resources spread globally and across other industries that now become part of a company’s new ecosystem, a company has no choice but to not only partner to grow, but to learn how to do it well. This naturally required a new set of capabilities to create and manage these relationships.”

Childers:

“As for item 3: Partner/Source. We had many partnerships (mostly co-marketing or joint-marketing agreements, and complimentary services partnerships). Some of these were due to global issues. For example, we had co- and joint marketing agreements with several European firms where we had complimentary services that were marketed to similar clients. We had several structures such as very simple agreements (i.e., simply hand out brochures for both companies) to more complex ones where there was joint staff, expense splitting and finder fee incentives. None of them were particularly successful, but none were disastrous. Main reason for the lack of great success was that our client bases were more different than we originally thought (e.g., pilot/clinical scale versus manufacturing scale).”

More to come on “next level” from our other panelists.