Process Mapping to Improve Acquisition Effectiveness
Arizona Tech Investors (ATI) is an active community of accredited, angel investors focusing on early-stage technology companies located in Arizona and the surrounding states. Since May, 2007, ATI members have invested in 33 companies, providing over $10.5 million in capital, making them the most active technology investor in the region.
Because ATI uses a structured, process-based approach to selecting and managing its investments, the group’s Executive Director approached BEM with the objective to provide more value to ATI members through enhanced business processes. The goal was to increase the probability of investing success and deliver ROI’s that were better aligned with the risks taken. This created a very unusual and interesting opportunity to study processes in an acquisition based enterprise.
Arizona Tech Investors’ Story
While it serves many constituents within the Arizona community, ATI’s primary customer is its member, who pays dues to belong to the organization. Working with an ATI team, BEM defined six primary processes that combine to deliver the core value proposition of ATI, Screening, Due Diligence, Investment Decision, Candidate Acquisition, Investment Management and Exit. Because these processes are executed in a sequential manner, the primary customer of each process is essentially the following process. The primary input to the core process flow are acquisition candidates and their referral sources, such as incubators and accelerators, and the primary customer of the main process flow is the member, who hopefully pockets a substantial gain on their investment.
Process Map Development
Process maps were developed in a series of work sessions over a two-week period. The mapping sessions were attended by the Executive Director, an ATI Board member and interested other volunteer participants variously served as subject matter experts. Two local referral organizations also contributed to the sessions, bringing valuable depth to the discussions.
BEM mapping sessions tend to engage participants, surfacing problems and opportunities rather quickly. ATI found this to be true. Using our Perigon™ Program, the team identified 82 red clouds of process improvement opportunities. Many were quick wins that could be implemented within 90 days, offering immediate benefits.
It was a challenge to resist jumping in and solving problems right away. Perigon provides proven results through a structured, thoughtful and comprehensive analysis of opportunities, requiring that problem-solving wait until mapping sessions are completed. After building the current state map to 90-95% complete, an opportunity is clarified, prioritized, and categorized by type and time-phased. Quick wins are prominent in the resulting Process Improvement Plan.
Following the completion of the mapping sessions, a Process Improvement Plan was developed by the team and implemented by the ATI Managing Director. A couple of major improvement themes are summarized below.
- Improve and Standardize Communications with Suppliers. Action areas included clarifying what ATI wants in candidates and deals, educating entrepreneurs on meeting ATI investment standards, and creating candidate feedback templates.
- Increase Member Participation on Deals. Actions included inviting more members to get involved later in the review process, increasing the number of meetings per year and conducting member polls on the investment thesis.
- Strengthen Deal Leadership. Actions included standardizing the due diligence process, developing useful information templates, potentially compensating a deal lead and contracting professional services.
- Improve Collaboration among ATI Members – Actions included identifying a point person per investment, creating a dashboard, defining and communicating board membership responsibilities.
ATI’s Future Direction and Strategy
Even a relatively small organization like ATI receives substantial benefit from process mapping. Using the Perigon Program, ATI achieved a detailed description of the current state, a foundation for sustainability and improved communication pathways. The team exhibited great enthusiasm and gained momentum through the lively and interactive process definition and problem-solving sessions. ATI’s leadership developed a prioritized work plan and commenced implementation. In particular, a number of standard forms, templates, and check sheets were designed, reviewed and put into use. ATI also implemented an education plan for ATI members, candidate management, partner organizations and the general business public. Finally, ATI has successfully re-branded itself with a name change, new communication strategy and revamped website.