Acorns and Leverage

I was pelted by acorns as I strolled through the East Woods on a breezy day last weekend. The oaks have decided to gang up on the forest and release a decade’s worth of seed in a couple weeks, overwhelming any chance that they will all be eaten or lie unfruitful. This tremendous outpouring provides leverage over the chipmunks, blue jays, and fungi, insuring that many trees will have seedlings spring up in their shadows come next summer. Similarly this leverage is critical to how businesses make deals, sway customers, and gain advantage in the marketplace.

Since the world is not a benevolent place for companies and organizations, some degree of leverage is needed in order to make things happen. It is important to recognize when it is needed, when you have it (or not), and when to use it.

• When do you need it? – Almost all transactions need some kind of leverage to get things moving and ultimately to come to an agreement on what is traded for what. Whether it is speed, cash, knowledge, or capital, something valuable is transferred to you in exchange for something valued by the acquirer. This is leverage and you each have some. The more you have, the more value you can get and the faster you can get there.

• Do you have it? – Recognizing whether you have the ability to close a sale, build a partnership, or acquire a new technology takes a good deal of time and effort. The process and pipeline must be built, discipline used in developing the relationships, and constant assessment made of the situation. Testing the strength of the relationship is important as well as closely scrutinizing your position as well that of the other party.

• When do you use it? – Assuming that you want to have a positive relationship after the transaction, be sure that the other folks will benefit as well. When you have a solid view and feel that you have adequate leverage, it’s time to start to pull the lever. Doing this too soon will only spill your acorns and cause you to spend time re-growing your seeds, so use caution.

Not unlike the northern red oaks, it takes time to build up the leverage that you can use to move your company forward. Realizing when to use it is critical to insure that you have a fruitful crop of new ideas, relationships, and partners.