Creating business value demands a shift in mindset

Change Management

If value creation was easy, investment by Private Equity (PE) businesses would look very different from how it looks today. Rather than being a high value, insight-led industry, it would be commoditised and transactional.

But, value creation isn’t easy. 

Indeed, it is increasingly challenging, as the traditional financial levers used to drive out value are more challenging these days.

So, what else can be done to drive up value in portfolio companies, and to stand out as a high performer in the investment community?

Our Belief at Equator

 We have been working with investors and their portfolio companies for many years.  Our approach is centred around the belief that transformation in a digital world is not simply about new digital assets.

 

 

 It is about making sure companies have the right technology, processes, people and capabilities to take on tomorrow. 

 

It’s increasingly about data-informed decision-making and building organisational agility to respond faster, reduce uncertainty and drive out value. This is the only way businesses can stay relevant in a digital world with accelerating change demands.

Let's go back a few steps

Activities involving mergers & acquisitions, the implementation of new digital solutions, consolidation of teams, simplification of processes or taking cost out are all significant change activities.

 

These change activities require (indeed, demand) well-executed people-centred change management.

People-centred change management is increasingly important.

Sadly, people considerations do not often feature heavily in investment discourse or, if they do, it usually is restricted to leadership challenges and the change of Executive Team members. 

 

The shift in mindset required is accepting that customers and team members are the value creators.  They are the key to executing change well and building organisational agility.  They should therefore command more attention.

Let's see if we can persuade you about that shift in mindset:

  • People create value which is even more of a truism these days as businesses seek to provide awesome services and great experiences in order to stand out from their competitors.  Change in today’s digital world will – if not managed - erode this value due to the uncertainty it creates.  To be able to respond positively to change, people need to be able to buy into it.   They need a purpose and – here’s the shocker - wealth creation is not a purpose everyone can buy into (particularly if they are not benefitting personally).  So, businesses need to narrate a compelling case for change that provides purpose and involves engagement, ongoing communication and partnership. 

 

  • Encourage team members to play their part in being a good custodian of the business.  An individual PE company’s involvement may be relatively short in the history of the business but customers and team members build longer lasting relationships.  Support and encourage team members to take responsibility, to innovate, to change and adapt.  Help them to be good custodians so that growth continues for the next investor.  

 

  • Do better and be better when it comes to looking after people.  For the Executive Team this means remembering that you are an employer, not just an investment vehicle.  That may sound obvious but sometimes the obvious is overlooked.  There will inevitably be some decisions relating to people that are tough but it is the execution of those decisions that distinguishes good employers from bad.   If leaders connect a strong purpose with an engaged workforce and they work hard at being a good employer, then they move beyond the self-interests of the PE investor and Executive Team.  By investing in the people who create value in a way that feels authentic and committed, leaders are, collectively, more enlightened.    

The shift in mindset required involves embracing people-centred change management as the key to delivering the Value Creation Plan for the business

Organisational change doesn’t ‘just happen’ because a plan is created or projects are started

Nor does the introduction of new growth targets and performance KPIs suddenly make change easier. There is no way to reduce the uncertainty (and the risks) without good change management.  Taking on tomorrow demands being good at creating value today.

 

 

“If my mind can conceive it and my heart can believe it - then I can achieve it.”

Muhammad Ali

Need help or want to share success?

If you are struggling with change delivery or not realising the value from your investment or are absolutely knocking it out the park and just want to boast about it, contact us.