From plan to execution

How to Drive Change at the Organization

Effectively driving change at a portfolio company is less about power and more about influence. It's a strategic, human-centric process that ensures the organization moves with you, not against you. This requires a three-part approach focused on people, data, and incentives.

1. Build a Foundation of Trust, Not Authority

You cannot mandate a turnaround; you have to earn buy-in. The existing management team and employees likely have a deep understanding of the business and its customers. Your role is to be a partner, not a dictator.

• Lead with Empathy: Acknowledge their hard work and the challenges they've faced. Frame the new strategy not as a criticism of past efforts, but as a path to a more successful future.

• Empower, Don't Replace: It is hard to find great new CEOs. Instead, think about the management team as a valuable asset. Use your operating partners to upskill and support them in areas where they lack experience. This builds loyalty and leverages their existing industry knowledge.

• Create a Joint Vision: The action plan shouldn't feel like it's being imposed. Collaborate with the leadership team to define the strategic goals and KPIs. When they have ownership, they'll become champions for the change.

2. Use Data as Your Unifying Truth

In an "adrift" company, different departments often operate in silos with different ideas of what success looks like. Data provides an objective roadmap.

• Establish a "Single Source of Truth": Implement the dashboards you mentioned not just for you, but for the entire organization. Make core metrics like CAC, churn, and NRR visible and accessible. When everyone is looking at the same numbers, debates become about strategy, not data.

• Focus on the “Why” Behind the Numbers: Don't just show them a high CAC; explain why it's too high and how it impacts the company’s ability to grow. Connect the data to the strategic playbook, showing how each action (e.g., optimizing a sales funnel) will directly improve the metrics.

• Celebrate Data-Driven Wins: When a team successfully lowers a key metric, highlight it. This reinforces the importance of using data and builds momentum for future initiatives.

3. Align Incentives to Drive Behavior

For change to stick, the team's personal and professional goals must be aligned with the firm's.

• Tie Compensation to the Playbook: Ensure that management compensation, including bonuses and equity, is directly tied to the key performance indicators you’ve defined. When a portion of their potential earnings is based on achieving milestones in the playbook, they are personally incentivized to drive the change.

• Communicate the Value of the Exit: Remind the team that their hard work is not just about daily tasks; it’s about making the company a more attractive acquisition target. Their efforts today directly contribute to the value of a future sale, which will reward everyone. And even beyond the financial benefits- the journey is in growing the business and creating something really special. An exit is just an outside validation of that.