How PE firms can exploit industry disruption
Our keynotes bring breakthrough insights and perspectives.
Workshops for partners. Workshops for portfolio company boards and management.
Portfolio company disruption risks and opportunities. Portfolio company disruptive innovation capability. Fund practices to exploit disruption.
Design and implement higher-order organization. Train practitioners to build disruptive ventures. Update fund practices to exploit disruption
Portfolio company and PE firm transformation. External distribution risks and opportunities.
How we help PE firms
Inspirational keynotes to bring a new perspective
Our keynotes bring new perspectives and insights to partners, and portfolio company management teams. They stimulate discussions that otherwise might not have taken place.
Education for partners, boards and portfolio company management
Our workshops go beyond stimulating discussion, they provide actionable insight in the form of a methodology for exploiting industry disruption.
Assessments of disruption exposure and innovation capacity
We provide management teams and boards with an unbiased and thorough assessment of a portfolio companies’ exposure to and capacity for disruptive innovation. Our assessment includes:
- Organizational culture (mindset, behaviors, values)
- Leadership styles and competencies
- Leadership capital (perceived competence and character)
- Organizational structure and processes from a change management perspective
- Current innovation strategy, including strategic assumptions
- Mapping industry structures and identifying relevant disruptive technologies
- Discovering how the technologies will alter relevant industries
The assessment is done in collaboration with management and uses surveys and interviews to gather information. The outcome is a jointly authored report with ﬁndings presented and discussed in a half-day workshop. Assessments can also be performed of the portfolio as a whole, with aggregate results provided in a separate report.
The PE business model itself is facing disruption. We can provide an assessment of a ﬁrm’s practices for industry analysis, deal sourcing, due diligence, value creation thesis development and portfolio management. The outcome is a jointly authored report with ﬁndings presented and discussed in a half-day workshop.
Transformation: managing disruption risk and unlocking value
On a portfolio company level, we can work with the management team to design a strategy for the to systemically detect and take advantage of disruption opportunities. Emphasis will be placed on developing the capacity to fund and develop new disruptive ventures, sourcing technologies, innovation talent and external capital as appropriate. The outcome is a jointly authored document with an executable strategy, including speciﬁc projects, deadlines, budgets, and KPIs.
We also help PE ﬁrms improve their practices for industry analysis, deal sourcing, due diligence, value creation thesis development, and portfolio management.
Monitoring and support
We provide ongoing advisory support during the transformation process. We can also continue to look for external disruption opportunities and risks in relevant industries.
The PE industry faces an interesting combination of challenges. Interest rates have been kept artiﬁcially low for several years, LPs have become more risk-tolerant in search of yields, and PE ﬁrms have amassed a lot of dry powder. Increased demand has also resulted in higher asset prices; with credit being so cheap, PE ﬁrms face competition not just from one another, but from strategic buyers as well.
Historically, the PE industry has employed ﬁnancial engineering, governance engineering and operational engineering to improve value in portfolio companies. By reallocating capital, reﬁnancing debt, renegotiating with suppliers, and reducing headcount, PE owners have improved margins. They have also sought to upgrade management teams and improve execution in manufacturing, marketing, distribution and sales.
However, traditional remedies for value creation are no longer suﬃcient. Exponential technologies are disrupting the mature industries that have proven attractive to PE in the past. This is in part because of AI and automation, but also because the structure of these industries is changing. Technologies are enabling capital-eﬃcient business models that decouple assets and people from ﬁrms. The nature of ﬁrms is changing too; one can now rapidly build global businesses with a handful of people. Instagram was acquired for $1B with just 13 employees.
Startups are exploiting disruption opportunities faster than mature ﬁrms, which are hampered by a lack of awareness, cultural impediments and organizational structures focused more on eﬃciency (e.g. Lean) than innovation and renewal. What’s needed now is a Post-Lean approach to value creation, focusing on deliberate, targeted and systematic disruption. The Post-Lean Institute is pioneering new management and innovation practices to achieve this.