How PE firms can exploit industry disruption

Decode the Disruption
Build the future
Inspiration

Our keynotes bring breakthrough insights and perspectives.

Education

Workshops for partners. Workshops for portfolio company boards and management.

Assessments

Portfolio company disruption risks and opportunities. Portfolio company disruptive innovation capability. Fund practices to exploit disruption.

Transformation

Design and implement higher-order organization. Train practitioners to build disruptive ventures. Update fund practices to exploit disruption

Monitoring

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 opportunity

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.

Learn more

Post-Lean Thinking: A New Vision for Corporate Innovation

Start your journey. Contact us to explore your options