The Art and Science of Leadership

“Private equity firms have historically paid little attention to the art and science of leadership.”

That line introduces this article, which outlines the case for #PrivateEquity firms and their portfolio companies to invest more time and attention in #LeadershipDevelopment, for which they’ll reap greater #ValueCreation .

In case this is behind a paywall for you, here are some key points:

• PE firms have largely ignored leadership beyond the CEO/CFO in the interest of quickly creating value.
• Financial engineering alone is no longer a viable approach due to a variety of factors.
• The pressure is higher for portfolio companies to outperform, and that requires strong leadership.
• Of the PE execs surveyed, they cite leadership effectiveness as most important for value creation–citing it 70% more often than operational effectiveness.

So what’s getting in the way?

• Time, both the pace in portfolio companies and resistance to spending time on leadership development
• Differing views on what great leadership looks like
• A lack of management infrastructure
• Tension between the PE firm and the portfolio operators
• Focus on enterprise value (= cost cutting)

While the article outlines steps PE firms can take to right the ship, it also emphasizes that portfolio companies need to step up their leadership game as well:

• Invest time and resources in strategic talent management that will get you to the finish line..
• Include people metrics and milestones into your financial reporting. People, after all, are what will fuel your goal achievement.
• Select, build and enable HR teams that are strategic vs tactical.

In full transparency, the author of the article has a vested interest in the recommendations–his firm provides transformation services to #HighGrowth companies. (I.e. It’s not a research-based article.)

I have a vested interest too:

• I work with executive teams in high-growth, privately funded companies to build leadership capability, relationships, collaboration, and alignment.
• My approach enables these teams to grow faster, together in a healthy, sustainable way while increasing their value creation.

I’ve said it before: When it comes to landing the value creation plane, if you don’t invest in individual and collective leadership effectiveness, one of two things will happen:

• You’ll crash and burn.
• You’ll land the plane but you’ll land it ugly, taking out your passengers (team) and bystanders on the tarmac (other employees, customers, and partners).

If you’re a leader in a PE-backed firm, you have a decision to make. What will it be?

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Hey there, I’m Cynthia. I’m a leadership team whisperer, executive coach, and speaker. I guide leadership teams in high-growth companies to achieve rapid growth in a healthy, sustainable way. I coach senior leaders to discover the path to lead with ease.

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