So, you’re hired, and the private equity firm is dropping you in to lead their latest investment. You’ll be expected to deliver step-change, quality EBITDA growth, upgrade the team, and outline a path to future growth for the next owners – resulting in a 3x return in a relatively short period of time. (With an attractive payback for yourself when all is said and done).
You’ve spent your career in a corporate environment, with the luxury of supporting processes and talent. You know your industry, your company, your team. You’ve earned your reputation by delivering at the “corporate pace” over many years. Now, you’re entering a world of minimal process, less talent, less support, less personal credibility … with a greater sense of urgency and expectation for transformation and results than you’ve ever experienced.
Never fear. Focus on three areas to manage the risks and realize your opportunity during this transition:
- Determine your leadership approach
- Get aligned with your board
- Be prepared to lead your team differently
Determine Your Leadership Approach
Inevitably, the environment you’re entering leaving is different from the one you are leaving behind. You want to come in with the right sense of urgency in light of the circumstances. Start by assessing the organization’s need for change and readiness for change.
Assess the Need for Change by understanding the external risks and opportunities and determining the organization’s ability to address them with current capabilities. Then, review performance data to determine how far away current results and momentum are from your target growth rates. Leverage that work to determine if there is a Low, Medium or High need for change.
Next, assess the organizational Readiness for Change by evaluating the Will of the team to do what is necessary – does the team recognize the need for change? do they have the desire to change? Then, review the team’s Skill – do they know how to change? Utilize those assessments to determine if there is an overall Low, Medium or High Readiness for Change.
Once you’ve assessed the overall Need for Change and Readiness for Change, use the grid below to determine your overall Leadership Approach. Be prepared to SHOCK if there is a high need for change, and low readiness. Adjust to CONVERGE & EVOLVE (Fast) if both the need and the readiness for change are high. When the need and readiness for change are low, CONVERGE & EVOLVE (Slow). Be satisfied to ASSIMILATE when the need for change is low and the team’s readiness is high.
Get Aligned with Your Board
This needs to be done early on – there’s nothing more frustrating than running hard after the wrong goals. (1) Start by describing to the board the approach you’d like to take to assess the goals, their pace and the plans in place to get there – get their input to your approach and timing. (2) check in with the board with observations along the way – not only what you are finding, but also the implications. Make this a conversation. Absorb the feedback and continue. (3) cycle through Step 2 a few times before you attempt to adjust goals. As you are re-setting Goals, do the same with Priorities – the key items that need to be managed to achieve the goals.
Be Prepared to Lead Your Team Differently
Now that you’ve settled on your leadership approach, goals and priorities, you’re ready to begin leading your team. Remember though, you’re not in Kansas (or your old corporate job with all the process and resources) anymore. You’re in a middle market business, and the team may not be ready to pivot and accelerate at the necessary pace. Whereas you may have grown accustomed to a strong depth of talent on your teams and the luxury of time to coach and train, in this role, you will need to be prepared more than in the past, to carry (by doing yourself) and supplement (by adding talent or temporary consulting resources) to quickly fill gaps. The overarching goals are speed and effectiveness – help the team understand when you are using which technique and why.
Transitioning into a middle market private equity owned business is a thrilling time for an executive. To avoid risks, define your leadership approach and get aligned with your board on goals and priorities before Day One. Then, be prepared to lead differently compared to past roles – at times coaching, at times training, and more often than you’re accustomed, leading by doing and steadfastly supplementing your team with the new talents needed to accelerate business transformation and results.