Operating Partners: Get a Little More Sleep with These Tips

Private equity activity is up. Operating teams are burning the candle at both ends working on diligence, enabling management teams and preparing companies for exit. Deal cycles are less predictable, exits remain challenging and hold times continue to be elongated. It’s an engaging and challenging time to be an operating partner.

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Alexander Group recently polled our operating partner community to see how folks are navigating this environment. Our community offered the following advice on where to place bets and invest scarce hours:

Prioritize Diligence

Deal teams are primary, which means that effectively supporting and serving this audience is crucial. Today, these teams are facing elongated and less predictable deal cycles. Alongside this, go-to-market (GTM) strategy remains in focus and resources to investigate a target are tightly governed. Operating partners are being asked to provide GTM insights with less time, less prior notice and fewer resources. To deliver answers, it’s key to leverage tools (ex. research platforms), expert networks and a narrow set of diligence activities (e.g., confidential information memorandum (CIM) review, management interview, lead/pipeline/customer cube analysis).

Install GTM Planning

Longer holds put pressure on operating teams to go deeper with value creation. Install a formal process aligned with the annual operating plan (AOP) cycle to evaluate the GTM model’s alignment with strategic priorities and the upcoming year’s growth strategy. Elements of great planning frameworks included segmentation, channels and jobs, headcount sizing and budgeting, metrics, goals and incentives.

Use AI and ML to Force ICP Discipline

For enabling account and buyer level execution, teams should press management to use modern techniques to translate Ideal Customer Profile (ICP) frameworks. Leaders should also install machine learning (ML) models that score accounts and contacts on forward looking data. These insights can be utilized to guide in-year resource deployment as well as inform daily marketing, sales and post-sales customer-facing activities.

Measure and Monitor Productivity

To start with, leaders should select your primary functional metric (return on marketing investment, bookings/revenue per rep, cost of sales, cost of service, etc.). Regardless of the metric, any changes should be monitored from quarter to quarter. Condition management to understand and explain underlying drivers and proactively mobilize interventions. For effective communication of any updates, make sure to standardize quarterly business review (QBR) templates and board updates.

Govern Sales Process Execution

Consistency is key for an effective sales process. For this, begin by embedding performance management programs that support the organization’s specific sales methodology. Then, customize onboarding and training programs to reflect the process. Drive accountability with metrics and dashboards that reinforce how you expect teams to operate. In addition to this, arm managers with coaching and recognitions tools that prompt desired behaviors. Use non-cash incentive systems to celebrate behaviors you expect others to model.

Focus GTM Teams Outward

Successful GTM teams have the ability to think like their customers. Management can start taking an outside-in view by conducting diagnostics and workshops. Management should also have a deep understanding of customer journeys, personas and value drivers. Alongside this, drive teams to challenge the GTM model through the eyes of the customer. These insights will ensure organizational alignment on a common customer experience (CX) vision. Leaders can then use that vision to prioritize value creation plan (VCP) initiatives.

Clarify GTM Roles

Delivering above market net revenue retention (NRR) and maximizing customer lifetime value (CLV) starts and ends with the customer experience. While product has a lot to do with it, the GTM organization can create unnecessary friction in how teams interact with customers. For instance, sales and account management hand-off to customer success is a common place where this tension can occur. To address this, leaders can map the customer journey in this window. Next, uncover pain points and controllable points of friction. Automate and standardize processes while training team members on how to work together. Lastly, align incentives and measures of success.

Be Great at Retention

Filling a bucket is far more difficult if there is a hole in the bottom. While new logo acquisition and expansion are critical to value creation, their impact isn’t felt if they are covering up retention problems. Fixing this issue requires diagnosing and solving leaky bucket problems. Prioritize management time, energy and capital here before looking elsewhere.

Align Incentive Programs

The best growth strategies are narrow. They orient the business around two to three plays that will deliver the greatest impact. These change every few years and are tweaked yearly. Often, alignment programs like incentives do not adequately adapt. Conduct thorough reviews of incentive programs. Ensure incentive plans clearly direct team members to play their part in executing the growth strategy.

It’s a busy time for the operating partner community. High demand and scarce resources mean identifying and putting energy into the few actions that will deliver the biggest impact. Place your bets and keep grinding. Maybe get some sleep too!