Where are your skills gaps? Last time, I looked at the necessity – both ethical and commercial – of integrating ESG into your business strategy. But if you’re seeking investment, you need to have multiple strings to your bow – apart from the product or service you’re creating!
A while ago, we published a report on the weaknesses and strengths in companies backed by private equity investment. The report revealed the collective view of top private equity firms.
We weren’t surprised that product innovation and sales were among the strongest skills. It makes sense when many invested companies are run by entrepreneurial owner-managers.
However, digital transformation, transparent performance management and financial skills were seen to be distinctly average, requiring sharp scrutiny from private equity investors.
And at the lower end, the ability to develop talent, achieve growth at scale, and implement effective marketing and communications were all seen as typically weak areas demanding urgent attention.
“A comprehensive approach to key skillsets is crucial to lead sustainable and strong growth in PE-backed companies. The need to supplement financial skills is one that PE investors can easily fill. But too often, a systematic approach to marketing and communications is neglected. This study provides important reminders for investors and management alike to rigorously ensure all the main skills are covered, with no weak links.”
— Patrick Headley, experienced leader of PE-backed companies, currently Non-Executive Director at Pureprint Group
Where does your business competency stand in these areas?
- Product & service innovation
- Sales
- Digital transformation
- Performance visibility (moving away from a periodic, retrospective view of financial and operational performance to daily updates – at least).
- Financial strategy & management
- Talent management & development
- Growth management & scaling
- Marketing & communications
Most private equity backed firms just don’t have the capacity to carve out time for weaker or neglected areas, and this is where delegation is key, to team members or a third-party expert who will be able to get the job done faster and more efficiently.
“Rapidly scaling a business against the backdrop of a challenging market environment requires being able to think objectively and dispassionately about the toughest decisions (redundancies, killing projects, reducing costs, etc.) – and being able to force the execution of those quickly if needed, all balanced against keeping strong momentum in the evolution and performance of the business to the extent that’s possible. That can make the difference between make or break in difficult market conditions, and must often be accompanied by the ability to weave everything into an investor narrative that is realistic, that cuts through to the positive of the actions being taken, and also navigates the highly charged emotional atmosphere internally when businesses are restructuring and repositioning for future success.”
— Paul Aylieff, experienced leader of PE-backed companies and currently Group CFO of Quantexa
A little late to the party, I’ve only just been reading (beyond the headlines) about Ozempic, as part of a copywriting project. The report focused on the implications for pharmaceutical companies of vast incoming demand for Ozempic and other glucagon-like peptide 1 (GLP-1) drugs.
This project focused on the drug delivery device, i.e., the need for pharma to source devices appropriate for this drug class, which don’t need lengthy regulatory approvals, and which can then also flexibly adapt to different dosage frequencies or fill volumes. And then there’s the pressure to produce these devices in sufficient volumes within tight timescales. With 300 weight-loss drug candidates in development, it’s going to be a race for market share, and getting the device sorted will play an important role.
This Economist piece provided interesting background reading for the report, and then purely by chance, I came across an episode of Trevor Noah’s What Now? podcast, which looks at the wider social discussion around Ozempic. It’s here to stay, so worth reading (or listening) up.
