The best investors and executives, whatever their personal brilliance, know that they depend on the teams running their businesses day to day for their own success. Spotting, empowering, and enabling talent is crucial to value creation and reputation. Yet for all its importance, this critical dynamic must often be assessed in a few set-piece presentations, dinners, and time pressed one-to-one meetings. This is especially true in competitive M&A situations. So much is possible with the right team. The best combinations put capable executors together with investors and executive sponsors that see their role as helping the team power forward. Trust is built from confidence. Value is accelerated by sponsors getting the team what they need to go further, faster, and then getting right out of the way. Partnership is cemented by shared incentives and timeframes. So, what have I learned about the characteristics of the most investable teams?
They are greater than the sum of the parts
There is too much bias to the CEO in my view, and I think it is crucial you look beyond. The best CEOs will have created a platform for a team of strong, complementary individuals to do their best work. A lot of the power of the team dynamic is not in identity and affiliation but mutual respect for individual expertise. The right blend means the whole is greater than the sum of the parts. Individual strengths matched to an aligned agenda creating collective breakthroughs. Corporations particularly treat leadership as a short-cycle event, moving leaders quickly between assignments based on short term accomplishments. This is one of the great reasons why founders often win. They rely naturally on a hand-picked team; they organize around medium and long-term tenure, and everyone naturally focuses on next accomplishment not next job. Politics and presentation polish don’t come into it.
They focus on outcomes
I have learned that there is a great differentiator in assessing teams. Many leaders will present themselves based on the companies they have worked for and the titles they have built on their resumes. I learned a lot from the exceptional Domenico De Sole, and one of his favorite mantras was “show me don’t tell me.” A team of strong value creators will always present their accomplishments as measurable outcomes. Across the consumer products industry a great array of talent has been indoctrinated by maintenance activity, incremental thinking and steady P&L management. Highly effective at managing risk in stable conditions but lackluster at value creation and risky in changing markets. Great teams have leaders with long lists of specific interventions and improvements. They build their reputation on designing outcomes, not managing inputs and outputs. They will naturally embrace progression, sometimes in leaps, often in steady steps forward. Clarity emanates from these teams. Selective and substantial agendas. "This is what matters. This is what we can do better and what it’s worth. This is how we are efficiently realizing that value." These teams won’t need 500 hundred slides of PowerPoint. They won’t have initiative overload. Nor will there be a hockey-stick between their past value creation and the future. There will simply be momentum.
They play to their strengths
Third and I think perhaps most important. These teams know their place. They will have a very articulate view of their role in the world. “This is our business. This is what we aim to do better than anyone else. This is why it matters to our consumers and customers. This is why, how, and where it is expandable.” They will not simply have an anthemic purpose statement. Instead, these winning teams will be able to link brand and product and point of difference to real wants and needs in the market, with a path to realizing ever greater value from this. The activity systems that matter in the company will align to it. The team will be great editors of extraneous initiatives. They will be constantly ambitious. You don’t get distracted when you have plenty to be getting on with. You don’t chase small wins when you have big accomplishments in mind.
These three dynamics are so obvious in their nature but so often missing. The power of them, is that when they exist, they ripple through an entire organization with everyone able to commit and contribute. In such ways, great leadership teams magnify their impact and the value they create.
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