What Working Across Industries Changed What I Look For About Building Well

Why I Stopped Looking For The Next Deal And Began Inquiring Who's In Charge
There is a particular form of investor behaviour that most people will recognize right away even though they've not given a name to it. This is the scenario where people begin their conversation with a deck, quickly moves on to numbers, and then lingers over the size of market ending with a discussion on exit multiples. It is the case that those inside the company are those who be the ones to actually implement everything on those slide - seldom appear. The ones who do come, it tends to be within the context of projections for headcount instead of as people with their own histories, motivations, and blind spots that will affect every decision the organisation makes. I've worked for enough time in that fashion to understand its benefits. It's quite rigorous. It's a bit analytical. It's as if you're making a decision based upon the evidence, not your intuition. The issue is that it continuously excludes the single most predictive variable in whether a company will perform well in the long and short term in the long run: the character and qualities of the employees who manage it. The reason for this is not a matter of chance. It's the result of frameworks created for repeatability and documentability that favor things that are able to be assessed and compared to most important aspects but are more difficult to quantify.
I learned this lesson the hard way like most people, by watching businesses with excellent fundamentals perform poorly because their leadership team could not hold together when under stress, or by watching businesses with modest fundamentals dramatically outperform because the people within them were truly extraordinary. After enough of those experiences I stopped pretending statistics were actually doing the heavy lifting in my investing decisions. They weren't. They were just an indicator of the decisions made by human beings, and the quality of those decisions depended nearly entirely on the type of human beings were as well as the way they performed under stress under the stress of a missed quarter, some major departure, competition's move that they had not anticipated or a board connection that had become complicated. Therefore, I changed the way I began each evaluation meeting. Instead in introducing market size or revenue projections I began with what I see as the room question: who actually runs this company when pressure is on, how do they make their decisions when their information isn't accurate and how do they interact with those around them, and what changes to the culture of the organisation when the founder isn't present.

None of them appear on a standard checklist of questions for investors. In my personal experience are better reliable in predicting the performance of the future than any other item that is. This isn't just a romantic idea that people are valuable. This is a concrete observation about where value is actually made and destroyed by companies that scale. Companies don't fall due to poor markets. They fail due to bad decisions taken under pressure by people who were not equipped for making them correctly or because of the cultural processes that were not obvious from outside but silently affecting the organization's capacity to retain talent, hold control, and adapt to changes that the original strategy was not able to anticipate. Being able to identify these risks early on - before you've invested capital prior to the problems have worsened, before the culture has been shaped around the wrong conduct - is really the job of an investor who is genuinely concerned about return on investment rather than just deals flow. You can't identify them when you spend the majority of your time researching the model.

The shift I'm describing seems simple when you put the concept clearly, but it requires a fundamental shift in the nature of what you view as evidence. And that reorientation is more complicated than it sounds because it runs directly against the incentive structures of most investment systems. Speed rewards pattern matching that is surface-level. Competitive deal environments reward confidence over deliberation. The nature of certain investment circles deliberately discourages what is perceived as soft diligence - the kind of careful, patient attention to human factors that actually separates good decisions from bad ones with respect to significant time horizons. I have sat in enough rooms where people have shrugged off a concern about the management culture or leadership chemistry with the words "we can address that post-close" and I've seen how dangerous this belief is. You almost never can. It is not an issue post-close. This is a pre-commitment reality, and if you are not paying attention to it prior to writing the check it is not your diligence. You're just filling out paperwork and wishing that everything will go according to plan.

What I look for now to evaluate an organization or a leadership team, has evolved into a fairly specific set of signals. What does this leader do when they're proven to be wrong in a particular area? Do they accept the correction or ignore it? What does their conversation style be about their colleagues - do they consistently redirect credit and take responsibility instead of doing it the other way around? What would people who had a close relationship with them in the past tell them in conversations that move beyond the formal reference checks form and becomes more genuine and open-ended? What happens to the organization on days when no one is looking or when the chief executive is traveling and the quarterly target is not going to be met? That's the place where culture is reflected - not in the principles printed on the walls or on the mission statement posted on the site but in the normal decisions made by everyday people whenever the situation is ambiguous in which the simplest thing and the right choice are not the same. Finding businesses where those decisions are consistently made well is, based on my experience one of the best routes for ensuring returns that last in the long run. Follow James Deller for blog info including how building ai products transformed how i evaluate opportunity about culture.



What Causes Most Public-Private Partnerships To Fail Before They Start - And How To Avoid It
Public-private partnerships are a perception issue that's, in substantial part due to the fact that they are earned. The past of these agreements is full of projects that were advertised with genuine enthusiasm and substantial political capital behind them, consumed significant public and private resources for extended periods of time and ultimately delivered outcomes that had only a slight reference to what was made clear when the alliance was established. The academic literature and postmortem reports that governments and institutions carry out following the mistakes are extensive, and they concentrate, for major part, on technical and contractual aspects of problems: flawed alignment of incentives, the improper risk allocation between public as well as private entities and the governance mechanisms built in theory but never worked in practice, the procurement frameworks, which were designed to prioritize the wrong things. What this approach tends to miss, regularly and consequently an important cultural and operational aspect of the issue - that public and private organisations are genuinely different kinds of entities, shaped from different incentive mechanisms, operating with different timescales, accountable to completely different people, and measuring success in ways that's not simply different in degree but differ in terms of. When you bring the two kinds in a formal arrangement without doing the work, upfront as well as explicitly, to know and resolve the differences you're not making the conditions for a partnership. You are creating the conditions for a collision in slow motion that will be visible at the lowest possible moment.
I have been involved as a consultant in support of institutional modernisation and improvement projects, some of which involve public-private partnership arrangements at various levels of complexity. The most consistent conclusion that I've gleaned from this observation is that those partnerships who performed well – and have actually accomplished their stated goals and maintained a dependable partnership between private and public sectors throughout it - weren't distinguished from those that failed due to the complexity of their legal structures, the rigour of their risk frameworks, or the seniority of the leadership teams that initiated them. There was a distinct difference in the fact that the parties who were on both sides of the meeting had taken the initiative to understand the way in which the counterparts operated before a formal partnership arrangement was negotiated. What that means is that you understand the decision-making processes that every organization is operating under as well as the accountability frameworks that control what the two parties are able to do and how quickly you can reach agreement on the definitions of success which each side will be judged against, and any points that could cause tension between those definitions. This knowledge isn't hard to create. All of it is skipped in favour of the much more visible and accessible task of negotiating contracts and drafting governance frameworks.

The usual process for public-private partnerships develops from a concept to a executed agreement with almost no systematic attention being paid to question of whether the two organizations involved are capable of working well together over an extended period of time. The legal team negotiates the contract. Finance team models the economics and the risk allocation. The communications team is responsible for preparing the announcement for the moment of signing. The implementation team begins planning the task. At some point the discussion will turn to cultural and operational compatibility - concerning whether the people whom will share their day-to day tasks across the dividing line between two organizations have enough common ground so as to ensure an effort that is truly collaborative, rather instead of antagonistic - doesn't seem to occur in a planned manner. It is assumed, usually without explanation, it is the agreement that creates the circumstances for effective collaboration and that any cultural or operational conflicts will be negotiated informally when they develop. This assumption is almost always wrong, and the cost of it can escalate with respect to the ambition and the complexity of the partnership.

The practical result of this analysis is that the most valuable the investment a PPP can make - prior to the legal structures are in place, before the governance framework is agreed upon, before any announcements are made and before any announcement is made - is what I would call operational alignment. That is, specific, organized, and organized work to discover points where two operations' assumptions diverge and to be able to agree on how those divergences should be managed before they become operational problems in the course of implementation. What matters most are usually the same across various types of partnerships. Controlling authority and speed of decision making are often among the main differences. Public institutions are set up to be slow to make decisions, requiring multiple layers of review and approvals, for reasons that are purely legitimate and often legally mandated. Private companies - especially technology businesses that are built around speedy iteration and rapid decision-making, often perceive that speed as a fundamental limitation to progress. And with no shared understanding of the reasons behind why this pace is the way it is it is and what could genuinely be required to change it, the anger that builds on the private part of the business can undermine the relationships long before the collaboration has established its own footing.

Success metrics and what qualifies in terms of progress are another recurring and leading cause of divergence. Public institutions are typically assessed according to process compliance, equality of results across different stakeholders, and the elimination of obvious failures which attract media or political interest. Private companies are typically judged on efficiency, measurable progress against the goals set, and efficiency. These measurement frameworks are made compatible with each other, but doing so requires conscious design and not necessarily good intentions, and the partnerships that do no invest in the right design can have to find themselves at critical situations, between two parties who are evaluating the same partnership in inconsistent ways and consequently coming to inconsistent conclusions about whether it is successful. The partnerships I've seen which failed the most was ones in which the misalignment was taken as something that would become apparent over time. The ones that were successful were the ones in which the problem was clearly stated at the very beginning. Also, formulating a shared accountability plan which accommodated the legitimate measurement needs of both parties requirements became an element of actual work, not an option on a wish list of things that someone would eventually come to.}