Market Hill | a northdoor group company |

Working on big, expensive, complicated technology problems.

value creation

Why PE firms are taking hold of their product destiny in 2022.

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Last time, you learned what a product review meeting is, why Private Equity involvement is a must, and the value you can achieve.

Following this, readers asked excellent questions on the themes product value creation takes. After all most tech programmes waste time and don’t deliver value.

That’s because they spin out forever. They cost a lot and deliver less value than you hoped for. And it’s tough to understand what happened and what you missed out on?

That’s why PE firms are taking hold of their product destiny in 2022.

For 2022 and beyond product meetings are becoming the new board meetings. They’re where you influence the technology roadmap and align this to value creation.

The best PE firms run QVCMs. These include the leaders and doers from tech, sales, marketing, operations and support. Throughout the quarter, we’ll guide them in implementing and facilitating the QVCMs.

But, it’s not all about writing new fun bits of code. Here’s your checklist for seven very valuable pieces of the puzzle. Take the test and see if your product teams have considered them yet.

  1. Is there a programme in place for continual assessment? That’s looking at cost and performance data to reduce areas of inefficiency
  2. Are the demand and capacity forecasts of business, technical and cloud systems built to scale with your growth ambitions?
  3. Do you ensure product release management strategies predict, manage and improve future performance, cost and growth positions?
  4. How does Incident management align to release processes? How quickly are issues addressed during upcoming releases?
  5. Do you design a system of approaches to the cloud so you can leverage RI’s, Rightsizing and optimisations in the future?. 
  6. Are you mapping and reducing the cost per user to allow for the most aggressive and flexible growth strategy you can imagine?
  7. Can you build a simple framework for external guidance that will increase the overall velocity of your product teams?

Each of these areas can reveal anywhere between $0.5 – $1M tech value creation windfall per portco that you should be able to get at in 90 days or less.

Do any of these look like it’s worth taking action on now? Please let me know.

Keep leading; it matters.

–

Thomas

You can sign up for more ‘unconsidered needs’ below.

A simple product review meeting framework for success in 2022

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This week I was invited to a product review meeting, and like most product review meetings, the first time out, it was chaos!

What is a product review meeting, and why should Private Equity be involved?

Technology teams can seem random, unorganised, and slow to make changes. You’ve probably found yourself frustrated by tech teams as a private equity operator. The product review meeting is your chance to work with your tech leaders. Your chance to influence the technology roadmap. Your opportunity to align this to the value creation strategy.

There are five key elements to agree on at a great product review meeting.

What we will build and why we will build it.

How long do we think it will take.

How much do we think it will cost.

The value will we create as a result.

How confident we are with those estimates.

Great PE firms run product review meetings with their tech leaders twice per year.

The best PE firms run quarterly product review meetings, including leaders and doers from tech, sales, marketing, operations and support. They are bringing together small teams of 5-8 people at most. And with a value creation review, goals and accountability.

The QVCM. 

Throughout the quarter we’ll guide them to implement and facilitate the QVCMs. 

Product review meetings, not board meetings, are where the success of your portcos is decided in 2022.

Keep leading; it matters.

–

Thomas

You can sign up for more ‘unconsidered needs’ below.

Overcoming Risk aversion, why technology is treated differently from the rest of value creation.

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Last night I was racing a 5 km run; it’s a handicap series with the idea that everyone should cross the line simultaneously.; I even convinced my non-running wife to attend.

Last night’s event used a new timing system.

This used to be a piece of paper, a stopwatch, and some guesswork. Now, It’s a phone, an app, and QR codes.

The race committee was worried the change might confuse their runners and had put off doing so since 2018; it didn’t. The new times are accurate enough to give a certified race time.

It got me thinking about conversations I’d been having with Private Equity partners and some research we completed that you’ll probably get value from.

Did you know that only 10% of PE firms make transformative tech changes in their portfolio companies?

Put another way; our research showed that 9/10 of operating partners actively avoided making transformative tech changes! In 2022 doesn’t that feel like a massive slam dunk?

The best firms are looking at their portcos and thinking, how could we change how this business works using technology? Transformation is at the heart of this.

Just like the run committee, they cite risk aversion as the reason they avoid it.

Risk aversion is a genuine issue; you invest your GP’s money. The decisions you make impact the returns they will see. The inverse is also true. If there were an opportunity to drive higher returns with a traditional value creation method, you’d take it, right?

Why is technology any different?

Data is the key.

Can your portco CTOs tell you the scaling limits of their systems? Do they have defined NFRs? Is the cost per user/customer reported to the board?

If they can, you should feel more confident in transformative change.

If they can’t, then you know where you can add value.

We’ve talked more about this in the report ‘Creating value when it comes to technology change for Private Equity Portfolio Companies.’

If you’d like a copy, please let me know; you can contact me at: thomas@themarkethill.com.

Keep leading; it matters.

Thomas

How can you afford not to focus on Data Science?

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Last weekend, I raced my first Triathlon since 2019; I spent some time speaking with the race director; he was a fun guy.

He talked about how they were being asked by people racing their events to do more with their data. He said we need an app; I said probably not.

We talked about how they could compare their racer’s times to predict future results, help them find their closest competitors, and use this to make race recommendations!

Not bad for a post-race discussion.

It got me thinking about conversations I’d been having with Private Equity partners and some research we completed that you’ll probably get value from.

If you aren’t investing in Data Science, you can be sure your competitors are. Data science has fast become a differentiator in sourcing, dealing and value creation.

However, less than half of all PE firms have Data Science capabilities. Those that do are struggling to scale up their capability—both internally and within their portcos.

Can you afford not to focus on Data Science?

It would help if you created ‘innovation sandboxes’ to make this process scale. This approach should reduce the reliance on tech leads to start building models. These should be templated technical implementations. You can use them to scale your capabilities across multiple portcos simultaneously. You can repeat this same process for your firm’s internal teams.

We’ve talked more about this in the report ‘Creating value when it comes to technology change for Private Equity Portfolio Companies.’

If you’d like a copy, please let me know; you can contact me at: thomas@themarkethill.com.

Keep leading; it matters.

Thomas

Triathlon kits and Technology value creation, reducing the friction.

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Here’s a short story that might resonate from working with your portco tech teams to value creation programmes.

I’m part of a local Triathlon Club; we set a goal for 2022 to increase member engagement; we already have enough members; we just needed them to do more stuff with the club.

We decided to do three things to increase engagement: communicate more, reduce fees and introduce a new club kit!

Triathlon kits aren’t inexpensive; the average kit costs $200 and lasts a long time; our last new kit was 12 years ago!

We wanted to incentivise people to buy a kit now by offering: A simple online shop, buy-back if you got your sizing wrong and subsidising the kit, so it would only cost our members $50.

They had two weeks to order.

After one week, there were only two orders.

One of them was me.

One email to our members changed everything, “Reminder on club kit; we have only five more discounted Tri suits left!”.

Within 2hrs, we had all the orders we wanted and more!

What does this have to do with technology value creation?

We’ve talked before about how ‘when your site fails, it can be great for business!’

FOMO can be a key-value creation ingredient, but would they still have ordered if the fiction to buy was too high: If they got the wrong size and couldn’t exchange or if they had to fill out a form, they could only get on the 2nd Tuesday of the month or if they had to pay $200!

Tech value creation needs to do to reduce friction, both in complex technology change and for your customers.

What fiction do you usually encounter with your tech teams? How does this affect their customers, internally and externally? Could you make the whole process that much simpler?

If you can find and eliminate sources of friction in your portcos tech estate, there could be considerable value made as a result.

Keep leading; it matters.

–

Thomas