Banner Default Image

Driving Commercial Excellence in a Resurgent Economy: A Private Equity Perspective

Lise Ferrier

03 December 2020

by Lise Ferrier

( Words)

We recently hosted an event with a panel of private equity experts to hear their thoughts on driving commercial excellence in the current climate. In this article, we summarise the key learnings and advice for business leaders and investors alike.

Event facilitator: Jonathan McKay

Panellists: Jolanta Pilecka, Joe Steele, Robert Roberts, Stephen Welton

The global pandemic has shaken up the commercial landscape unlike anything seen before. With a wholesale shift in the middle of the budget cycle, and no template or historical model for what to do next, most companies have had to do a complete U-turn on plans and budgets in a survival response to a near-death economic shock.

The experience has not been completely negative, however – businesses have made an impressive collective effort to survive against a common enemy. The management teams best positioned to thrive during and after COVID have already been identified by investors through their quick decision-making and agility, skills which have enabled them to adapt and trade successfully through these difficult market conditions.

But with government aid running out, it’s time for organisations to move from cost-related survival to growing and thriving in an uncertain and volatile future. Cash conversion can only last so long, and we can’t sustain this level of reactive alertness forever.

“We will never be in the position we were in March again”

As a collective, we’ve learned a lot about the ‘art of the possible’ this year. The global crisis has exposed business models that aren’t strong or robust enough and forced risk-averse companies to be bold for the lack of another option. Without classic growth dynamics to fall back on, now is the time to be brave and evolve business plans to pivot into different segments or products in order to drive top line growth.

Leadership figures today must be decisive in their actions, learning and responding to changing customer demand while utilising all the tools available to them. Attribution and ROI are a huge competitive advantage when measured correctly, and a combination of solid structure and guidance paired with an agile approach to consumer attitudes is sure to set businesses on the right track.

How has consumer behaviour changed during the pandemic?

Increasing pressures mean that some sectors have suffered far more than others in recent months. Consumer behaviour has been much more erratic, meaning the normal deal cycles and key learnings that private equity investors look for have not been as clear cut. The best insight businesses can hope to glean comes directly from their customers, who have become fickle and increasingly scrutinous of the companies they interact with since the shift to digital platforms.

What is certain though is that selling virtually works – however with no physical presence, brand equity is a huge factor in retaining and attracting customers, and a strong online brand (facilitated by design and marketing teams) is crucial for providing the quality service that consumers look for.
It’s time to harness this new virtual platform and invest in the future – reacting quickly is key, and incumbent big players are acutely at risk from new, agile companies paving their way by reacting to opportunities as they arise.

How can leaders maintain team motivation?

As important as being responsive to customer needs may be, true success starts at home. Teams have been asked to ‘sprint’ non-stop since March while juggling uncertainties in their personal lives too, so it’s imperative that leaders are open and honest: recognise the contributions of employees, say thank you, and learn from them.

Given that employees are ‘locked’ to their screens to some extent and lacking social interaction, keeping everyone engaged is a must. Modern leaders should be able to understand the shifting dynamics of the new normal and be agile, courageous and emotionally intelligent in their management, moving towards a two-way democratic ecosystem where the feedback of employees is a key factor in creating plans for the future. The good news is that this is already happening – video meetings have done well to break down the common barrier between C-suite executives and other employees and encourage them to become more visible and available to the wider company.

Are investors exacerbating the sector gap?

Naturally, not all sectors have been affected equally by the pandemic, with high levels of demand depression in certain areas. From an investor standpoint, there is a concern that by rushing to support the sectors that are thriving, others may be doomed to failure. However, this is much less of a reactive effort than may initially be apparent – pre-COVID, private equity houses were already coalescing around software and healthcare sectors.

The herd instinct of investors will always spur them to allocate money to the ‘next big thing’ for the sake of securing a sustainable investment, but this is constantly shifting – the digitisation of the hospitality sector, for example, has seen a lot of interest in recent months. Smart investors will take a holistic approach and measure pick-up based on vacancies in different industries, analysing data as it becomes available to predict upturn as it fluctuates.

How important is digital marketing at board level?

With so much focus on digitisation, many businesses are looking to introduce a digital coordinator to the board as a critical addition to the C-suite. As aforementioned, combining a strong online brand with a carefully mapped customer experience is a must, but it’s often difficult to know where to find the right expert to maximise marketing success and drive sales. Investors are no longer backing physical B2C offerings; digital leaders are expected to know more than just buzzwords and would ideally have the capacity to cover traditional marketing and branding in tandem with digital and data-oriented performance marketing.

Cost-effectiveness is of course important, but compromising on quality could result in throwing away not only money and time, but most importantly, customers! The ideal digital manager should have strong transformation and execution skills as well as a comprehensive understanding of not just digital marketing but also business strategy and general management.

How has the pandemic changed businesses for the better?

This year has been turbulent to say the least, but progress is born of necessity; as a collective, we have matured faster, wiser and smarter to achieve six years of change in just six months.

Recent technological advances have significantly reduced points of friction across the board. Digital technology has massively helped in streamlining processes from a consumer perspective (in e-commerce settings, for example), but its impact on internal democracy has the potential to be transformational too. As well as offering a much better work-life balance where people aren’t tied to the office every day, virtual meetings have peeled back the veneer of the way senior leadership operates – we’ve seen where people live and work, and this creates a more intimate connection and sense of empowerment (especially for the younger generations) to approach the C-suite and executive staff about their ideas.

We’ve learned that we are adaptable – in moving from a handful to hundreds of ‘offices’, most companies have found that when you share a collective goal, you don’t need to be in the same room to achieve it. Of course there is no substitute for seeing people in person – and, if nothing else, the pandemic has given us perspective on what we can’t wait to get back to – but there’s no doubt that as a collective, we have managed to maintain a culture of teamwork and togetherness through alternative means and continue to drive sales effectively.

And for investors? The future holds a lot of opportunity for growth, with two main areas of interest. First, people: through hiring talent to match opportunities, we can work to avoid ‘zombie companies’ and allow individuals to inject new life and experience into a business, driving commercial excellence as they do so.

Secondly, time spent at home has forced people to take stock of their surroundings and re-evaluate the importance of sustainability and their local environment. Digital platform businesses are well placed to help this, and as such, ESG is likely to be at the top of the private equity agenda in the near future, as investors look to focus their efforts on supporting positive societal change.

What advice would you give your pre-COVID self?

To close the event, we posed this final question to the panel to hear their views.

“Like a TV remote, we knew about the power of technology but hadn’t quite harnessed it to achieve its full potential. Technology is much more than a ‘Zoom era’, it’s a huge empowerer.”

"Agility, speed, and motivation are key.”

“Focus on core learned experiences from a decade ago and ensure comms and listening skills are tight.”

“It’s imperative to have a plan B – you need a contingency plan for security."

“Focus your first investment on creating a solid and scalable tech-driven revenue engine.”

“You are more adaptable than you think! We have all shown that we can change and adapt.”

If you’re looking to hire a new leadership into your team to drive sales and marketing performance, we can support you. Read more about our executive recruitment capability here.