Facing the future: leadership strategy to support long-term growth

 By Samuel Robberts, Chief Strategy Officer, The LCap Group

Samuel Robberts, Chief Strategy Officer, The LCap Group

Following a period of extreme highs and lows, private equity investors and PE-backed leadership teams are focused on sustained long-term growth. With economic uncertainty, high interest rates, and dampened valuations predicted to continue, organic value creation has come to the fore. At the centre of that shift sits the leadership team. 

The critical role of leadership in business success is well-known, yet many companies still don’t have a long-term, data-led leadership strategy in place. Aligning leadership competencies to the evolving needs and objectives of a business is vital to the success of the value creation journey. Yet too often leadership decisions are reactive and subjective, leaving businesses vulnerable to disruption, conflict, and inefficiency in the top team.

How can businesses take a more strategic, data-driven approach? 

• Look at the team together, not individuals 

Charismatic leaders might make the headlines, but you can’t build a great business without a well-rounded leadership team. Founder-led businesses work for a while, but to scale, they need functional heads, and the optimal balance of competencies. A good leadership strategy should therefore look at the whole team together, rather than the strength of individuals. Roles must be delineated to avoid conflict and leaders should be compatible behaviourally so that they can work together effectively. The best teams bring out the best in each other, bring a variety of perspectives to the table, and constructively challenge each other. 

• Leverage data to enable objective conversations

One of the biggest reasons why businesses overlook leadership strategy is a reluctance to have difficult conversations, which could jeopardise important relationships. Frequently, this means leadership decisions are delayed, limiting the impact a team can have within a defined timescale. People analytics data is invaluable for solving this issue, as it provides objective insights on how leadership can best align with the value creation plan and where the gaps are. It facilitates objective leadership conversations, removing the emotion, and aiding decision-making.

• Maximise the runway for growth 

The clock is always ticking for private equity-backed businesses and investors must be prepared to make proactive, early leadership decisions, to ensure that the team has the maximum opportunity to make an impact. Our Leadership Capital 2023 report  found that top-quartile performers make key leadership decisions more than 30 months earlier in the hold period than worse performers. With leadership analytics, investors can now assess the competencies of a leadership team at arm’s length before they even start working with them.

• Focus on the growth stage and journey

Successful leadership is contextual. The needs of a founder who is preparing for their first round of investment will be very different to a mid-market firm planning to exit, and the most valuable hires have experience of the exact journey a business is on. In fact, our Leadership Capital 2023 report found that top-performing businesses prioritise situational experience when they make leadership hires, even at the expense of market knowledge. Leveraging data analytics enables businesses to analyse where they have situational gaps in their current competencies and test out potential hires, to ensure that the team is ready to grow. 

• Continuous succession planning 

Leadership strategy is an ongoing commitment. Business requirements are unlikely to remain static for long. Failure to invest time in regular succession planning could leave a company with a leadership vacuum that could seriously impact its growth trajectory. The sooner leaders and investors can plan for change, the better. What will the leadership team look like in five years? What if the unexpected happens? Leadership analytics mean it is possible to map out a transition plan for all eventualities.

As investors and businesses seek out areas for competitive advantage, the role of leadership has never been more important to help firms navigate uncertainty. At the LCap Group, our approach is centred on collaboration and guidance, giving clients objective insights and a framework from which to make informed strategic choices to optimise growth through exceptional leadership.

If you would like to discuss how leadership analytics could help your business implement a sustainable, long-term leadership strategy and align leadership with value creation, visit our website or get in touch at contact@thelcapgroup.com

Samuel Robberts, Chief Strategy Officer, The LCap Group will be speaking at the Rainmakers Conference 2024 looking at the prospects for the year, including the strength of the economy and consumer confidence, the expected impact of the looming General Election, and what is needed to support long-term growth.