AUGUST 2023

Maximise value creation by unlocking your business’s full potential

By Sally Jansen and Andrew Aitken

In the context of private equity, value creation generally centres on maximising returns for shareholders. However, we believe that value should be created for all stakeholders. Maximising value creation requires a holistic approach to growing a business in a way that benefits not only shareholders, but all stakeholders and society at large. This approach empowers businesses to reach their full potential across a broader spectrum of metrics than simply how much profit they generate.

In the words of expert mentalist and bestselling author Gilan Gork, “Significance is attained when a company generates purpose-led influence, operates in a consciously congruent way with its purpose, and develops responsive leaders who are able to influence themselves and the organisation in new directions.”

We believe our journey and purpose is to empower people, teams and businesses to unlock full potential. There is no playbook for success and no one-size-fits-all formula for this, which is why we partner with our management teams and a broad group of experts in their fields to provide world-class, contextualised solutions.

RMB Ventures has developed a structured way in which to approach value creation, which starts with a brutal, but honest ‘diagnostic’ of the business. This means testing the health of a company and benchmarking many different aspects that define its “as is” state. We believe that if we can help businesses create the right internal conditions for success, work with them to allocate capital to the right initiatives, create the right incentives and, if possible, adopt a shared value approach in their strategy,  the outcome will be a business that is positioned to achieve its full potential (“to be” state).

So what is the pathway to success? We believe there are many, but we have picked four key considerations when unlocking value.

• A clearly defined purpose

Our goal is to become enablers of successful entrepreneurs to help them grow not only their own business, but the economy as a whole. For RMB Ventures, the journey to finding our own unique purpose, or the reason we exist - empowering people, teams and businesses to unlock their full potential, has been catalytic to our growth.

Every business is unique,  and understanding why you exist as a business not only cements your conviction in a strategy, but motivates your employees to deliver discretionary energy. It comes down to clearly understanding the nature of your business and people, and then creating a compelling purpose to lead you forward. We discovered that many organisations really don’t have a clear idea about who they are, and where they want to go.

Once we all understand ‘why’ we do what we do, we can use this to guide our business and operating model. The insights we uncover help us to identify themes and problem statements we need to solve, and we manage our portfolios based on this.

• Understanding full potential and diagnosing where the ‘unlock’ might lie

Once our management teams have uncovered the business’s purpose, our transactors and value creation team work with them to diagnose where the unlocks and transformative opportunities for full potential are across the following four categories: Environment; Strategy; Leadership; Organisation, with digital being the enabler in most cases:

Utilising the above framework and working alongside management we prepare the Full Potential Roadmap for each company as follows:

• Market: Do we have all the information we need about our market or potential market? What data or research do we require to understand the market better?
• Strategy: guided by our purpose, what are we going to do to reach full potential? What is our tactical strategy? What is our grand strategy? What does horizon one, two and three look like?
• Leadership: Do we have the right people with the right skills and experience to deliver on this strategy? Where do we possibly need to enable, augment or change?
• Organisation: Are we structured correctly to deliver on this strategy? What processes do we need to redesign, remove or put in place?

And finally, how can we use digital to enable execution of our full potential strategy?

In all these discussions, we ensure that management are building capabilities internally that will be retained long after we have exited as shareholders.

• Possibility versus constrained thinking

Organisations are living, breathing beings with intertwined ecosystems. Making changes in one area can have significant impact in others. Adopting this line of integrative thinking is key to unlocking potential.

The challenge is that many people and businesses become constrained in their thinking and thus in their approach, but many constraints are self-imposed. We encourage a growth mindset, asking management teams to explore possibilities without being tethered to this harness. “What could our business truly accomplish if we unlocked its full potential?” We believe in pushing the paradigm on possibility and putting the right teams in place to make this happen. Driving value often means sitting uncomfortably in the world of possibility so that we can identify the ‘unlocks’ or breakthroughs that we need to get to the desired end result.

We can then find other people who can solve for how to make it happen if we don’t have the expertise ourselves. We need to take a bold step to explore new ideas, embrace uncharted territory and suspend judgement. Disruption happens when we can contemplate things that are not completely within our current view. We believe in showing people the alternatives so that they can make an informed decision and better choices and in shifting mindsets to unlock full potential.

• Increasing the cadence of decision making – changing team behaviour

Thinking in an unconstrained manner, and truly unlocking full potential is of course easier said than done.  It requires change, which is challenging for business. So how do we shift mindsets to catalyse full potential?

Ultimately, your only sustainable competitive advantage is your people and the magic they create when they work together. Identifying the right people to champion the journey of value creation and leveraging their strengths is key to creating the agility we need to maximise potential. There needs to be a relentless focus on agility and the speed and clarity of decision making and execution. Adopting a mindset of openness and willingness equally creates a cadence that accelerates the process of constant adaptation. In time this culture and biomimicry permeates the organisation.

To do this, however, we must understand the decisions required to change the behaviour of the whole management team. There are always choices and trade-offs around strategy, but if an open-minded approach is adopted, we believe the right choices will be made.

The results

The key to achieving full potential lies in finding areas of limitation that can be unlocked with the right combination of motivation, incentive and strategy. RMB Ventures has experience in understanding what needs to be done. We have spent significant time on this topic internally, as well as helping many businesses achieve success and create value. Having the right partner on this journey is invaluable to removing friction points and ensuring that the entire team is on the same page.

From understanding purpose, to developing the right leadership skills, to finding the right incentives, to changing mindsets and ultimately embracing possibility - we walk with our management teams and fellow shareholders every step of the way as a partner for the long term. We believe in patient capital, and will not chase immediate gains at the expense of sustainable value. Our goal is to create a perpetual cycle of growth and value creation. The output will be value for all stakeholders.

Businesses that have partnered with RMB Ventures have consistently outperformed the market and their peer group. A structured and intentional approach to value creation, with a focus on unlocking full potential, is essential to maximising growth and shareholder returns.

Aitken is Head of RMB Ventures and Jansen spearheads the RMB Ventures value creation strategy