Jim Collin’s Advice on Building Enduring, Private Equity-Backed Companies

Many CEOs and exec­u­tives strug­gle to bal­ance short-term per­for­mance with the long-term resilience of their com­pa­nies. In many con­ver­sa­tions, CEOs of pri­vate equi­ty-backed com­pa­nies (and, in many cas­es, pub­lic com­pa­nies) tell me they have strug­gled to bal­ance the per­spec­tive of Jim Collins’ work on build­ing endur­ing, great com­pa­nies while simul­ta­ne­ous­ly bal­anc­ing the desire for short ‑term performance.

All investors and share­hold­ers, ide­al­ly, want to have both short-term per­for­mance and long-term endur­ing great­ness because that is the ide­al investment.

The Genius of the &

I was inter­est­ed in this Chief Exec­u­tive arti­cle, in which Jim Collins responds to a ques­tion, at their annu­al lead­er­ship sum­mit, about how CEOs bal­ance the short-term time hori­zons and max­i­mize finan­cial returns. In per­fect Jim Collins-style, he had a very well-thought-out answer:

“Your respon­si­bil­i­ty, as a CEO, is to be build­ing the com­pa­ny in such a way that you’re build­ing it for who will be the next sup­pli­ers of cap­i­tal — not for those who have the priv­i­lege of invest­ing in your Fly­wheel, now.”

PE-backed and pub­lic com­pa­nies put a lot of pres­sure on short-term finan­cial results. While that is pow­er­ful but with the right bal­ance, you can have your cake and eat it too.

Keep the right amount of focus on what cre­ates val­ue for your orga­ni­za­tion, in the five- to ten-year time hori­zon, while also stick­ing to the prin­ci­ples of your Flywheel.

Just don’t lose sight of the long term there­fore dam­ag­ing or sac­ri­fic­ing your busi­ness for short-term results.

The Chal­lenge

• Whether you are pri­vate equi­ty-backed or pub­lic com­pa­ny, what can you do to make sure you’re lever­ag­ing the Genius of the &, with the right amount of focus on being a long-term, endur­ing great com­pa­ny while get­ting your short-term results?
• If you’re not backed by exter­nal investors, how could you ben­e­fit from their think­ing and, poten­tial­ly, have more focus on the short-term results? Or maybe in your case you also need to focus on being an endur­ing, great company.

Addi­tion­al Podcasts

• Jim Collins’ Fly­wheel Concept
• 5 Ways to Ensure Your Fly­wheel Will Build Momentum
• Pow­er­ing Up Your Flywheel

Addi­tion­al Blogs

• The Fly­wheel Effect: Is it Work­ing For or Against You?
• Lever­ag­ing the Flywheel

Lawrence & Co’s work focus­es on sus­tain­able and enhanced growth for you and your busi­ness. Our diverse and expe­ri­enced group of advi­sors can help your lead­ers and exec­u­tive teams stay com­pet­i­tive through the use of var­i­ous learn­ing tools includ­ing work­shops, webi­na­rs, exec­u­tive retreats, or one-to-one coaching.

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