Helping Investors Leverage the Eighty Twenty Rule to Increase Portfolio Company Value
The eighty twenty rule and the Critical Few Weekend Workshop
The eighty twenty rule, also known as the Pareto Principle, is defined as eighty percent of the benefit comes from twenty percent of the effort. The eighty twenty rule applies to many situations such as 80% of revenue generated by 20% of our customers, 80% of our complaints come from 20% of our customers etc.. The eighty twenty rule happens to be the basis of the Critical Few Weekend Workshop. Arrow Up Partners creates value for, and supports, venture capital, private equity and individual investors by helping to grow and protect their portfolio company investments.
What keeps an investor in portfolio companies up at night?
Here’s a short list:
- Missed financial targets
- Declining margins
- Loss of clients
- Key employee turnover
- Finger pointing
- Crisis management
- Lack of planning
- Lack of candid communications about problems
Many investors are scratching their heads
After all, the investment was based on the understanding that there would be healthy top line revenue growth and the successful implementation of the initiatives that would deliver the returns. An investment pool that meets or exceeds expected financial performance.
So, what happens if your investment doesn’t work out as planned?
Investors must decide to ether stay the course with lower expectations, maybe replace the portfolio company management team, or walk away from their investment. Now there’s another option.
Introducing Critical Few Weekend Workshops
We have conducted Critical Few Workshops for over 10 years and have helped clients manage almost every type of challenge — 3X year-over-year growth, team alignment, new product launches, system integrations, mergers, add-on acquisitions and exits. There are many factors that create a successful outcome for investors, and the Critical Few Workshop methodology could be one of these factors. The Critical Few workshop helps investors sleep a little easier at night by getting their highest priorities — the eighty twenty rule.
Critical Few Weekend Workshop Benefits
- Workshops are a low time investment — preparation occurs over two days, workshop occurs over a weekend or a scheduled executive retreat
- Extends the investor strategy into the actual implementation within the portfolio company
- Adds C level interim resources that would not otherwise be working with the firm
- Focuses on moving into the future not just an extension of the day-to-day
- Empowers teams to stand up, take bold steps and run
- Holds the entire organization, investors and trusted advisors accountable for growth and progress
- Improves communications
- Aligns all the players involved including investors, leadership and team around agreed upon initiatives
- Establishes direction and vision for the business
- Mitigates risk and focuses on value creation
- Identifies opportunities to address the causes rather than treat the symptoms
Improving portfolio company value in 150 days is a very big idea
When we conduct a Critical Few Weekend Workshop, we experience engaged, excited, and supportive participants. They demonstrate a clear willingness to do what it takes to make a company successful. Naturally, there are multiple points of view, lots of ideas (usually more than 300), and healthy discussions. We see during the second day, usually right after lunch, there is a clear shift from skepticism to optimism.
Why does this happen?
When a strategy is translated from a 30,000-ft level to a 300-ft level there is clarity. When a team gets to participate with senior leadership and investors there is buy-in. When there is a clear prioritization of the top 3–5 initiatives, assignment of tasks, allocation of resources, and a written project timeline there is accountability.
What happens during the 150 days?
When we conduct a Critical Few Weekend Workshop, we experience engaged, excited, and supportive participants.
Strategic planning, roadmap, implementation and accountability
The Critical Few Workshop approach includes two important components — strategy and implementation. Brainstorming sessions aren’t enough to get initiatives over the finish line. It’s the implementation and accountability aspects that make this approach effective. The final arbitrator is the stakeholder and the stakeholder is looking for results, accountability and a reason to trust their investment is in good hands! Today’s yield offers tomorrow’s opportunities.