A Case for Templates in an Age of Hyper-Personalisation

Authors: Michelle Seng Ah Lee, Deployment Director & Fraser Robson, Partner and Head of Investments at WovenLight.

We live in an era of hyper-personalisation, in which products and services are tailored to individual preferences. In private equity, every portfolio company is different, with its unique set of opportunities and challenges, and it is easy to assume that deep domain expertise and precisely tailored approaches are required. While this is true to an extent, there are some commonalities between a tyre parts supplier and a SaaS company. In particular, the fundamental foundations of enterprise value are the same.

WovenLight is a new category of active co-sponsorship firm bringing deep capabilities in data, machine learning, and artificial intelligence (AI) to operate as a trusted partner in value creation for other private equity firms. We invest alongside the lead GP and work with the portfolio company to deliver material performance uplift by building and transferring our analytical IP and capabilities. To this end, at WovenLight, we have built a portfolio of configurable and reusable templates. We use these templates to answer three questions:

1. What are we looking for? In pre-deal buy-side or sell-side Diagnostics, we look for alignment with our existing templates to identify opportunities to enhance, augment, or accelerate the value creation plan (VCP) beyond what is created by the management team or the buy-side PE firm.
2. Where do we start? We support the lead GP in post-deal portfolio value creation, by using our templates as a starting point to prioritise use cases for AI and analytics by their uplift potential and deliver and handover the capability to the portfolio company.
3. How can we do better? We learn from each investment lifecycle, continuously refining our templates, so that we can deliver the next use case with greater efficiency and effectiveness.

We have previously argued that standardised, codified approaches that drive repeatability are critical for future performance, drawing parallels to automatisms (repeatable patterns of play) of elite football players that build instincts and team cohesion. In this article, we illustrate our usage of templates with whimsical comparisons to two beloved F&B chains.

“What are we looking for?” The Power of the Tried-and-True

One of our Partners, Fraser Robson’s favourite restaurant is Relais de l’Entrecôte (called Relais de Venise in London), a Parisian restaurant dating back to 1959 that is famous for serving one menu: a walnut salad followed by steak frites with a secret sauce. The success of this model lies not in variety but in the restaurant’s unwavering commitment to executing this one dish exceptionally well. Customers flock to Relais de l’Entrecôte for the simplicity and consistency of the experience, knowing exactly what to expect every time they visit. This singular focus allows the restaurant to optimise every aspect of the dining experience, from the quality of the meat to the wine pairing to the ambiance. The organic wines from Chateau de Saurs were blended to complement the steak dish.

Building trust is not easy, especially in the over-hyped world of AI. More companies are (claiming to) use AI, and separating hype from real value is challenging. In this emerging landscape, WovenLight builds trust with our partnered GPs through our depth of expertise, our consistency in our messaging, and our proven implementation history. We have in-house experts who are more than niche academics, with experience in applying AI to real-world problems. We are not a jack-of-all-trades; we are a master of five. We know our templates will be successful because we have implemented them before.

WovenLight mirrors the approach of Relais de l’Entrecote by employing a set of five established value creation strategies: 1) Commercial Precision, 2) Product Enhancement, 3) Streamlining Workflow, 4) Supply Chain Optimisation, and 5) Production Efficiency. While these are fundamental to creating business value, these are also unique opportunities to leverage data science, AI, and analytics. We work across five sectors: Services, Industrials, Healthcare, Technology, and Sports.

Figure 1 : WovenLight’s five investment themes

In selecting partnership opportunities with lead GPs for co-sponsorship, WovenLight seeks to understand alignment with its core templates. These templates allow WovenLight to effectively address the diverse needs of its portfolio companies without the inefficiencies of starting from scratch each time. Rather than custom-building solutions from scratch, WovenLight leverages five tried-and-true methods, much like a set of hammers ready to tackle different nails. Not every potential investment will be a nail, and we accept this. Our objective is to identify the areas in which we can deliver the greatest incremental uplift to support our GP partners who have sourced the deals.

The beauty of this strategy lies in its adaptability and efficiency. While every firm is different, there are commonalities that can be systemised in code libraries, which may include data repositories, data management scripts, engineered features, pre-built model pipelines, infrastructure set-up scripts, and operational know-how. By using proven methods, WovenLight ensures that its companies benefit from best practices that have been refined over time.

“Where do we start?” Efficiency over Choice Paralysis

One of our Directors, Michelle Seng Ah Lee, grew up in the US with Starbucks as a popular hang-out on her Los Angeles school campus. At Starbucks, hyper-personalisation reigns supreme with countless options that cater to individual tastes. While this model appeals to some, the sheer volume of choices can overwhelm customers rather than enhance their experience. We have seen this play out in private equity, where the due diligence process revealed dozens of potential value creation use cases through AI and hundreds of potential data sources. Starting with data availability and creating a long-list of what is possible can be time-consuming and challenging to complete within a restricted timeframe.

WovenLight’s strategy of using templates offers a stark contrast to this excess. By focusing on well-defined methods for value creation, we look to streamline processes and reduce complexity. This allows for more targeted decision-making and faster implementation of strategies across different portfolio companies, ensuring that all stakeholders are aligned and working towards common goals.

Of course, not every portfolio company will fit neatly into a pre-defined template, just as not every culinary experience should be limited to one dish. Recognizing this, while the five value creation methods serve as a strong foundation, they can be flexibly adapted to meet the unique circumstances and challenges of individual companies. This balance of structure and adaptability empowers each business to thrive while maintaining the efficiency of a templated approach.

“What can we do better?” Building a Flywheel

Templates can also facilitate stronger foundations for learning and growth. By relying on established strategies, WovenLight can systematically evaluate what works and what does not across its portfolio. This ongoing analysis fosters a culture of continuous improvement, refining our methods based on real-world outcomes. As Relais de l’Entrecôte has honed its craft over years of serving the same dish, WovenLight benefits from the insights gained through repeated application of its templates. This iterative process leads to increasingly effective solutions that can be implemented with confidence.

Less can be More

In an era where customisation often overshadows efficiency, WovenLight’s commitment to repeatable and reusable templates exemplifies a compelling alternative. These tried-and-true methods provide the right tools to address various challenges faced by portfolio companies. While not every business will be a perfect fit for a templated approach, the clarity, consistency, and efficiency that come from these strategies create a strong case for their use. As some diners appreciate the simplicity of a well-executed dish, stakeholders in the private equity landscape can find value in the focused application of proven strategies.