Scaling Portfolio Value Creation — Anatomy of a Template
Authors : Devin Taylor, Principal Data Scientist & Simon Williams, Founder at WovenLight
The repeatability revolution
“Traditional rockets and drug development share a limitation: one-time use, causing high costs. Yet, programmable medicines that reuse components, like gene therapy, are making great strides toward solving this.” — Jorge Conde, Partner, a16z
If you have a spare 20 minutes it’s worth watching Jonge’s big idea for 2024 exploring the opportunity for programmable medicines to reduce the cost of drug development and clinical trials. At its core it argues that standardised, codified approaches that drive repeatability are critical for future performance.
As keen football fans, we’ve been fascinated by how elite teams are coached to respond to the scenarios and situations the players encounter on the pitch with repeatable patterns-of-play, known as automatisms. Automatisms are predefined patterns of movement, passing and positioning that players develop through training and repetition. These automatic movements allow players to anticipate each other’s actions and react quickly to changing game situations without the need for explicit communication. Coaches typically implement automatisms to improve team cohesion, fluidity and efficiency during matches. These patterns of play become instinctive for the players, allowing them to perform certain actions almost reflexively during live gameplay.
Private equity has successfully relied on rigorous data analysis, financial modelling and market research — combined with deal judgement — to make informed investment decisions. While these remain fundamental, the need for speed, accuracy and adaptability has introduced a new dimension to the industry; namely the adoption of automatisms to deliver superior returns on a repeatable, scalable basis.
These automatisms come at a time when AI has hit the mainstream both in consumer awareness and in investment activities to help investors work more efficiently and effectively. For example, the 2023 AI Index Report by Stanford University highlight tools such as GitHub Copilot, a text-to-code AI system that has been successfully adopted. GitHub reports that 88% of respondents feel more productive, 88% feel they are able to complete tasks more quickly, and — interestingly — 74% feel they are able to focus on more satisfying work which suggests that AI is not always perceived as a threat.
Institutional Investor reports how leading asset managers such as Blackstone are building AI capabilities to support core activities such as evaluating risk or forecasting performance when undertaking diligence on opportunities and post-acquisition activity to drive portfolio value creation through enhanced capabilities in areas such as sales, supply chain, and product development.
These AI capabilities will develop to act as ‘co-pilots’ that integrate seamlessly into your environment and workflow, providing real-time suggestions and completing tasks to transform a range of activities along the investment lifecycle.
Templates : the superpower of compounding infrastructure
Alongside the investment process the value creation levers themselves have become assets that compound; at WovenLight we have built a portfolio of configurable templates to act as co-pilots in portfolio value creation.
Recognising that every firm is different, these templates provide step-by-step best practice guides for project teams to frame the business context, test hypotheses and plan the path forward.
These best practices are anchored on golden path development principles. Embedded within these guides is tooling such as data repositories, data management scripts, recommended analytical techniques, engineering features, pre-built model pipelines, code libraries, infrastructure set-up scripts and operational know-how to facilitate customisation and integration into portfolio companies.
This means that rather than building from scratch, each time the templates are configured to the local context of the company.
Our best practice guides, methods and requirements are codified as our ideal path, however, we have a graceful way to fall back from that ideal to a pragmatic implementation based upon context, such as availability and quality of data, infrastructure choices and policies, together with the in-house talent profile.
Deploying pre-built assets offers accelerated operationalisation and alignment with business and operational KPIs, clearly linked to enterprise value, with measurement tools to track impact and monitor performance.
The result is not a turn-key software product, but codified, repeatable and scalable best-practice that accelerates deployment of production-ready solutions and the speed-to-value-capture, whilst assuring quality and making the capability easier to maintain.
Our experience in deploying these templates alongside private equity firms and portfolio companies across a variety of sectors has yielded three key benefits:
- Speed
Deploying best-practice templates underpinned by pre-built code assets that are 20%, or 40%, or 60% ready to go accelerates the speed at which value is captured. Templates ensure rapid, pragmatic delivery fine-tuned to best fit an organisation’s unique context, data landscape nuances, competitive or regulatory pressures. - Transferability
Taking a standardised, codified, open-source approach means that the technical capabilities are much easier to transfer to the portfolio company to ensure a long-term sustainable capability making the firm more resilient and valuable. Deploying against templates doesn’t just simplify the technical implementation but also makes it easier to upskill the existing talent to maintain and extend the new capability. - Measurability
Delivering templates in a consistent way makes them easier to measure. This establishes powerful compounding infrastructure for the firm. Every time you deploy a value creation template you can systematically capture what worked, what didn’t, key lessons learnt, and the performance impact at sub-sector level. This provides ‘telemetry’ on the value creation plan, helping to track performance and improve your original templates as you capture impact metrics and benchmarks — and hence your entire investment process through better understanding and pricing of the value of opportunities pre-deal.
Good habits win
“Time will multiply whatever you feed it. Good habits make time your ally, bad habits make time your enemy” — James Clear
There is a reason that in elite sport the teams, athletes, and coaches focus on the process. They believe that getting the process right ultimately results in the right outcomes — amateurs focus on the outcome, whilst professionals focus on the process as the saying goes.
Configurable templates naturally build and reinforce the processes, nudging the odds of superior returns in your favour over time. Critically, this is about augmentation not replacement. As in the first industrial revolution when factories augmented human’s physical abilities, the emerging AI-powered templates will augment synthesis, experimentation and decision-making but won’t replace the need for skilled human judgement. Just like automatisms in football.
