Overcome Barriers to Business Valuation Growth (P2)

Part 2 – Overcoming Barriers to Growth and Improving Business Valuations

Having a track record of developing and implementing a strategic plan is critical to business buyers and investors such as private equity firms. It has a positive effect on business valuations when the track record can translate into predictability of future performance.

An  alignment  driven strategic planning process will be different for some. Yet properly conducted it can provide a comprehensive, efficient means to adjusting varying viewpoints toward a common objective. Without it, the best plan will not be executed.

Reducing  team dysfunction

Even the best management teams exhibit behaviors that work against their own effectiveness; behaviors that cause inefficiencies and dysfunction for the team and therefore for the organizations that they lead. These behaviors are often exhibited as functional competition, short term thinking, win-lose thinking, internal focus, silo mentality, among others. This dysfunction works against the collective capabilities, or collective intelligence of the individuals who compose a management team.

The  management  team’s  Collective Effectiveness (CE) is equal to the net of the team’s  aggregate  knowledge  and  skills, Collective Intelligence,  (CI), reduced by the obstacles caused by its Collective Dysfunction (CD).

The relationship

CE = CI – CD

tells us there are two ways to increase the team’s

Collective Effectiveness:

  • Add to/change the team (increase CI)
  • Reduce dysfunction (decrease CD)

In most cases it is far less costly, disruptive and time consuming to reduce dysfunctions rather than to add to or change the team’s intelligence.

To achieve improved effectiveness, management teams must understand their current behaviors in critical areas impacting performance and then work to change behaviors that increase the team’s Collective Effectiveness.

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