A value creation plan needs good infrastructure. But the infrastructure is no substitute for the plan itself.
The two levers pieces covered what moves equity value. Revenue growth that compounds. Pricing and profitability analysis that flow straight to EBITDA. These are the power tools of the trade, and quite rightly, they dominate the conversation. But if these are the power tools, then KPI selection and good governance are the workbench that lets the tools cut cleanly. I will look at KPI design first because this is often where the Value Creation Director has most agency. Board governance is more often the investor’s dominion, so I will present a single case: a joint venture that reached the right answer as an inevitable business pivot.
KPI Design: pointing the team at the right outcomes
In 1956, V.F. Ridgway observed that ‘what gets measured gets managed’ and the same remains true 70 years on. KPIs can fail a business in more ways than they can help it. Too much detail buries the levers. Blending hides them. Long lists dilute focus. Late reporting reduces KPIs to a running commentary. The four cases below cover one example of each.
The 260-line P&L that buried what mattered.
The chart of accounts of a conference company had expanded to over 260 line items through a process of creep. The business operated across multiple countries, with permanent and temporary venues. Each addition responded to a specific past situation. None was ever removed. The subtotals didn’t reflect the key operational levers, so financial reports were useless as an operating tool. More cost centres than employees. Budgeting and invoice coding required choices from drop-downs spanning a dozen pages. Hours of extra work for output that was harder to act on.
We collapsed our divisional P&L to roughly 15 lines. Spreadsheets surfaced the relevant inputs and subtotals. Irrelevant lines in the core accounting system were filled with zeros automatically. Same data, regrouped and honed, now exposing the strategic levers. This allowed meaningful comparisons across years and across locations, and surfaced the trade-off between exhibition halls and conference centres. Exhibition halls were a blank canvas. Lower hire cost, but we had to build each stage from scratch and actively manage sound leakage. Conference centres were costlier to hire but came with fixed stages and low build costs. There, we needed to manage crowd flow through signage, sightlines, and where to put the coffee. From then on, every venue decision would start with a full build-out costing. The variability from location to location was huge, and the 15-line P&L made it visible for the first time. A 260-line P&L tells you what happened. A 15-line P&L tells you why.
The licensing business running on rear-view data.
A children’s entertainment company earned the majority of its revenue from licensing. The industry-standard reporting cycle meant our licensees reported Q1 performance only in month five, after finalising their own Q1 sales numbers to their retail and wholesale channels. Our management team was consistently running the business on data that was at least five months old. And it meant we were budgeting the following year a full six months before receiving Q4 figures. Q4 was the most material quarter, because of Christmas.
Under PE ownership, the constant question is what it would take to do things faster. You cannot accelerate what you cannot see, so we needed forward indicators rather than trailing ones. We approached the biggest licensees, accounting for 80% of revenue, for provisional, unaudited monthly forecasts. Most agreed and the effect was material. Reactive decisions became proactive. Conversations with licensees about underperformance could happen collaboratively, in time to influence the quarter end. We might discuss content schedules with TV broadcasters or support the licensee in product listing discussions with retailers.
32 KPIs, no priorities.
The finance function of a trading business I worked with issued a monthly KPI book to each trader, laying out 32 KPIs. Thirty-two of anything cannot be ‘key.’ Leadership openly acknowledged that nobody could (or should) expect to hit all these goals simultaneously, so each manager should choose which to deliver against and which to let slip. It wasn’t a KPI framework, it was a narrative review. It raised the question: was the key trader competency knowing which KPIs to prioritise, or actually delivering the results the business needed?
A genuine KPI framework is a small set of metrics that match leadership’s agenda. Selecting them is a strategic decision. Thirty-two is not strategy. It is abdication. Chosen properly, the framework clarifies what the team is optimising for and gives every trade-off a tiebreaker. A 32-KPI report can still exist as a diagnostic. It just cannot be the primary instrument of management.
The social-impact enterprise that blended two businesses into one P&L.
This portfolio company ran two fundamentally different activities under a single set of accounts. One was a high-margin commercial activity. The other was a community-oriented service with very different economics and a different customer profile. The P&L treated them as a single business. Blended numbers obscured the levers that mattered most to the commercial side. The community side was being judged against expectations it could not meet.
Separating the two lines of business in both the management accounts and the KPI framework let us optimise each in its own context. The commercial side sharpened its focus on commercial clients with a clearer understanding of margins, helping us deliver a step-change in sales. The community side kept delivering social impact without dragging on the commercial engine that funded it. The more the commercial side earned, the more social impact was possible. Separating them made that loop visible, and something the team could act on.
The pattern across these four KPI cases is the same. KPIs and the reporting that supports them look like plumbing. They aren’t. They shape what the team sees, what they pay attention to, and what they optimise for.
Governance and Board Effectiveness
Good governance mitigates risk. The hard part is evidencing it, because if it works, the bad outcomes never happen. The case below is one where the risk was investment that wouldn’t pay off. The cost avoided was unusually clear. A JV board called the risk and further investment stopped.
The JV board that talked itself out of the business it had built. The subject company was a children’s radio joint venture between three partners. A TV production company, whose TV catalogue could be mined for soundtrack content as a low-cost foundation of the radio offer. A major commercial radio operator, who would handle distribution, advertising sales, and operations. And a specialist children’s content creator, from whom the venture would commission original content.
DAB was still a niche platform at that time, well before podcasting existed. Audiences were national but small, insufficient for audited measurement and therefore insufficient for impressions-based ad sales, although audiences and sponsor income were both growing.
The original thesis was sound on paper. Distribute on DAB to prove content quality and audience resonance. With proven content quality, the venture could bid for local FM licences. One of these would bring sufficient distribution for a profitable advertising-funded station. And any additional licences would multiply revenues at minimal cost. But after a handful of applications, each expensive to prepare, none had been won.
The board started asking the question that boards exist to ask. Was the plan actually achievable? Did it justify continued investment? Management came back with the answer. On DAB alone, breakeven would take at least four years. And after several failed bids, FM licences were starting to feel remote. The field of applicants was getting more contested with each round. The board then did what good boards do when the core assumption of the plan has broken. It tested the alternatives rather than persisting with the original thesis.
The content creator wanted to press on. Their economic stake differed from the other partners’. They had no funding obligation, and were paid to produce content for the venture. This was an asymmetry baked into the partnership. But neither of the other partners had the patience or the appetite to continue investing, and their JV board representatives took this recommendation back to their respective parent organisations.
The parent companies agreed. The board initiated a sale process and the venture was acquired by a buyer for whom the strategic rationale worked on its own terms. A clean outcome for all sides.
Infrastructure makes the plan deliverable
KPIs that point the team at the right outcomes. Boards that test the plan rather than ratify it. Two forms of infrastructure. Both shape whether the levers covered in earlier episodes convert into results.