On this blog, we usually share our perspective on strategy execution based on our client work. Today is different. We want to leave the stage to San Francisco-based Alpine Investments’ CEO Graham Weaver.
In a recent article in Term Sheet, a newsletter for PE and VC professionals, Graham shares his perspective on human capital. And that perspective happens to be the same as ours:
The only priority of any leader is to hire and retain the best of the best for the job.
You may think your business is very different from the way private equity firms operate. It may be. But Graham’s proposition is universal: success depends on who you work with. If you have employees or contractors, your success depends on your people, too.
Haven’t we heard this from thousands of places in the past two years? Yes, however, Weaver’s argument is not the “motherhood and apple pie” type of those who suddenly discovered in the pandemic that workers are human beings who deserve respect and attention. Weaver’s is an economic argument: your people will literally make or break your business.
We’re glad to put the spotlight on Weaver because his experience is 100% aligned with our clients’ journeys to improve their strategy execution.
We use a platform called Line-of-Sight to measure the execution capabilities of an organization. This platform puts people in the center: Line-of-Sight’s unique approach is that it relies on employees, managers, and executives’ perception of these capabilities. It is all about the people: any strategic plan is worthless if it is not understood by employees in a way that shapes their behavior towards outcomes that drive economic performance.
However, that understanding is still not enough.
You need people who are well-suited for their jobs so their behavior translates into productive and effective actions and decisions.
In fact, human capital is one of the 6 dimensions of good execution (the others are the clarity of your market discipline, which is the positioning that ultimately makes customers want to buy from you; understanding of your strategy by all employees; leadership; balanced metrics, and activities and structure).
In truth, we need more Graham Weavers. Our client work shows that human capital tends to be the most neglected dimension of strategy execution. Consider this:
When Line-of-Sight surveyed 150+ executives about the execution capabilities of their organizations in late 2020, CEOs nearly universally rated their human capital capabilities the lowest. It does not mean they gave their employees poor scores: it means their organizations did not have in place the right tools and mindset to do what Weaver says should be leaders first and only priority: hire and retain the best for the job.
A diagnostic solution like Line-of-Sight is invaluable to show leaders where their gaps and risks are.
And human capital risks are big: just look around you and you’ll see businesses disrupted by their leaders’ inability to attract and retain employees, whether they are your local eatery, a global airline, or a specialty manufacturer.
Where to Start
In our firm, we provide every organization with simple, confidence-inspiring analytics and solutions that build their internal alignment – and get things across the finish line.
Just like Weaver, human capital is our priority to build and retain this alignment. If you are curious about your own execution capabilities, and whether you could do more to hire and retain the best of the best, call us.
You can find extracts from the Term Sheet article below. Thank you for reading!
Alpine Investments finds its edge—cultivating CEOs for its portfolio companies
July 29, 2022
Graham Weaver founded San Francisco-based Alpine Investments in 2001, but it wasn’t until the depths of the financial crisis that the firm discovered its edge.
With several portfolio companies struggling, Weaver was jetting from city to city putting out fires. When he canceled a weekly meeting with executive coach JP Flaum, the coach pushed back and peppered Weaver on the challenges facing his companies, including one led by a 25-year veteran CEO who was missing his projections during the market turmoil.
Flaum asked Weaver to grade the CEO, who was regarded as a legend in his industry. Weaver nonetheless gave him a solid B. Then the coach said something that switched on a light in Weaver’s brain: “Are you going to get to your goals with B or C CEOs running your portfolio companies? If you’re not building a suite of A+ leaders, Graham, how would you rate yourself as a CEO?”
“At the bottom of every single one of my problems, I saw I had the wrong person.”
Weaver tells me as he recalls that moment. “I was running around fixing the symptoms without focusing on the root cause.”
Since then Alpine has shifted into a private-equity firm that distinguishes itself with a paramount focus on talent—especially the raw, young talent of executives fresh out of business school. For its portfolio companies, Alpine appoints some CEOs seasoned with decades of experience. But much like tech giants like Google, it’s found that it’s often easier to train recent grads than it is to un-train and then retrain a more experienced leader.
Emboldened, Alpine launched a CEO-in-Training (CIT) program, an in-house talent initiative that recruits, develops, and places mostly green executives into Alpine’s portfolio companies. Rather than experience, Alpine looks for attributes such as resilience in the face of failure, emotional intelligence, humility, and a willingness to do all it takes to succeed. These early markers for success are easy to spot in interviews, says Weaver.
Over the years, more than 40 trainees in the CIT program have progressed to CEO roles.
This year’s class has over 60 trainees, with 72% of them coming from under-represented populations: 61% are female-identifying, and 39% are Black, Indigenous, and people of color. Both groups have long been sidelined in startup funding: Women-led startups receive 2.3% of VC funding, while only 2.4% of VC money goes to startups founded by Blacks and Latinos.
“If I hire a CEO from one of our companies’ competitors, I’ve just rearranged chess pieces on the table. I haven’t added to the pool of women or people of color in the CEO ranks,” Weaver says. “We’re trying to significantly expand that pool.”
Alpine’s CIT program eschews classes involving finance, strategy, or spreadsheets. There’s plenty of that in business schools. Instead, the firm places trainees in roles alongside seasoned mentors who coach them one-on-one to develop their own leadership styles. All trainees are schooled in the Alpine playbook, which focuses on strengthening a company’s vision, values, and long-term strategy, and, above all, hiring and engaging the best people.
“The playbook basically comes down to, just go build the best team you possibly can. Period,”
Weaver says. Some Alpine-trained CEOs who were inexperienced and even soft-spoken have turned around companies with broken cultures by aligning employees with their vision. “Getting the right people on the bus, that’s a big part of it. But it’s also making sure everyone on that bus has a say in where the bus is going.”
Weaver’s faith in the leadership skills of recent business-school grads goes back to his own youth, when as a 25-year-old Stanford student, he bought an Indiana-based printer of industrial labels. That experience, coupled with three previous years studying spreadsheets at a Wall Street investment bank—a stifling environment with long days of drudgery—underscored the importance of learning through a hands-on education.
“I remember thinking, ‘What a waste.’ I was using only 3% of my capacity at that firm,” he says. “Now I tell our CEOs in training, ‘We’re going to give you as much as you can handle—and then some.”
Alpine’s talent-centric approach to managing companies helps it address what investors and founders often complain is their biggest headache: hiring the right talent. Weaver offers two pieces of advice. First, don’t look so hard at financial metrics like revenue growth or EBITDA: They’re lagging indicators of success. Instead, track leading indicators like employee retention, engagement, and satisfaction, which can be measured through employee net promoter scores.
And second, make sure your top executives are all grade-A leaders. When portfolio companies gripe to Weaver about hiring challenges, he assumes the role of his own executive coach and holds their feet to the fire.
“I’ll have them look at their calendar to see how much time they’ve spent directly on hiring. If they say, ‘That’s not my job,’ I’ll ask, ‘If hiring is your top priority, then what is your job?’” Weaver says. “You’ve got to put your money where your mouth is. If you really believe that talent is important, you need to ask yourself how much time and resources you’re personally spending on it.”
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