3 Characteristics of Successful PortCo Management Teams

Technology and InnovationTechnologyArtificial IntelligenceTechnology, Data, and Digital Officers
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November 16, 2023
3 min read
Technology and InnovationTechnologyArtificial IntelligenceTechnology, Data, and Digital Officers
Executive Summary
Confidence in tech portfolio company management teams has declined, impacting success. Successful teams have the right capabilities.
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Over the past 2 years, our research has indicated a consistent downward trend in the level of confidence that technology portfolio company C-suite leaders have regarding their management teams.

The CEOs of private capital backed tech companies have demonstrated exceptional resilience under the pressure of intense competition and a challenging market. They've learned how to weather market fluctuations, adapt quickly, and make agile decisions that keep their businesses thriving. But, under the pressure of a deeply challenging market and rapidly evolving expectations of success, management team dynamics have deteriorated.

Tech portfolio companies with executive teams that lack confidence in each other and their operation as a team are very likely to fall short of meeting their targets.

Research shows time and time again that the quality of a portfolio company’s management team is the most-cited reason for deal success and the second most cited reason for deal failure (Bain&Co, 2021).

Over the past 2 years, among PortCo Tech Executives:

  • Confidence in leadership capabilities has declined by 31 percentage points.
  • Confidence in executives' ability to embrace change has declined by 16 points.
  • Confidence in effective collaboration as a team has declined by 9 points.

Source: RRA Global Leadership Monitor 2022 & 2023

Today’s interwoven web of challenges require the collaborative strength of the leadership team to solve.

It’s no surprise as the demands upon tech CEOs, even remarkable ones, are more than a single leader can solve. Each challenge further complicated by the unique stakeholder dynamics of being a private capital backed business.

Tech CEOs that say they are prepared to address the challenges of 2024 share a common trait: A formidable management team who are individually deeply experienced in their domain and well-functioning as a collective.

3 characteristics of successful tech portfolio company management teams:

  • All leaders have the right capabilities for the needs. Conducting executive evaluations, which blend industry, function, personality, and performance data, enable firms to predict how successful a leader will be in current and future business contexts, so you can make the right succession decisions.
  • Work together effectively as a team. During times of transition, such as a merger or private equity deal, the need for strong teams at the top becomes abundantly clear as a make or break factor. CEOs must investigate existing group dynamics and capabilities, align teams around key objectives, and ultimately field a top team that’s ready to meet strategic priorities during “make or break” moments.
  • Able to effectively embrace change. Executive leadership assessments aren’t still portraits, they’re dynamic snapshots that capture the ability of leaders to change over time as market conditions and dynamics change, enabling CEOs to make informed decisions for what’s ahead.

There’s more. We’ll continue to track this topic and share updates on our research - going deeper into the profiles of the leaders that make up a winning team and sharing the stories of how successful portfolio company CEOs have instilled and maintained confidence among their management teams. Stay tuned!

We welcome the chance to tell you more: Reach out to set up a chat

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Recent Tech News from RRA

We are pleased to announce that we have acquired Savage Partners, an executive search firm serving growth equity-backed software companies and world-class technology executives.

Bringing Savage Partners on board will further deepen and enhance Russell Reynolds Associates’ core leadership advisory work and capabilities in growth-oriented technology companies. We look forward to combining our strengths and assets to provide industry-leading leadership and succession planning guidance to the tech industry.