Hallmarks of success: Apply lessons from great companies to your own

When one of the investments of The Riverside Co. underperforms, we go to great lengths to figure out what went wrong. We even keep a collection of “Lessons from the Loo” on our office restroom wall, which chronicles the many ways a company can fail.
Success doesn’t lead to such soul searching, so we don’t have a similar list for the great majority of wonderfully performing companies with which we’ve worked. Nonetheless, after investing in about 380 companies, we’ve learned some fundamentals that superb ones always get right, and I’ve picked out some of my favorites.
Here is a list, by no means comprehensive, of five attributes of organizations that may help your company thrive:

  • Excellent leadership. Poor leadership can derail an otherwise solid company, so invest in talented executives to ensure the C-suite level is exceptional.
  • Innovation/improvement is part of their DNA. The desire to improve is imperative. Invest in R&D and never stop learning. Surround yourself with creative thinkers to always stay a step ahead of your competition and anticipate customers’ needs.
  • Transformative potential. Whatever your goals for your company, it likely could be a much bigger and better version of what it is today. With a great vision and specific steps to achieve goals, your company can morph into something bigger and better.

As an example, Riverside recently sold its stake in DISA, which went from a growing provider of drug screening services for the oil and gas industry in Texas at our initial investment to a global powerhouse worth 10 times more just a few years later. We helped DISA, and its management team, build on a strong niche to become capable of serving any safety-sensitive industry in the world with more comprehensive services.

  • Strong ESG+V commitment. Environmental, social and corporate governance (at Riverside, we add a V for values) sound dull, but companies committed to outperforming in these areas are often leaders in terms of bottom-line results. In short, they do things the right way across the board — from their books to their policies — and the effect is invariably felt by customers.
  • Never settling. Great companies constantly seek to improve systems and processes, finding ways to improve outcomes, efficiencies or both. Continuous improvement has long been idealized in management circles, but you must back it with a deep commitment of time and money.

We sponsor Riverside University, a series of webinars and in-person meetings designed to help our companies improve sales, pricing, production, IT and other fundamentals. Our best-performing companies tend to take the most advantage of these sessions. Paying for speakers, ongoing learning and travel to ensure your people have the latest knowledge is costly, but invariably worth it. The best never stop trying to get better.

Of course, rattling off a list like this is a far cry from living and breathing these things, but they’re also things we often lose sight of in the press of our day-to-day routines and demands. It’s never too early or too late to make your company even better.

Stewart Kohl is co-CEO of The Riverside Co., a global private equity firm based in Cleveland. He is an Oberlin College trustee; co-chair of the board of trustees of the Museum of Contemporary Art Cleveland; a trustee of the Cleveland Clinic, as well as a member of its Wellness Institute Leadership Board and co-chair of the Cleveland Clinic Capital Campaign. Contact him at www.riversidecompany.com