Why your management team is so important when it comes to raising capital

The most important factor in the success or failure of an investment (or the degrees in between) comes down to the leadership and experience of the management team, the interactions between team members and the strategic plan they create for the future of the business.

At Evolution, we spend more time on team health, trust, getting the right people in the right seats, core values and strategic planning than anything else.

In the words of the acclaimed author Patrick Lencioni, “If you could get all the people in an organization rowing in the same direction, you could dominate any industry, in any market, against any competition, at any time.”

This is what we believe and strive for at Evolution and we require the same of our partners. While a simple concept, don’t underestimate the difficulty, commitment and investment of time necessary to achieve.

First off, no strategic plan goes exactly as designed. The best management teams are able to pivot their plan and capitalize on changes quickly to make the most of any new paradigm. Management teams that fall in love with their original plan and are too proud or incapable of making the necessary changes will at best, not maximize their  opportunity, and at worst, fail completely.

At Evolution we work with our management teams to not only have a five-year strategic plan (first two years by month with assumptions), but we ask them to have a Plan B, Plan C and Plan D with “triggers” that would cause the management team to automatically move to another of their defined strategies.

This dynamic planning process provides the necessary clarity when the inevitable changes come to the original strategic plan and when emotion can take over.

Secondly, at Evolution we subscribe to Patrick Lencioni’s “trust pyramid” which, in summary states that in the absence of trust, management teams avoid conflict and by avoiding conflict they lack commitment, and when they lack commitment no one wants to be held accountable, and when no one is accountable there is a general lack of attention to results.

I am fascinated at how accurate this trust pyramid is in describing the real challenges even the most talented management teams suffer from.

We solve for this at Evolution by relying on the Entrepreneurial Operating System (EOS) designed by Gino Wickman that takes management teams through a process to create transparency and accountability in any organization.

The fact is that EOS brings misalignment and lack of trust to a head very quickly. As a result of this, sometimes people do end up leaving the company, but both the employee and the company are better off as a result. The employee is not stuck in an organization that they will not be happy in (if they are honest with themselves) and the company ends up with one of the greatest competitive advantages, a fully-aligned and trusting management team.

Once you have solved for the planning and the alignment, the business has a strong foundation to face any challenge.

Jeffrey Kadlic is co-founder and managing partner at Evolution Capital Partners LLC