Author: Tom Koor

Tom Koor

How profitable is private equity? V2

How profitable is private equity? V2

 What is the purpose of this article?

This article enables a discussion regarding the profitability of PE (Private Equity) buyout funds.  The focus is on traditional PE funds with a fixed liquidation date.

The audience for this article includes: LPs (Limited Partners) and GPs (General Partners of PE buyout funds).

This article does not provide tax, legal or financial advice.

You must do your own research and fact-based analysis using current and relevant information.

You can download a PDF of this article from: How profitable is Private Equity V2

What are the critical learnings in this article?

  • Close to 50% of PE buyout funds had the same returns (or worse) returns than public market indices.
  • Past PE buyout GP performance is not a predictor of future Direct Alpha performance.
  • There are ways to identity what impacts the future Direct Alpha PE of GPs but I have not found fact-based analysis that these ways will results in positive Direct Alpha.
  • There won’t be fact-based analysis of AI on GP Direct Alpha performance for several years.
  • Scenario planning is important to identify the GP talent which can drive long-term Direct Alpha.

How do you read this article?

This article uses Direct Alpha as the measure of GP performance. See Appendix A for a definition of Direct Alpha.

How profitable have PE buyout GPs been for their LPs? 1

Close to 50% of PE buyout funds had the same returns (or worse) returns than public market indices.

  • 25% of PE buyout funds had annual returns 8% (or more) higher than public market indices.
  • 25% of PE buyout funds had annual returns at least 5% lower than public market indices.

Picking the right PE buyout GPs is critical to better performance than a public market index.

Does past PE buyout GP performance help you predict future performance? 2

Past PE buyout GP performance is not a predictor of future Direct Alpha performance.

  • “Interim performance offers no evidence of persistence”
  • “Investors gain little by knowing which quartile the GPs current fund is in when they are deciding whether to invest in the next buyout fund”.
  • But what if you took the second previous fund, which is largely realized, to predict performance? “We find no evidence of persistence using this approach”.

How can you predict future performance of PE buyout GPs?

There are ways to identity what impacts the future Direct Alpha PE of GPs but I have not found fact-based analysis that these ways will results in positive Direct Alpha.

  • Has the GP been growing revenue and EBITDA in portfolio companies? There are reports which indicate that simply cutting costs is of limited value.
  • Does the GP’s team do the investment due diligence or is it done only by external consultants, advisors, and lawyers? There are reports which indicate that internal due diligence, length of the due diligence process and due diligence process improve GP performance.
  • The use of value creating operating partners has big impact on EBITDA. One study found that deals with operating partners generated average EBITDA growth of 23.2% Deals without operating partners generated average EBDITA growth of 11.9%. 3
  • There are a number of talent characteristics which impact GP performance. These include: The operational and financial background of the deal partners, the ongoing replacement of poor performing deal team members, the fund having a dedicated human capital partner to managing talent acquisition and exiting at portfolio companies. The portfolio company CEO execution skills CCC (high empathy and listening skills are not correlated with EBITDA growth).4

Have the private equity and public markets changed?

There have been massive changes in the private equity and public markets in this century. 6

  • Over the past 10 years private equity has spent $900 billion taking public companies private.
  • From 2000 to 2024 the number of US public companies declined from about 7,000 to 4,500. The number of PE backed companies grew from about 2,000 to 11,600.
  • 61% of the stock value creation occurs prior to the IPO, leaving less value creation potential for the average investor. 85% of US unicorns that went public were unprofitable in 2023.
  • 44% of the Russell 2000 companies are unprofitable.
  • The conventional thinking that smaller companies outperform larger companies is not supported by facts. The Russell 2000 has been underperforming the S&P 500 and Nasdaq composite by increasing amounts over the past 20 years. E.g. over 20 years: -5.6% per year, over 10 years: -9.2% per year, over 5 years: -10.7% per year.

What are the current challenges PE fund managers face in providing cash returns to LPs?

  • The traditional PE equity value creation model appears broken. For 40 years the approach has been financial leverage and increasing the price to EBITDA multiple. 6 This approach now often appears to fail.
  • The total PE assets appear to be greater than the capacity and demand from IPOs and operating companies.
  • There is a backlog of portfolio companies waiting for exits The assets under management have tripled since 2014 while the value of exits has remained flat, resulting in a build up of unsold assets. 7 Late 2024, global buyout funds were holding about $3.6 trillion of unrealized value in about 29,000 unsold companies. 8
  • To provide capital returns, GPs: are borrowing money to give to LPs or selling some assets to the GP ‘s continuation fund. 9 (the cash from LPs investing in the continuation fund can be given to LPs in the original fund.) Most existing investors in a PE fund decline the option to roll over their investment in a continuation fund run by the same GP. 10 .
  • There different points of view regarding portfolio companies sold to a continuation fund. Some believe these portfolio companies have major profit growth potential and they should be retained.  Others believe these portfolio companies have few or no buyers and thus are being sold to avoid a write-down.
  • LPs are getting return on capital by selling their interest in a fund to a third party. This is a secondary investment.  Online marketplaces are emerging to enable LPs to sell their PE fund investments.

 What will be the impact of AI on GP performance?

There won’t be fact-based analysis of AI on GP Direct Alpha performance for several years.

Is scenario planning important to predicting the future Direct Alpha of GPs?

Scenario planning is important to identify the GP talent which can drive long-term Direct Alpha.

  • The future cannot be forecast.
  • Public markets may change.
  • Interest rates and the economy may change.
  • The business models GP need to create positive Direct Alpha may change.

 What are your next steps – as an LP?

  • Define the words/concepts you’re using, in a glossary. I’ve seen major confusion when the same words mean different things to different people. Different data sources will have different definitions. Very subtle differences in definitions can have a major impact on your returns.
  • You should create future scenarios.
  • Then you create detailed evaluation criteria regarding GPs. As discussed above, assessing the talent of the GP firms is critical. They need to be able to learn and unlearn more quickly and better than the competition.

 Footnotes

1 “A optimistic but measured outlook for private equity”, Vanguard

https://corporate.vanguard.com/content/corporatesite/us/en/corp/articles/optimistic-but-measured-outlook-private-equity.html

2 “Has persistence persisted in private equity? Evidence from buyout and venture capital funds” Journal of corporate finance, Page 15.

https://www.sciencedirect.com/science/article/pii/S092911992300010X

3 “The Impact of Operating Partners on Private Equity-backed companies in France: an exclusive study”, Page 6

https://www.franceinvest.eu/wp-content/uploads/2023/10/The-impact-of-Operating-Partners-on-PE-1.pdf

4 “Which CEO Characteristics and Abilities Matter?” – National Bureau of Economic Research

https://www.nber.org/digest/feb09/which-ceo-characteristics-and-abilities-matter

 5 “Private Equity Can Add Diversification to Your Public Index Holdings”, page 5-6, iCapital, 2025 July 16

https://icapital.com/category/insights/private-equity/

6 “Bridging Private Equity’s Value Creation Gap”, page 2, McKinsey, 2024 April 12

https://www.mckinsey.com/industries/private-capital/our-insights/bridging-private-equitys-value-creation-gap

7 2025 Global Private Equity Report – Bain, Page 4,6

https://www.bain.com/insights/topics/global-private-equity-report/

8 ibid., Page 17

9 What is a continuation fund? A GP creates a new fund, managed by the GP. Some assets are sold to the new fund.  LPs have the option to receive cash or roll over their investments into the new fund.

10 Kobi Kastiel, Yaron Nili “The rise of private equity continuation funds”, Chicago Booth Stigler Center January 2024 page 1

https://www.chicagobooth.edu/research/stigler/research/-/media/5d46328c68e0466b9787f42d98275f3b.ashx

 What further reading should you do?

Your company will fail. Koor and Associates

https://koorandassociates.org/avoiding-business-failure/your-company-will-fail-v1/

What are the core components of talent? Koor and Associates

https://koorandassociates.org/creating-business-value/core-components-of-talent/

LP (Limited Partner) assessment of a fund. Koor and Associates

https://koorandassociates.org/selling-a-company-or-raising-capital/lp-limited-partner-assessment-of-a-fund/

 Appendix A – What is Direct Alpha?

Direct Alpha is the annualized return of a fund over a public market index (e.g. S&P 500).

  • Direct Alpha is calculated using the specific cash flows of an LP in and out of a fund. These dates and dollars amounts are used to determine hypothetical purchases and sales of a public market index
  • Direct Alpha also includes the Net Asset Value of the fund, which is the value of unsold assets.

Direct Alpha measures the annual percentage return above or below the benchmark the LP would achieve.  A Direct Alpha of 0% means the investor received the same return as of they had bought and sold the public market index. A direct Alpha of 5% means the investor received an annual return 5% higher than the public market index.

Why not use the IRR reported by funds?

  • The IRR reported by funds does not represent the annual % cash returns the LP would achieve over the lifetime of the fund.
  • The IRR can also be manipulated by funds to generate high values.
Tom Koor

Society does not trust its leaders and institutions. V7

Society does not trust its leaders and institutions. V7

 What is the purpose of this article?

To enable boards of directors, C-Suite, and shareholders to begin a discussion regarding: the value of society’s trust in them, and whether action must be taken to increase trust.

This article applies to all companies, ranging from pre-revenue through to long established global companies.

This article does not provide tax, legal or financial advice.

You must do your own research and fact-based analysis using current and relevant information.

AI did not write this article.  100% human written.

You can download a PDF of this article from: Society does not trust its leaders and institutions V7

What are the critical learnings in this article?

  • Criminal behaviour is common in US public companies. The majority of people believe government and business leaders purposefully try to mislead people.
  • Accountants are under pressure to commit unethical behaviour and have done so.
  • Most young Americans have a bleak (my words) view of the future.
  • 70% of people globally are hesitant or unwilling to trust someone who is different from them.
  • 68-70% of people globally, think that government leaders, business leaders, journalists, and reporters purposefully mislead people by saying things they know are false or gross exaggerations.

I wonder how society can survive when the population doesn’t trust leaders and institutions and believes leaders are only looking after themselves.

How common is criminal behaviour in US Public Companies?

Criminal behaviour is common in US public companies. 10% of public companies commit securities fraud every year.1

My observations

  • This was data leading up to 2022. Have things changes since the 2024 US Presidential election?
  • What is the overall percentage of US public companies committing criminal acts each year? Securities Fraud is only one example.
  • Where were the boards of directors?

Are accountants under pressure to commit unethical behaviour?2

  • Accountants are under pressure to commit unethical behaviour and have done so. 55% of accountants have witnessed unethical behaviour in their career.  24% have been pressured to behave unethically in a three-year period.
  • 40% of accountants said the top area for ethical challenges was leadership and culture.

My observations

What are the values, morals, and ethics of accounting firm leaders?

How do young Americans (18-29 yrs old) view the future?3

Most young Americans have a bleak (my words) view of the future. 59% say the country is on the wrong track.

  • Only 15% trust the federal government and 39% trust the military.
  • Only 33% say they trust that the 2026 elections will be conducted fairly.
  • Only 29% say they will be better off than their parents.
  • Approval ratings for President Trump, the Democrats and the Republicans are similarly low: 25%-26%
  • The majority believe both political parties care more about elites than people like them.
  • What’s the most important qualities of a congressional candidate that would make young American vote for the candidate: 37% said a candidate who shares their values.

Do people think the next generation will be better off?

32% of people globally4 and in Canada5 think the next generation will be better off.

Do people trust some who is different from them?

70% of people globally are hesitant or unwilling to trust someone who is different from them.6 73% in Canada.7

Do people help leaders who are different from them?

34% of people globally would put less effort to help a team leader with different political beliefs succeed.8  31% in Canada. 9

Who do people trust?

77% of people globally trust scientists, 53% CEOs and 47% government leaders.10 In Canada, 78% trust scientists, 44% trust government leaders and 37% trust CEOs.11  I wonder why Canadian trust in CEOs is lower than the global average.

 Do people believe that hostile activism is a viable means to drive change?

  • Globally 53% of people ages 18-34 believe that hostile activism is a viable means to drive change.12 In Canada 67% of people ages 18-34 believe that.13 I wonder why more young people in Canada believe in hostile activism than the global average.

How do people view the wealthy?

  • 65% of people globally believe the wealthy’s selfishness causes many of our problems.14 61% in Canada believe that 15
  • 67% of people globally believe that the wealthy don’t pay their fair share of taxes.16 73% in Canada believe that.17

Do people think that leaders lie to them?

68-70% of people globally, think that government leaders, business leaders, journalists, and reporters purposefully mislead people by saying things they know are false or gross exaggerations.18  In Canada, 62% to 67% of people believe that.19

What are your next steps?

  • Define the words/concepts you’re using, in a glossary. I’ve seen major confusion when the same words mean different things to different people.
  • Conduct an anonymous survey of your board of directors, CEO, and C-Suite to learn their perception of how important it is that employees, customers and society trust.
  • Discuss the results of the anonymous survey and decide whether or not to continue.
  • Survey your board of directors, CEO, C-Suite, employees and other members of your company’s ecosystem, op learn the degree of trust in the board of directors, CEO, and C-Suite.
  • Discuss the results, in terms of: what are the symptoms, what are the problems, what are the underlying root causes.

Footnotes

1 “How pervasive is corporate fraud”, Alexander Dyck (University of Toronto), Adair Morse (University of California-Berley), Luigu Zingales (University of Chicago)

https://link.springer.com/article/10.1007/s11142-022-09738-5

2 “The new era of ethical challenges for accountants”, Association of Chartered Certified Accountants, Oct 14 2024

https://www.accaglobal.com/gb/en/professional-insights/global-profession/ethical-challenges.html

3 National Poll by Harvard Youth Poll 2026 Spring

https://iop.harvard.edu/youth-poll/52nd-edition-spring-2026

4 Page 10 2026 Edelman Trust Barometer Global Report

https://www.edelman.com/sites/g/files/aatuss191/files/2026-01/2026%20Edelman%20Trust%20Barometer%20Global%20Report_Final.pdf

5 Page 6 2026 Edelman Trust Barometer Canada Report

https://www.edelman.com/ca/trust/2026/trust-barometer

6 Page 17 2026 Edelman Trust Barometer Global Report

7 Page 12 2026 Edelman Trust Barometer Canada Report

8 Page 16 2026 Edelman Trust Barometer Global Report

9 Page 17 2026 Edelman Trust Barometer Canada Report

10 Page 10 2026 Edelman Trust Barometer Global Report

11 Page 49 2026 Edelman Trust Barometer Canada Report

12 Page 07 2026 Edelman Trust Barometer Global Report

13 Page 12 2026 Edelman Trust Barometer Canada Report

14 Page 13 2026 Edelman Trust Barometer Global Report

15 Page 11 2026 Edelman Trust Barometer Canada Report

16 Page 11 2026 Edelman Trust Barometer Global Report

17 Page 17 2026 Edelman Trust Barometer Canada Report

18 Page 10 2026 Edelman Trust Barometer Global Report

19 Page 15 2026 Edelman Trust Barometer Canada Report

Tom Koor

What is the value of an advisory board? V2

What is the value of an advisory board? V2

 What is the purpose of this article?

This article enables a discussion about strategic advisory boards for a CEO.

The audience for this article is focused on the CEO of a for-profit business. This article applies to all long-established companies.

This article does not provide tax, legal or financial advice.

You must do your own research and fact-based analysis using current and relevant information.

AI did not write this article.  100% human written.

You can download a PDF of this article from: What is the value of an advisory board. V2

 What are the critical learnings in this article:

  • The strategic advisory board helps the CEO understand the underlying problems. The board also helps the CEO change their thinking about how to make critical decisions.
  • CEOs leave successful advisory board meetings emotionally and intellectually exhausted. Fundamental learning is like physical training – improvement is painful and exhausting.
  • CEOs leave unsuccessful advisory board meetings “feeling good”. The meeting was pleasant with no difficult action or outcomes for the CEO.
  • A successful advisory board has members with an extremely diverse background. E.g. exclude people with many years of industry experience and heavily biased towards “the way to solve yesterday’s problems”.
  • CEOs who cannot admit being wrong will not benefit from a strategic advisory board. They may not have the cognitive and psychological capabilities to unlearn and change their core thinking.

What are different types of advisory boards?

The strategic advisory board helps the CEO understand the underlying problems. The board also helps the CEO change their thinking about how to make critical decisions.

Other types of advisory boards include:

  • External warning board. Making the CEO aware of changes occurring in the world.
  • Introductory board – doing introductions for the CEO to potential customers, suppliers, employees, and investors.
  • Expert board – a group of experts providing answers to the questions posed by the CEO

What are the differences between a strategic advisory board and consultants?

The board helps the CEO identify and define underlying problems are. The consultants help solve defined problems.

  • Symptoms are indications of problems.
  • Your challenge is to identity the root causes of the problems.

 What does success and failure of the board look like to you after 12 months?

Success may look like:

  • At least one major flawed initiative was stopped due to new insights.
  • Significant changes made to the strategic plan before the strategy is presented to the fiduciary board.
  • At least one major implementation ran more smoothly.
  • You left advisory board meetings emotionally and intellectually exhausted. Fundamental learning is similar to physical training – improvement is painful and exhausting.

Failure may look like:

  • Your advisory board offered minor changes to major initiatives and decisions.
  • Your advisory board was focused on minor deep details.
  • You left each advisory board meeting “feeling good”. The meeting was pleasant with no difficult action or outcomes for you.

 Who should be on your strategic advisory board?

Your advisory board has an extremely diverse background. Potential members could include:

  • A former corporate CEO.
  • A former leader who from complex challenge environments e.g. retired politician, retired faculty dean from a university.
  • People who are comfortable telling the CEO that their underlying assumptions are wrong and them explaining why.
  • People who can go beyond symptoms to identify underlying problems and causes.
  • People who can use the Socratic technique to enable the CEO to learn and change their core thinking

Who should not be on your strategic advisory board?

People with: a short-term focus, deep historical industry experience, or conflicts-of-interests.

  • People with many years of industry experience and heavily biased towards “the way to solve yesterday’s problems”.
  • People who are deeply focused on the minutia of what’s happened in the past or currently.
  • Professional services providers who may have biases to sell you major projects or be concerned about the financial implications if they upset you.

How can you deal with the conflicting advice you’ll get from your strategic advisory board?

The onus is on you to determine your actions and not for the advisory board to be in 100% consensus. Some of the ways for you to deal with conflicting advice are:

  • You must always take notes.
  • Always ask for the rationale for the advice, the assumptions or facts.
  • Immediately after the board meeting, write down your top 3 cognitive changes.
  • Within 48 hours of the board meeting (you must have been able to sleep at least once regarding the board discussion), write down immediate actions regarding changes to current initiatives and plans.
  • Ask an executive to validate or invalidate a critical assumption.
  • Schedule a meeting with your executive team to deeply probe an issue.

What are the characteristics of a CEO who can benefit from a strategic advisory board?

  • You view yourself as the decision maker with accountability vs a consensus seeker.
  • You can separate your views of your personal worth from your ideas.
  • You know that many decisions will, in hindsight, be wrong.

What are the characteristics of a CEO who cannot benefit from a strategic advisory board.

You cannot admit being wrong.  You defend your past decisions rather than learn why they were wrong.

  • You try to have the advisory board make the decisions and shift accountability to the board.
  • You use the board to support the decisions you have already made. i.e. validate your thinking
  • You do not have the cognitive and psychological capabilities to unlearn and change your core thinking.

What are your next steps?

  • Define the words/concepts you’re using, in a glossary. I’ve seen major confusion when the same words mean different things to different people.
  • Write the strategic advisory board mandate: Why does it exist? What is within scope? What is not within scope (e.g. quarterly financial results)
  • Define the cognitive profiles of the advisory board members. Recruit the members. To pass an interview each candidate must push back on a strategic problem identified by you.
  • Prepare the operational documents e.g. NDA, compensation, meeting schedule for the upcoming 12 months.
  • Prior to meeting #1, an onboarding package is sent to each board member and you meet for 1 hour with each board member.
  • Structure the first meeting e.g. single problem or question to discuss, you don’t use slides, you restate the rules of engagement (“I am not looking for validation. You must help me understand the flaws in my thinking”)

 What further reading should you do?

Are you solving the right problem? Koor & Associates

https://koorandassociates.org/avoiding-business-failure/are-you-solving-the-right-problem/

Note taking is key to value creation. Koor & Associates

https://koorandassociates.org/creating-business-value/note-taking-is-key-to-value-creation/

Does everyone agree on what strategic planning is? Koor & Associates

https://koorandassociates.org/strategy-and-strategic-planning/does-everyone-agree-on-what-strategic-planning-is/

Is the human expert panel concept obsolete? Koor & Associates

https://koorandassociates.org/creating-business-value/is-the-human-expert-panel-concept-obsolete/

Tom Koor

Does your company have current knowledge and facts?

Does your company have current knowledge and facts?

 What is the purpose of this article?

  • This article enables a discussion about the value and creation of knowledge, facts, and data.
  • The audience for this article includes: investors, board oof directors, and C-Suite
  • This article applies to all companies, ranging from pre-revenue through to long established global companies.
  • This article does not provide tax, legal or financial advice.
  • You must do your own research and fact-based analysis using current and relevant information.
  • AI did not write this article. 100% human written.

You can download a PDF of this article from:Does you company have current knowledge and facts

How is this article structured?

  • Decisions and actions are based on knowledge. Knowledge is derived from facts. Facts are derived from data.

What are the critical learnings in this article?

  • Your company’s survival and success depends on having better knowledge than your competitors and better ability to learn.
  • Knowledge explains why things happened. Your decisions and actions are based on knowledge.
  • Facts describe behaviour at a point in time and are validated. Facts are what people believe to be the truth.
  • In today’s turbulent, fast changing, and unpredictable world knowledge, facts and data often become obsolete quickly.

What is knowledge?

Knowledge explains why things happened. Your decisions and actions are based on knowledge. For example:

  • The facts could be that sales dropped last quarter. Knowledge is knowing why customers decided to buy from your competition rather than from your company.

What are the two types of knowledge?

  • Explicit knowledge is what resides in documents and electronic files.
  • Tacit knowledge is extremely difficult to document e.g. how to calm an angry customer, how to reorganize talent to cope with an unexpected crisis. Tacit knowledge resides in peoples’ brains.

 Why is current knowledge critical to your company’s survival and success?

Your company’s survival and success depend on having better and more current knowledge than your competitors in key areas.

  • Some of the key areas include: Why customers make buying decisions. Why your solution more is more profitable than the competition. Why star employees decide to join your company or leave your company.
  • You must have current knowledge. Why? For example, knowing how customers made buying decisions 10 years ago is not helpful in today’s world.
  • Why customers make buying decisions may change within days. E.g. fashion
  • The average half life of professional skills and technical knowledge is below 5 years.1

What are facts?

Facts describe behaviour at a point in time and are validated. Facts are what people believe to be the truth.

  • Facts are truthful at a specific point in time in a specific situation.
  • Facts describe behaviour at a point in time e.g. 80% of revenue comes from 20% of customers.
  • Facts by themselves are not the rationale for making decisions about actions to take.

Everyone needs to have a common understanding and agreement on what the facts are.

 How does your company create knowledge from facts?

  • Analytical techniques and software, including AI, help identify potential knowledge from facts.
  • The creation of knowledge in the brains of your board directors, C-Suite, and employees requires physical changes in their brains.

Do facts need to be validated?

Facts without validation are not facts. Assumptions, opinions, hopes, etc. are not facts. Some types of validation may include:

  • Separating correlation from causation e.g. smoking and lung cancer are correlated. But it’s false to conclude that lung cancer causes smoking.
  • Getting different data e.g. the statement that the new software is great success because there were 100,000 downloads in a month is not fact when the different data shows that 99% of people uninstalled after a week, and that after a month only 10 people were cash paying subscribers.

Facts need to be constantly validated in today fast changing, unpredictable world.

How does your company create facts from data?

  • You must have a common definition of facts and data. Create a glossary for defining facts and data.
  • Create data from variety of sources.
  • Analytical techniques and software, including AI, help identify potential knowledge from facts.
  • The final step is people in your company agreeing on what are the facts.

Why are current facts critical to your company’s success?

Facts are constantly changing in todays turbulent and unpredictable world.

  • There is the risk that your company continues to believe out of date or unvalidated facts as the truth.
  • Your decisions and actions are then based on out-of-date or unproven knowledge.

What is data?

  • Data is a huge pool of unprocessed – unvalidated and without business meaning.
  • Examples include: 1,000s of customer invoices and payments, sensor readings in a factory, raw survey responses, social media posts, logs of customer phone calls and emails, etc.

Why is current data critical to your company’s success?

New and changed data often appear in todays turbulent and unpredictable world.

  • Current and relevant facts must be based on current and relevant data.
  • Current relevant knowledge must be based on current and relevant facts.
  • Your company decisions must be based on current and relevant knowledge.

What are the challenges in your people learning to create new knowledge?

It is mentally difficult and psychologically stressful to make the biological changes in your brain required for learning and creating new knowledge and new facts.

  • You will very naturally, and often unknowingly, utilize a broad range of cognitive and psychological bias to resist unlearning, and to resist new knowledge which is different from the past.
  • You will unconsciously favour decision making and planning processes from the past and which are no longer useful today.
  • Your information technology systems continue to support the old way of doing thing.

What are your next steps?

  • Define the words/concepts you are using, in a glossary. I have seen major confusion when the same words mean different things to different people.
  • Identify the key areas where your company must have competitively differentiated knowledge.
  • Identify the links between your company’s performance and your company’s knowledge.
  • Assess your company’s knowledge and facts.
  • Assess your company’s planning and decision-making links to knowledge.
  • Identify your company’s process for creating fact from data.
  • Assess your company’s leadership capabilities to quickly learn and unlearn. Start with the Board of Directors, CEO and C-Suite.

Footnotes:

1 Boston Consulting Group “Reskilling for a rapidly changing world.https://www.bcg.com/publications/2023/reskilling-workforce-for-future

 

What further reading should you do?

  • What is learning? Koor and Associates

https://koorandassociates.org/creating-business-value/why-have-your-minimized-your-talent/

  • Are you solving the right problem? Koor and Associates

https://koorandassociates.org/avoiding-business-failure/are-you-solving-the-right-problem/

  • Is you company planning to fail? Koor and Associates

https://koorandassociates.org/avoiding-business-failure/is-your-company-planning-to-fail/

Tom Koor

Are you solving the right problem?

Are you solving the right problem?

 What is the purpose of this article?

  • This article enables a discussion about whether you’re solving the right problem with the greatest impact on your business.
  • The audience for this article includes: investors, the board of directors, CEOs, and C-Suite.
  • This article applies to all companies, ranging from pre-revenue through to long established global companies.
  • This article does not provide tax, legal or financial advice.
  • You must do your own research and fact-based analysis using current and relevant information.
  • AI did not write this article. 100% human written.

You can download a PDF of this article from: Are you solving the right problem

What are the critical learnings in this article?

  • A problem is a symptom (something observable) which has a negative impact on your company.
  • You need a solution which addresses the cause of the symptoms.
  • A cause explains why the symptom is occurring e.g. a fire in the building is causing smoke to pour out the windows.
  • A root cause is a cause, which if addressed by a solution, means the problem will never occur again.
  • The fundamental root cause is always people.

What is the structure of this article?

Symptoms > Problems > Causes > Root Cause > Fundamental Root Cause

What is a problem?

  • A problem is a symptom (something observable) which has a negative impact on your company.
  • A symptom occurs when what is observed in not what is expected. The observation may be by a human, sensor, or AI making an observation based on complex analysis of data. Some examples of a symptom are: smoke coming out of building windows. The observation may be measurable e.g. last quarter sales 20% below target.
  • A decision is made whether or not the symptom is a problem. It is not a problem for me if the morning temperature is 2 degrees lower than I expected. It may be a problem for your company if last quarter’s sales were 20% below target.

How do you decide if a symptom is a problem you may need to correct?

  • You have criteria to define if a symptom is a problem.
  • These criteria may include the impact on your company, employees, your shareholders, and society.
  • The impact may be in the next month, or 10 years from now.

Your company will have lots of problems. You won’t solve all of them, because many will have little impact.

Do you need a solution to the problem?

  • You need a solution which addresses the cause of the symptoms.
  • You do not need a solution to the problem.

What is the cause of a problem?

  • A cause explains why the symptom is occurring e.g. a fire in the building is causing smoke to pour out the windows.
  • A cause can only be determined after investigation i.e. is the smoke due to an electrical fire, a broken natural gas line burning, a smoke bomb, a blocked fire place, etc.

There can be a hierarchy of causes and solutions.

  • There can be a hierarchy of causes e.g. the fire was from a broken natural gas pipeline, the break occurred due to failures in installing the pipeline, etc.

What is a root cause?

  • A root cause is a cause, which if addressed by a solution, means the problem will never occur again. E.g. checking the natural gas pipeline for other defects to make sure there won’t be future natural gas fires. Turning of the natural gas pipeline may correct the immediate symptom but does not prevent future natural gas fires.

What is always the fundamental root cause?

  • The fundamental root cause is always people. E.g. who were the people who approved the process for selecting design engineers and installations firms for a poorly designed and poorly installed natural gas pipeline.

Are your focused on the right symptoms?

Have you identified symptoms which could cause major problems for your company in the next 3-5-10+ years?

  • It’s easy to focus on short-term symptoms showing that your company is currently in trouble.
  • It’s hard to identify symptoms and address causes to prevent your company from getting into trouble in the future.

What will be your challenges?

  • Measuring the symptoms and determining their impact.
  • It is easy to focus on symptoms and causes rather than root cause. It is difficult to overcome the cognitive and psychological barriers.
  • Understanding the cause-and-effect relationship between symptoms, causes and root causes.
  • In today’s inter-related systems world, there may be a large number of inter-related symptoms and root causes. One symptom may have multiple partial root causes, and a single root cause may impact multiple symptoms.
  • The fundamental root cause of people talent is often impossible to address, especially when changes are needed to the board of directors, CEO, or C-Suite.

 What are your next steps?

  • Define the words/concepts you’re using, in a glossary. I’ve seen major confusion when the same words mean different things to different people.
  • Create your own framework for analyzing symptoms and documenting problems, causes, and root causes.
  • Identify symptoms indicating current problems
  • Define symptoms which would identify future problems
  • Always include the fundamental root cause of people.
  • Define the decision-making criteria, especially the criteria for launching project(s) to address a symptom.

What further reading should you do?

Is your company planning to fail? Koor and Associates

https://koorandassociates.org/avoiding-business-failure/is-your-company-planning-to-fail/

What is learning? Koor and Associates

https://koorandassociates.org/creating-business-value/why-have-your-minimized-your-talent/

Tom Koor

Is the human expert panel concept obsolete?

Is the human expert panel concept obsolete?

 What is the purpose of this article?

  • This article enables a discussion regarding the future value and structure of expert panels.
  • This article applies to all companies, ranging from pre-revenue through to long established global companies.
  • This article does not provide tax, legal or financial advice.
  • You must do your own research and fact-based analysis using current and relevant information.

AI did not write this article.  100% human written.

You can download a PDF  of this article from: Is the human expert panel obsolete

What are the critical learnings in this article?

  • The traditional expert panel answers questions from a facilitator by sharing anecdotes from the past and opinions about what should be done today.
  • The primary challenge of the traditional expert panel is that their historical experiences don’t reflect current reality or future scenarios in today’s turbulent world.
  • The AI expert panel may consist of several AIs with deep current relevant knowledge and deep analytical frameworks.
  • A human panel can focus on outlining the human implications of past experience in future scenarios.
  • You can create your own AI expert panel to have a discussion about your own questions.
  • You have to design the expert panel: all human, all AI, or a combination of human and AI.

What has been the traditional expert panel?

  • The traditional expert panel answers questions from a facilitator by sharing anecdotes from the past and opinions about what should be done today.
  • These experts have a long and deep history of knowledge and experience.
  • A facilitator asks the panel a series of questions.
  • The audience attends to learn. The audience may come from a wide range of private, public, and government organizations.

Who is in the audience?

  • The audience has a wide variety of people e.g.
  • Different industries
  • Different types of organizations
  • Different types of short and long-term issues

What are some of the challenges with traditional expert panels?

The primary challenge of the traditional expert panel is that their historical experiences don’t reflect current reality or future scenarios in today’s turbulent world.

  • We live in a fast-changing world in which the future is unpredictable.
  • Customer needs, competition, employee expectations, investors expectations change.
  • There are multiple, unforeseen crisis at the same time.

 What has started to replace the human panel of experts?

The AI expert panel may consist of several AIs with deep current relevant knowledge and deep analytical frameworks.

Let’s look at an example:

  • The panel has three AI created consulting partners: McKinsey, Bain, BCG.
  • The AI facilitator asks the panel a question about a business issue. The facilitator will also provide some context.
  • Each AI partner then shares some relevant global fact-based analysis from the past 18 months. This is followed by a specific point of view.
  • The partners then get into a discussion where they challenge each others’ points of view.
  • At the end of the discussion regarding each question, the AI facilitator summarizes the discussion.

What can a human panel do that an AI panel cannot?

A human panel can focus on outlining the human implications of past experience in future scenarios.

When looking at past experience, especially failures the audience should not repeat, the panel can outline:

  • The process for making decisions and gaining commitment to action.
  • Why people supported or didn’t support changes.
  • The human interrelationships and politics of failure.
  • The metrics being tracked before decisions were made and ever afterwards.
  • The role of value, morals, and ethics.

What are the implications for you as an individual?

  • You can create your own AI expert panel to have a discussion about your own questions.
  • You can provide the AI experts with public information about your company.
  • You might be able to provide confidential information to the AI experts if you run a Large Language Model locally on your computer.

What are your next steps?

  • Define the words/concepts you’re using, in a glossary. I’ve seen major confusion when the same words mean different things to different people.
  • Describe your audience and their learning objectives for attending? What are the issues and challenges requiring insights from the expert panel?
  • Determine the type of panel you need e.g. all human, all AI, or a combination of human and AI.

What further reading should you do?

Is your company planning to fail?

https://koorandassociates.org/avoiding-business-failure/is-your-company-planning-to-fail/

What is learning?

https://koorandassociates.org/creating-business-value/why-have-your-minimized-your-talent/

Tom Koor

My regular update regarding my learnings and unlearnings

It’s easy to tell what your strategy is

The purpose of this email is to share my learnings and unlearnings, with the expectation that some will be of value to you. This email was 100% written by me – not by AI.  When you send me an email, my response is 100% written by me.

What has been my most valuable learning in the past three months?

I’ve had countless confusing discussions about strategy.  I’ve concluded that it’s easy to tell what your company’s strategy is.  Let’s assume your board of directors approves your strategic plan.

  • You have a slide at the beginning of your strategic plan presentation to the board. The slide states “Asking for the approval of ….”
  • The minutes of the board meeting document: what exactly was approved; who is accountable for the benefits; what are the metrics for measuring success; what facts and assumptions would have to change in order for the benefits to be unachievable and the board would need to approve something different.
  • The above two points illustrate that approving a strategy is a combination of a decision-making process and a learning process.

What is my personal update?

  • On the mentor roster at The Hatchery, Department of Engineering, University of Toronto, Department of Engineering.
  • On the mentor roster at the Health Innovation Hub, University of Toronto,
  • Continued my long-term fundraising for the Geoff Carr Fellowship at Lupus Ontario. Over the past 20 years family, friends, neighbours, and colleagues have contributed over 284,000.
  • Continued as a member of the Angel Capital Association in the US and the Institute of Corporate Directors in Canada.
  • Continued to share with you, and on my website, some of what I’ve learned and unlearned, with the intent that some of you will find value. The learnings and unlearnings are applicable to any size company, ranging from early-stage startups to large global enterprises.
  • Continued as Board Director at a private company.

I continue to focus my time to maximize the value and impact of my two professional purposes: #1 Enabling current and emerging business leaders to succeed, #2 Enabling business leaders to have a positive impact on society.

Sharing my learnings

Below are links to my website containing new and revised articles since my last update in September. The critical learnings from each article are included. Each article designed to enable discussion among founders, owners, shareholders, investors, CEOs, and boards of directors. The learnings and unlearnings are applicable to any size company, ranging from early-stage startups to large global enterprises.

Links to my points-of-view articles:

Does everyone agree on what strategic planning is?

  • There is no broad agreement regarding the definitions of: strategy; strategic plan; and strategic planning process
  • There is no broad agreement regarding the components and metrics of a strategic plan.
  • There is no broad agreement regarding a strategic planning process.

https://koorandassociates.org/strategy-and-strategic-planning/what-is-strategy-and-strategic-planning/

 

Traditional strategic planning dooms your company to failure.

  • TSP (Traditional Strategic Planning) evolved in a slow changing world. The future could be forecast, and decisions (and decision-making processes) were expected to be valid for several years.
  • The result of TSP was that few companies survived and most delivered poor financial results.
  • Today’s world is totally different: future is impossible to forecast, multiple sets of fast changes, multiple unpredictable crisis.
  • Strategic planning must be rethought to determine which decisions and decision making processes have a lifetime longer than a year.

 

https://koorandassociates.org/strategy-and-strategic-planning/traditional-strategic-planning-dooms-companies-to-failure/

 

Is your company actually a startup? V2

  • Most companies need to become a startup again but don’t realize it. As a result, the wrong type of talent is in place, taking the wrong actions.
  • Most companies don’t last long. Most companies have poor value creation. Most transformations and major business changes have poor results.
  • Companies need to get into startup mode to validate and invalidate their assumptions regarding: customer needs and problems, and the number of customers willing and able to pay for a solution.
  • Board directors and C-Suite cannot learn startup mode knowledge, skills and decision-making processes because their brains have hard-wired biological responses and cognitive biases.

https://koorandassociates.org/avoiding-business-failure/is-your-company-actually-a-startup/

 

How will startups destroy your company? V2

  • The startup is a temporary organization designed to search out a repeatable, scalable, and profitable business model with lots of potential customers who are willing and able to pay to solve their problems and needs. Startups are not building a solution. They are building a tool to learn what solution to build.
  • Startups begin by making assumptions about the problems customers are willing and able to pay for, and about how customers would perceive the value proposition they’d achieve from the startup’s solution.
  • The startup is driven by immediate and ongoing understanding of the customer based on face-to-face interviews supplemented by surveys.
  • The assumptions are quickly validated or invalidated. Invalidation results either in a new set of assumptions or the startup stopping.

https://koorandassociates.org/avoiding-business-failure/how-will-startups-destroy-your-company/

 

AI is not accountable for benefits.

  • AI is not accountable for benefits. I have seen countless articles start out with AI not delivering benefits.  AI is not accountable for benefits.
  • Management is accountable for benefits.
  • The way to solve this return on capital issue tis two-fold: First, improve the processes used by management to make investment decisions (including AI) and to achieve benefits. Second, improve management.

 

What is a startup? V3

  • There are no commonly accepted definitions regarding startups.
  • There are no commonly accepted definitions of a successful startup.
  • Each of the 5 US universities I looked at has different definitions, metrics, and processes for startups.

https://koorandassociates.org/the-startup-journey/what-is-a-startup/

 

How will undergraduate founders destroy your company?

  • Founders first go through a program to validate that cash paying customers believe they have a problem which needs a solution.
  • The first step is to have face-to-face interviews with cash paying customers.
  • There should a multi-disciplinary set of founders e.g. business, technical, social sciences people.
  • Program, mentor, and founder problems are addressed by AI.
  • The programs have a structured learning process to rewire the founders’ brains over a period of several semesters.
  • The program is part time, with the founders taking other courses during the semester.

https://koorandassociates.org/avoiding-business-failure/how-will-undergraduate-founders-destroy-your-company/

Tom Koor

Does everyone agree on what strategic planning is?

Does everyone agree on what strategic planning is?

 What is the purpose of this article?

  • This article enables a discussion about your company’s strategic plan and strategic planning process.
  • The audience for this article includes: boards of directors, CEOs, the C-Suite, individual investors, and institutional investors. The article applies to all companies, regardless of size.
  • This article does not provide tax, legal or financial advice. You must do your own research and fact-based analysis using current and relevant information.

What are the critical learnings in this article?

  • There is no broad agreement regarding the definitions of: strategy, strategic plan, strategic planning process
  • There is no broad agreement regarding the components and metrics of a strategic plan.
  • There is no broad agreement regarding a strategic planning process.

 How do you read this article?

  • This article is a collection of quotes defining strategy, strategic plan, and the strategic planning process.
  • The quotes are from publicly available articles from the some of the world’s leading strategy consulting firms and business schools.1
  • I have not read every single strategy article published by these organizations. I have not included every single strategy quote.

You can download  PDF of this article from: Does everyone agree on what strategic planning is

Are there common definitions of: strategy, strategic plan, and strategic planning process?

There are no common definitions.

A few of the many definitions of strategy are:

  • “profitably differentiate a company from it’s competitors”
  • “an integrated set of actions designed to create a sustainable advantage over competitors”
  • “the ability to foresee the future consequences of present initiatives”
  • “a strategy expresses the logic of success for the organisation”
  • “explaining what enables firms to enjoy sustainable performance advantages over their competitors”

A few of the many definitions of a strategic plan are:

  • “allocate resources to critical capabilities”
  • “a road map of how to get to the desired destination”
  • “output of the planning process”, “set of plans”, “which describe objectives and alternative strategies”

A few of the many definitions of a strategic planning process are:

  • “a comprehensive process for determining what a business should become and how it can best achieve that goal”
  • “the ongoing organizational process of using available knowledge to document a business’s intended direction”
  • a process to “accomplish the enterprise’s desired outcomes”, “plan for action with clear and measurable goals linked to these outcomes”
  • “anchors a company’s vision, aligns resources, and drives impactful decisions”
  • “explicit written process for determining the firm’s long-range objectives, the generation of alternate strategies….and a systemic procedure for monitoring results”.

Is there a broad agreement on the components and metrics of a strategic plan?

There is no broad agreement on the components and metrics of a strategic plan. A few of the many examples of possible strategic plan components metrics are:

  • “the size of the profit pool available in each market”, the pool’s potential growth”, “the company’s likely portion of that pool”
  • “demonstrates how any changes in end markets, competitors, prices, and other external variables will affect a company’s profits, cash flow, and valuation if no action is taken”
  • “market growth, segment size, customer needs, competitor strengths and weaknesses, and technological trajectories”
  • “operations costs”, unit costs, total volume costs, and lifetime costs.
  • “concise sentence describing the reason the organization exists”
  • “what success looks like for the organization over a three-year horizon”, “two external tangible outcomes and one internal improvement in capability”
  • “return on investment of stockholders”, “stability, good wages, and good benefits for employees”
  • “90-day priorities for everyone in your organization”
  • “Measures that allow them to understand whether their companies are outgrowing the market and taking share from competitors”
  • Explicit stakeholder objectives “listing of all groups that contribute to the organization”, “creditors, stockholders, retailers, and the local community”

Is there broad agreement on the strategic planning process?

There is no broad agreement on the strategic planning process. A few of the many examples of what comprises a strategic planning process are:

  • First step: “describe the organization’s mission, vision, and fundamental values”, “understand the current and future priorities of targets customer segments”
  • First step: Align on the strategic challenge”, “embedding strategy into plans and budget”
  • Answer the question: “is uncertainty properly defined and accounted for?”
  • First step: “Systematically scan the environment for opportunities and risks”
  • Answer the questions: “How are the priorities and options of leading-edge customers changing?”, “Where are today’s profit pools, and how are they likely to evolve or be disrupted?”
  • First step: “Define your purpose” to create customer and employee value.
  • Answer the question: “What would it take to be the Google, the Apple, or the Walmart of this market?”
  • “Quantify various types of threats” using “AI and machine learning tools”
  • Answer the question: “Where can we continue to improve and create value for our customers?”
  • “Define stakeholder expectations and establish compelling objectives for the business”

How many strategies does your company need?

The articles from the 9 organizations identified more than 19 different strategies your company might have. 2

I am unclear from the 9 organizations about:

  • How many strategies does your company need?
  • Who makes the decision about whether or not a strategy is required? What will be the value of each additional strategy?
  • Who makes the decision regarding your company’s overall planning and management process, which includes your various strategies?
  • How does your company coordinate the various strategies: e.g. assumptions, facts, decisions about resource allocations, decisions about timing etc.
  • Who approves the process for each strategy? Process includes: the questions to answer, the people involved, technology used, the types of analysis done, etc.,
  • Who is accountable for documenting each strategy process?
  • Does each strategic plan document start with a slide that says “Asking for the approval of….”. Do the minutes of the meeting document exactly what was approved?

What are your next steps?

  • Define the words/concepts/data you’re using, in a glossary. I’ve seen major confusion when the same words mean different things to different people.
  • Collect the facts regarding your current strategic planning situation, by using answering questions 2) to 6) from the above section “How many strategies does your company need?”
  • Benchmark your company’s historical results with your direct competitors and the broader market.
  • What are implications of the above?

Footnotes:

1 Bain, BCG, McKinsey, Harvard, INSEAD, MIT, Stanford, University of California – Berkley, and Wharton

2 I’ve listed here only 19 of the many strategies from the 9 different organizations: AI strategy, AI agent strategy, AI prompting strategy, brand strategy, corporate strategy, corporate finance strategy, crisis management strategy, customer insights strategy, data strategy, go-to-market strategy, innovation and entrepreneurial strategy, international and emerging markets strategy, investor relations strategy, M&A strategy, operating model strategy, operations and supply chain strategy, portfolio strategy, pricing strategy, transformation and change strategy,

What further reading should you do?

Your company will fail. Koor and Associates

https://koorandassociates.org/avoiding-business-failure/your-company-will-fail-v1/

Is your company planning to fail? Koor and Associates

https://koorandassociates.org/avoiding-business-failure/is-your-company-planning-to-fail/

Tom Koor

Traditional strategic planning dooms your company to failure. V2

Traditional strategic planning dooms your company to failure. V2

 What is the purpose of this article?

  • This article enables a discussion about your company’s approach to strategic planning.
  • The audience for this article includes: boards of directors, CEOs, the C-Suite, and investors. The article applies to all companies, regardless of size.
  • This article does not provide tax, legal or financial advice.
  • You must do your own research and fact-based analysis using current and relevant information.

You can download a PDF of this article from: Traditional strategic planning dooms your company to failure. V2

What are the critical learnings in this article?

  • TSP (Traditional Strategic Planning) evolved in a slow changing world. The future could be forecast, and decision (and decision-making processes) were expected to be valid for several years.
  • The result of TSP was that few companies survived and most delivered poor financial results.
  • Today’s world is totally different: future is impossible to forecast, multiple sets of fast changes, multiple unpredictable crisis.
  • Strategic planning must be rethought to determine which decisions and decision making processes have a lifetime longer than a year.

 When did strategic planning become popular?

Traditional strategic planning became popular in public companies in the late 1970s.  Many of the strategic planning concepts and methodologies are many years, or decades, old.  What were some of the characteristics of the old world?

  • Slow changing.
  • Infrequent crisis.
  • Forecasting the future 3 years out was often possible.
  • Capital was very hard to get.
  • Talent appears to be easy to get.

What did many strategic plans look like?

  • The format was executive summary, vision, mission, values, goals, objectives, multi year strategic initiatives, KPIs (Key Performance Indicators,) past and future financials, and assumptions and strategic initiatives.
  • Supporting analysis include SWOT (Strengths, weaknesses, opportunities, threats)

What were the results of traditional strategic planning?

Few companies survive

Most public companies will not survive. 3

  • A Fortune 500 company will survive an average of 16 years.
  • The typical half-life of a North American public company is 10 years.
  • Global public companies with $250 million+ market cap have a typical half-life of 10 years.
  • 50% of all U.S. companies survive for 5 years.

 Few companies generate significant value.

McKinsey analyzed the world’s 2,393 largest corporations from 2010 to 2014. The top 20% generated 158% of the total economic profit (i.e. profit after cost of capital) created by those corporations.  This was an average economic profit of $1,426 million per year. The middle 60% generated little economic profit, an average of $47 million per year. The bottom 20% all generated negative economic profit, with an average loss of $670 million per year.4

Most public companies have performed poorly5

  • 6% of all public companies have had negative returns over their entire life.
  • The median annual return for public companies (in existence for a least 1 year) has been -0.74%
  • 10% of the above public companies in had annual returns of at least 22%
  • 10% of the above public companies had annual returns of -58.24%, or less

But the world in 2026 is totally different.

  • The future is impossible to predict
  • There are multiple sets of crisis and turmoil at the same time and appearing unpredictably
  • Technology, customer needs, and competition changes in months.
  • Capital is now unlimited.
  • Talent is very scarce and very expensive. Elite employee (non-C-Suite) can reach into the millions or 10s of millions per year.
  • Two recent McKinsey articles outline: Monthly board and management meetings to discuss strategy; and weekly review of strategic KPIs by CEO and C-Suite, with intent to make any required corrections.

It is time to fundamentally rethink and recreate strategic planning.

  • What decisions can last for more than a year?
  • What decisions may be obsolete within a year?
  • What new decisions may your company need to make next month?

Your next steps.

#1 Define the words/concepts you’re using, in a glossary.  I’ve seen major confusion when the same words mean different things to different people. Critical definitions include: strategy, strategic plan, decision (i.e. what is a decision and the implications of a decision)

#2 Describe your potential external business environment over the next 3-5 years e.g. geopolitical changes, technological, capital and talent availability? Describe your external environment in 2020.

#3 What will your company look like in order to survive and prosper?

#4 What decisions will not need to be rethought over the next three years. Document your current decisions and decision-making processes. Some possible decisions are:

  • The processes to select, assess, develop, and exit talent at all levels of the company, including board of directors, CEO, C-Suite. This might include the role of values, morals, and ethics.
  • Talent allocation
  • Capital allocation
  • Decision making principles.
  • Board of directors approved policies.
  • Processes to launch and shut down projects lasting more than 6 months.
  • Risk appetite

#5 What decisions will need to be rethought during the next 3 years.  Document your current decisions. These could include:

  • Talent allocation
  • Capital allocation
  • Exiting certain customer segments.
  • Shutting down certain solutions.

 Footnotes

1 Renée Dye and Oliver Sibony, “How to improve strategic planning”, McKinsey Quarterly, August 2007, https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-to-improve-strategic-planning

2 Martin Reeves, Julien Legrand, and Jack Fuller November 14, 2018 BCG website, https://www.bcg.com/en-ca/publications/2018/your-strategy-process-needs-a-strategy.aspx

3 “Corporate Longevity”, Credit Suisse, February 7, 2017

4 Chris Bradley, Martin Hirt, and Sven Smit, “Strategy to beat the odds”, McKinsey Quarterly February 2018, https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/strategy-to-beat-the-odds

5 Hendrik Bessembinder, W.P. Caret School of Business, Arizona State University

Analysis of CRSP database of U.S. public companies, Dec 2025 to Dec 2023

https://www.scribd.com/document/924363269/2024-Which-U-S-Stocks-Generated-the-Highest-Long-Term-Returns-Hendrik-Bessembinder

What further reading should you do?

Does everyone agree on what strategic planning is?

https://koorandassociates.org/strategy-and-strategic-planning/does-everyone-agree-on-what-strategic-planning-is/

Your company will fail. Koor and Associates

https://koorandassociates.org/avoiding-business-failure/your-company-will-fail-v1/

Elite talent – what is it? Koor and Associates

https://koorandassociates.org/creating-business-value/elite-talent-what-is-the-purpose/

Tom Koor

Is your company actually a startup? V2

Is your company actually a startup? V2

 What is the purpose of this article?

Help shareholders, the board of directors, and C-Suite have a fact-based discussion regarding the status of your company.

The audience for this article includes: All companies, ranging from pre-revenue through to long established global companies.

This article does not provide tax, legal or financial advice.

You must do your own research and fact-based analysis using current and relevant information.

You can download a PDF of this article from: Is your company actually a startup V2

AI did not write this article.  100% human written.

 What are the critical learnings in this article?

  • Most companies need to become a startup again but don’t realize it. As a result, the wrong type of talent is in place, taking the wrong actions.
  • Most companies don’t last long. Most companies have poor value creation. Most transformations and major business changes have poor results.
  • Companies need to get into startup mode to validate and invalidate their assumptions regarding: customer needs and problems, and the number of customers willing and able to pay for a solution.
  • Board directors and C-Suite cannot learn startup mode knowledge, skills and decision-making processes because their brains have hard-wired biological responses and cognitive biases.

Where is your company it its life cycle?

#1 a startup

A startup is a temporary organization designed to search out a repeatable, scalable, and profitable business model with lots of potential customers who are willing and able to pay to solve their problems and needs.   Startups are not building a solution.  They are building a tool to learn what solution to build.

#2 most startups fail or end up as small companies.

#3 A scaling, growing profitable business enabling customers to achieve a competitively differentiated value proposition. Market share is growing, the overall market size may be growing, customers are strongly recommending the company, employees want to join and stay, etc.

#4 A slowly growing mature company. Market share is flat; the overall market size is flat.

#5 A company in decline. Market size may be shrinking. Market share is shrinking. Poor financial returns.  Transformation efforts producing little results. Etc.

Now what happens?1

Most companies need to become a startup again but don’t realize it. The company does not have a repeatable, scalable, and profitable business model with lots of potential customers who are willing and able to pay to solve their problems and needs.

  • Most companies don’t last long. The half life of US public companies is less than 11 years.
  • Most companies have poor value creation. 80% of corporations generate negative or little economic profit. Over 50% of public company generate negative returns over their entire life.
  • Most transformations and major business changes have poor results. Only 12% of major business changes produce lasting results.

 Why do companies need to become startups again?

Companies need to get into startup mode to validate and invalidate their assumptions regarding: customer needs and problems, and the number of customers willing and able to pay for a solution. This process must involve face-to-face interviews with customers by the CEO and other members of the C-Suite.

  • Customer needs and problems change.
  • The number of customers with historical problems and needs changes. Look at what happened to Blackberry: Blackberry was the cell phone leader in 2007. The iPhone was announced in 2007.  In 2008, the iPhone unit sales already exceeded Blackberry unit sales.
  • Customers perceive they get more value from a competitor.

Why are mature companies unable to get into startup mode?

The board of directors and C-Suite don’t realize they need to get into startup mode.

  • They try to do a transformation or major change – which usually fails.
  • I looked at recommended transformation approaches from the worlds leading consulting firms and business schools.
  • Only two of them (both business schools) recommended starting with understanding customers and their problems and needs. All the other have some variety of start with a vision or aspiration of where to end up. Building a solution which achieves the vision but does not address the problems and needs of cash paying customers results in failure.
  • None of the organizations I looked at recommended assessing and changing the board directors or C-Suite executives which led the company to failure.

Why can’t your board directors and C-Suite transform themselves?

  • Board directors and C-Suite cannot learn startup mode knowledge, skills and decision-making processes because their brains have hard-wired biological responses and cognitive biases.
  • One example is that the stress caused by financial turmoil triggers a threat response in the brain. The brain then relies on behaviors, knowledge and processes which have been successful in the past. This response leads to business failure when today’s reality is different from the past.
  • Another example is that their brains will strongly resist information which contradicts what they have deeply learned in the past.

What are the greatest challenges your board directors and C-Suite face?

  • Having the self awareness to recognize that they themselves must transform.
  • Having both the passion and ability to unlearn the past and learn new knowledge, skills, behaviours and actions.
  • Having the courage to recognize that they might not be the right person the lead the company forward.

What are your next steps?

  • Define the words/concepts you’re using, in a glossary. I’ve seen major confusion when the same words mean different things to different people.
  • Determine what stage your company is in by fact-based analysis of business performance and marketplace metrics. Exclude the impact of tax and financial engineering.  Assess the results of M&A by comparing the two separate companies with the final merged company.  I have often seen announcements in the financial press regarded the success of an M&A transaction while the post transaction market share, revenue, and profits were less than the two separate pre-transaction companies.
  • Determine the talent requirements for a board of directors and C-Suite in startup mode. Start with the components outlined in the article “What are the core components of talent?”2
  • Assess the cognitive biases of board directors and C-Suite and the resulting constraints on being able to move into startup mode. Determine what needs to change.

 Footnotes

1 Your company will fail. Koor and Associates

https://koorandassociates.org/avoiding-business-failure/your-company-will-fail-v1/

2 What are the core components of talent? Koor and Associates

https://koorandassociates.org/creating-business-value/core-components-of-talent/

What further reading should you do?

Is your company planning to fail? Koor and Associates

https://koorandassociates.org/avoiding-business-failure/is-your-company-planning-to-fail/

What is learning? Koor and Associates

https://koorandassociates.org/creating-business-value/why-have-your-minimized-your-talent/