The CEO Who Never Leaves the Office
“One of the biggest failures I see in CEOs is that they think their job is in their office at HQ.”
John Caple has been deploying capital in private equity for over twenty years, more than a billion dollars across portfolio companies. He’s watched more management transitions than most. This is the pattern he keeps coming back to: not bad strategy, not weak diligence, not the market.
How the Pattern Sets In
The market pressure to execute faster is real. Steffen Kroner, Alvarez & Marsal’s managing director for PE performance improvement, captures where the industry is right now: “Higher valuations, longer hold periods and geopolitical shocks have raised the bar for every value creation plan. Sponsors need to identify the operational levers before close and start executing from day one.”
The deal closes. The PE firm installs reporting requirements and KPI targets. A value creation plan gets built: 18 months of milestones, three or four operational priorities, EBITDA improvement targets. Everyone signs off. And then nothing changes about how the CEO spends their day.
Six months later, the management team is telling the board performance is improving. One senior PE operator described this publicly: a Big 4 QoE came in below expectation on adjusted EBITDA, while management kept reporting month-over-month improvement. Those two things can’t both be true in the same direction. Someone is reading different numbers, or the numbers mean different things to different people.
The management team isn’t lying. They’re reading the metrics available to them: outputs, not operational drivers. The MIP is tied to EBITDA, which shows up two months after the fact. The value creation plan sits in a board deck reviewed quarterly. Nobody owns execution at the operating level.
Paul Swaney, an operating partner with experience across multiple PE firms, is direct about the cost: “If you haven’t started the execution of your value creation thesis within the first year, your IRR is going to suffer by four to five hundred basis points.”
That’s not a warning about month ten. That’s about how the first six months get spent.
Why It Keeps Happening
Three structural reasons this plays out with regularity.
The founder-to-PE CEO gap. The skills that built a $20M business are not the skills required to scale it under PE ownership. Jared Greer, Director of Portfolio Operations at QHP Capital, sees it consistently: “What got you here gets you stuck. They hit this point where they have to evolve. They’ve got to change the way that they do things.”
Greer’s illustration of the specific failure mode is harder to argue with: “I can tie my six year old’s shoes for her every time. But the reality is I will always be tying her shoes. It’s the same thing for a CEO.” The CEO who can answer every question faster than a decision rights matrix ever could has no structural reason to change. Not until they become the bottleneck on every decision in the building.
The transition from founder-operator to institutional executive is one of the most underestimated challenges in PE portfolio operations. Acknowledging this isn’t a criticism of founders; it’s an honest description of a genuinely hard shift.
MIPs that don’t drive behavior. Erik Ginsberg, Managing Partner at Slate Capital, describes what real alignment looks like: “Win win, the word win shows up twice and there’s a reason. The best deals we’ve done are ones where we are a hundred percent committed to having the management team win, but they are also a hundred percent committed to having us win.”
That mutual commitment doesn’t happen through an incentive plan tied exclusively to trailing EBITDA. A MIP that isn’t connected to the operational KPIs that actually predict EBITDA, things like customer satisfaction, employee retention, and utilization rates, becomes a financial abstraction. The management team isn’t optimizing for the wrong thing on purpose. The plan is just measuring the wrong signals.
No operating system. Without a structured value creation framework that runs weekly, with clear owners and clear accountability, “value creation” is just a board deck. It gets reviewed quarterly. It doesn’t change behavior between board meetings.
The Value Creation Engine
The firms that get this right treat it as infrastructure, not a suggestion.
G.R. Kearney, who runs a long-hold PE firm across multiple portfolio companies, reflects what many experienced operators have landed on: “I truly can’t fathom operating these companies without EOS. It’s given us a common language and a common framework across all these businesses.” Caple’s firm runs something similar, what he describes publicly as “EOS 2.0”: the same bones, with PE-specific discipline layered on top.
That endorsement comes with a caveat worth stating directly: the framework is not the fix. It’s the structure that makes a fix possible. EOS, Metronomics, Scaling Up — these work when the metrics on the scorecard mean something actionable every week. When they don’t, the weekly L10 becomes a meeting about whether the numbers are right rather than what to do about the business. The framework runs on the data layer underneath it, and most portcos install one before they’ve built the other.
Here’s what this looks like in practice, broken into five moves:
1. Install a structured operating cadence. EOS, Scaling Up, or a custom equivalent. The point isn’t the brand. It’s that there’s a repeating structure the whole company runs on: weekly rhythms, quarterly priorities, annual goals that connect to the from-to chart built post-close. The cadence creates the container. The data makes it run.
2. Align incentives to operations, not just financials. MIPs tied to leading operational indicators: customer satisfaction, employee retention, on-time delivery, utilization. Not just trailing EBITDA. The CEO should feel operational performance before it shows up in the P&L.
3. Force in-person visibility. The CEO who is on the floor knows when a number is wrong before it gets reported wrong. Weekly metrics that the CEO presents at the operating level, not just to the board. The operating partner’s job is to make floor presence structurally required, not aspirationally encouraged.
4. Build accountability loops. Greer’s framing applies here too: “The performance of routine creates routine performance.” The weekly L10, the quarterly rock review, the daily huddle. Structure creates engagement. Without structure, engagement is optional, and optional engagement trends toward zero under the pressure of a busy portco leadership role.
5. Measure management quality. Employee NPS. 360 reviews. Customer satisfaction scores. As we’ve covered before, figuring out what good looks like for this specific business has to come before you measure it, and that applies to executives as much as it applies to any operational metric.
The Data That Makes the Engine Run
A value creation engine without operational data is just meetings.
The operating cadence creates the structure, but the weekly L10 is only as good as the metrics reviewed in it. Most portcos install the operating framework before they’ve built the data infrastructure to run it. The scorecard gets populated with whatever is available, not whatever is predictive. The weekly cadence runs on lagging indicators pulled manually from a system that wasn’t designed to answer that question at that frequency.
The result is accountability structures with no real accountability. The meetings happen. The rocks get reviewed. But when something goes red, the conversation turns to whether the number is right rather than what to do about it.
If the CEO is reviewing revenue and EBITDA, data that’s two to four weeks old by the time it’s consolidated, they’re making operational decisions on lagging information. That’s not accountability. That’s a quarterly post-mortem with weekly branding.
The firms that get the most out of an operating system build operational data infrastructure in parallel. Customer-level metrics. Employee-level metrics. Operational throughput data. KPIs at the role level, not just the reporting level. What does “improving” actually mean for this business specifically: a residential services platform, a logistics roll-up, a healthcare services company? The answer is different every time, and the metrics cascade that connects board-level KPIs to role-level actions is what makes the management system function in practice, not just in theory.
Caple’s view on where this creates differentiation is direct: deal sourcing and underwriting are increasingly commoditized. Governance, the ability to translate strategy into operational performance at the portco level, is what separates firms that create real value from the ones that just report on it. That translation requires data that reflects what’s happening on the floor, updated at a frequency that drives weekly decisions rather than monthly reporting.
The CEO in the office doesn’t have this data. Not because it doesn’t exist, but because the systems were never built to deliver it in a form that drives decisions rather than documents performance.
The Stakes
This isn’t a conversation about replacing CEOs who aren’t working out. That’s a different and more expensive problem.
This is about making the CEO you have effective by building the structure, incentives, and information flows that make engagement the default rather than the exception. Most CEOs of PE-backed businesses want to perform. They don’t always know what that looks like in the PE context, and the structure to support them is often missing.
The value creation plan isn’t the problem. The execution infrastructure usually is.
Your value creation plan is only as good as the management team executing it. And management alignment starts with one question: Does your CEO know what’s happening on the floor — or just what’s in the spreadsheet?
If the answer is the spreadsheet, that’s where to start.
Alex Escoriaza helps PE-backed companies build the operational data infrastructure that makes value creation engines actually work. If your portco has a plan but execution keeps stalling, let’s talk.