There are 8 standard process wastes or choke points which live in every business process. In fact, 80 years of process science have taught us only 1% of every process ever created is critical to getting to the end goal.  

You feel process waste when you’re stuck waiting on a response from an investment opportunity, revising legal terms which didn’t get transcribed well from a verbal conversation, or doing a second round of due diligence because something got missed in the first round, etc.  

This means your investment processes are made up of 95-99% of activities which may feel busy but aren’t productive to moving your opportunity further down your pipeline.  

This case study focusing on how we’re closing started the Define and Measure and start the first part of the Analyze phase by mapping our process out in more detail.  As a reminder, the process we’re using for our case study based on the internal rate of return performance gap reported by Bain’s 2017 Annual Global Private Equity Report:

21.1 (target set by top quartile firms and public market) – 15.2  (average PE firm IRR) = 6 net IRR (Gap)

private equity investment process analysis

In the last post we mapped out the process above in more detail by doing the following steps:

  1. High-level map limited to 3 steps (Level 1)
  2. Drill down into choke point by expanding into 3 more detailed steps (Level 2)
  3. Drill down into next choke point by expanding into 3 more detailed steps (Level 3)
  4. Pull down all final steps to create final process map

Remember, your choke point is defined by your CRM or deal pipeline software because they tell you which process step or activity took the longest.  Think of your choke point as the weakest link – you’re only as strong as it is.  In this case, you’re only as fast as your choke point.  We didn’t include the lead time data for each step so just know that each choke point on our map below was defined as a choke point by our software’s data:

lean six sigma private equity consultants

Analyze Part 2: See Process Waste


You can’t improve any process without understanding what’s holding it back.  This means the first step to scalable processes is to educate your team about process wastes.  Below are the 8 standard process wastes that exist in ALL process steps.  Choke points have the most process waste which is why they’re choke points.

lean six sigma 8 process wastes DOWNTIME

A common mistake for a team is to ignore process waste and jump to what they “feel” is holding back the process.  To catch yourself before you lose too much time, make each suggested waste is labeled with one of the 8 above.  This causes most people to stop and re-evaluate if they’re really looking at process waste or trying to make their own solution fit the methodology.

Below is an example of our IRR performance gap, flowed out in a process so we can analyze the choke points creating the 6.0 gap.  There are plenty of waste examples we didn’t touch on but we tried to put 1 example for each waste type.

Guerrilla Analytics private equity consultants

Remove Process Waste & Choke Points


Most process analysis falls short because it solves surface level symptoms, not root causes.  While observing the process, start a second list of potential root causes by asking “why” about 5 times for EACH waste you observe.

Your first why is a significant cause or effect.  Your second “why” is your level 1 sub-cause. Keep asking “why” until you’ve flowed down to level 3, 5 or 10.  You’ll rarely stop at 5.

The only rule is to keep going until no more insight.

For our example, we picked the last “Defect” waste to analyze deeper.

Guerrilla Analytics private equity consultants


Quick Tip: Check your logic by flowing from bottom to top by switching “because” with “therefore”.  If there’s a rational link between each in the opposite direction, you’ve done your 5′ why’s correct.

When you focus on the 8 wastes, the improvement needed to alleviate your choke point becomes obvious.  The other notable item is that the root cause of your business process wastes is always within your control.  We create our own process wastes when we design and perform our processes, so it only makes sense that we can get rid of it.

Private Equity Software


Software is just a process; been branded and sold to you in one package. So you either need a process to gather the data below or software that does the process for you.  To do the Analyze phase of DMAIC to improve your process, you’ll need:

  • Process mapping (we use Lucidchart and Realtimeboard but you can get away with post-its)
  • CRM (or deal pipeline data to show the activity level detail your deals flow through)
  • Accounting software (performance data to show your actual IRR and how your gap affects your bottom line)


Better Tomorrow Than Today

Continuous improvement means progress over perfection; being better tomorrow than you were today.  So what can you do today to ensure you’re better tomorrow? This is how top quartile private equity firms and high performers set themselves apart from the competition.  They’re continuously analyzing and improving their private equity processes to get closer and closer to their goals.

Grab your list of 8 process wastes, observe the process happening live and write down what you see.  Ask the process owner if they see it too and, most important, why why why why why it happens.  You’ll be ready in time for the next phase: Improve.

Ashley Asue Guerrilla Analytics Private Equity Consultants
At 26, she was asked to create a new department to grow their Fortune 300 company using Lean Six Sigma continuous improvement.
While working with consultants and experts, she saw a common thread among their challenges and failures.
With this insight, she created a custom process to create a high-performance company.
As the only CPA and business architect in the US, she helps others use creativity instead of cash to efficiently build their businesses.