To innovate the private equity investment process, we need a way to efficiently growth hack.  With increased competition, status quo is no longer an option unless you want to get pushed down to the bottom quartile.

Everyone else is raising the bar by focusing on the process instead of the outcome.  If you aren’t shifting your culture to this new perspective, you’re gambling on being able to clear that new bar instead of being buried beneath it.

If you aren’t building a system to detail how and why you’re getting outcomes, success is only a matter of luck.  Luck always runs out so to repeat success, we have to focus on data.




We’ve defined our process gap by benchmarking targets and analyzing deal flow data (Define phase of DMAIC).  In the previous post, we answered the questions “do we have a process? what is it?” by scoping the process.


This brings us to the Measure phase of DMAIC.  Our IRR case study details how to efficiently manage your analysis by slicing into data segments but we’ll skip to the Analysis phase (DMAIC).


Process data analytics is unique to the continuous improvement methodology of DMAIC.  Because it’s so radically different from traditional business we break into two parts:


  1. Identify hidden choke points by creating a business process map
  2. Analyze choke points by root causing process wastes




In our previous post, we detailed all the players, resources (software, people, data) needed to source and grow a deal.  Our next step is to brainstorm how the pressure from increasing competition damages the investment process.

increased competition affects investment process

There’s always a choke point in a process because every step requires a different amount of time.  The common mistake we see is improving a step which is not the choke point.

With increasing competition, your choke point may have shifted to another process step without you knowing it.  In this example, if we don’t improve the choke point, we won’t get closer to our target EDITBA multiple.

A process is only as strong as its weakest link.




The only thing we’re missing in our process map examples is time data.  We only map based on data so our examples were pulled from a CRM and deal flow software.  We get into more detail on how to pull data samples to process map so this a quick reminder that we’ve let the data lead us down the right road.

If you’re improving process speed, your choke point is the activity (not stage) in the deal flow which takes the longest.  If you’re improving process quality (deal conversion rate), the choke point is the activity with the lowest conversion rate.



solutions to overcome increased competition



Every process step has one or more of the eight process wastes.  Choke points are just process steps with the most waste.  We consult all clients to label each waste with the “type” to avoid jumping into opinion-based solutions.

We adopted this practice a few years ago to help increase our clients’ ROI.  It’s a small quality improvement but small improvements add up.

process choke points caused by increased competition


We don’t get into the buffet of Lean Six Sigma tools,  we focus on what you can learn and use in hours not years.  The only root cause analysis tool we use is the 5 why’s.

Below is an example where we drilled down to the root cause for “waiting” waste during the source investment deal step.


5 why's root cause analysis

It’s good to keep in mind everything else is a symptom of the waste, not a root cause.  We only create project plans based on root causes so be careful.  You’ll know if you’ve solved a symptom because you won’t see the process key performance indicator (KPI) improve.




Cash doesn’t solve problems – it only makes them more expensive.  You can easily grab free trials for everything below to help you better understand how competition is burdening your processes:




One of the many reasons we love Lean Six Sigma and DMAIC is because it takes away the option to use solve problems with money.  When you constrain time and money, you keep the hurdle to ROI low.

When you’re only left with a sense of urgency and no capital, the only tool you have to use is your own creativity.

If you’re interested in the remaining phase of DMAIC (Improve, Control ) see our internal rate of return case study on how to increase your investment returns.

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.