Most portfolio companies aren't underperforming. They're misdiagnosed.
Most portcos that miss plan are working hard on the wrong problem. Find the constraint before you write the plan: talk to the people who touch the work, then use the numbers to rank what they told you.
How does a plan end up aimed at the wrong problem?
Sales gets blamed for a fulfillment problem. Marketing gets blamed for a pricing problem. Somebody presents a plan built on the wrong read, the board approves it, and eighteen months later the number still hasn't moved.
Nobody was lazy. Everybody worked hard on the wrong thing.
What I do before I look at a number
Before I look at a single number, I talk to a cross section of the company. Warehouse, sales, finance, support. The people who touch the work.
Then I use the numbers only to rank what those people already told me.
The numbers don't find the problem. The numbers tell you which of the problems you already heard about is the expensive one.
Why does the board look in the wrong place?
The constraint is rarely where the board thinks it is. If it were, somebody inside the company would have fixed it already.
Short answers
Why do value creation plans miss?
They are built on the wrong read. Sales gets blamed for a fulfillment problem, marketing for a pricing problem, and the plan fixes the wrong thing while the real constraint stays in place.
Where should a diagnosis of a portfolio company start?
With the people who touch the work: warehouse, sales, finance, support. The numbers come second, to rank what those people said, not to find the problem.
Why hasn't the management team found the problem already?
Because it is not where the board is looking. If the constraint were where the board thinks it is, somebody inside the company would have fixed it.