This is the first entry in Protiviti’s five-part blog series on operational value creation.
For decades, private equity returns were driven by a familiar formula dependent on favorable financial market conditions, multiple expansion and accessible leverage. Today, the traditional methods of value creation have become an operational challenge.
As firms navigate higher capital costs, extended holding periods and evolving expectations from LPs, operational execution has emerged as the most important and controllable lever for value creation. At the same time, holding periods are extending, and firms are underwriting sustained EBITDA growth, often in the double digits, to meet return targets.
These points were front and center at a recent dinner discussion we attended with procurement leaders from a range of private equity firms. The discussion focused on several themes, including margin expansion, commercial excellence, pricing optimization, organizational effectiveness, spend visibility and execution discipline, all of which will be covered in this blog series. Among those in attendance, there was broad agreement that current market dynamics, including longer hold periods and higher interest rates, are increasing pressure to create EBITDA.
The implication is clear: Value is no longer won in the deal. It is won (or lost) in the speed, consistency and scalability of execution after closing.
The new reality: Execution speed equals enterprise value success
Many firms still operate with a traditional value creation model: episodic cost reduction programs followed by longer-term transformation efforts. But this approach is increasingly misaligned with today’s market dynamics, including:
- Longer hold periods expose slow transformations
- Delayed execution directly erodes the internal rate of return
- Fragmented operations limit scalability across portfolios
The real risk is no longer a lack of strategy; it is failing to execute quickly and repeatedly across portfolio companies. Leading firms are responding by shifting from isolated initiatives to systematic, repeatable operating models built to deliver results faster and at scale.
This point is reinforced in Protiviti’s recent global transformation survey, The Alignment Advantage in Transformation. The data showed C-suite confidence in achieving transformation outcomes falls below 20% on average among less mature organizations and exceeds 70% among more mature organizations. The finding reinforces that transformation value depends on disciplined, repeatable execution, not isolated initiatives.
The four themes of operational value creation
At Protiviti, we see four interconnected themes that consistently determine whether operations deliver or impede value: cost reduction, efficiency, execution and revenue enablement.
1. Cost reduction (structural margin improvement)
It is no longer about one-time cost takeout. High-performing organizations build sustainable cost advantage through procurement transformation, automation and operating model redesign. Top-tier procurement functions alone can deliver 8% to 20% annual cost savings while improving resilience.
Protiviti’s recent global transformation survey reinforces this margin-improvement mandate: Nearly half of CFOs (49%), and 40% of COOs identify operational efficiencies and cost optimization as the single biggest driver of transformation. In fact, organizations are undertaking transformation primarily to drive operational efficiencies and cost optimization.
2. Efficiency (process and scalability)
Operational inefficiencies, including fragmented processes, manual workflows, and underused technology, can create hidden performance drag. Leading firms standardize processes, automate transactions, and deploy analytics to create repeatable, scalable operating models across portfolios.
3. Execution (speed and discipline)
“The smallest of actions is always better than the noblest of intentions.” This quote by Robin Sharma, author, advisor and leadership expert, aligns perfectly with what Protiviti is seeing in the market — even the best strategy fails without execution. The gap between identifying opportunities and realizing value is where many returns are lost.
Winners differentiate through:
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- Relentless execution cadence
- Clear accountability and ownership
- Embedded performance tracking tied to EBITDA and cash
4. Revenue enablement (operations as a growth engine)
Operations is not merely a back-office function. It is a critical enabler of revenue growth and enterprise value. Increasingly, a company’s ability to capture market share, retain customers, and accelerate profitable growth is determined by the strength of its operational capabilities.
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- Leading organizations leverage operations to drive:
- Faster speed-to-market for new products and services
- Higher customer retention through reliable service and fulfillment
- Greater on-time delivery, quality and customer satisfaction
- Improved pricing realization through better supply and demand management
- Increased sales capacity through automation and process simplification
- Faster integration of acquisitions and expansion into new markets
- Scalable infrastructure that supports growth without proportional cost increases
Underpinning each of these themes is a fifth capability: data and AI-enabled decision-making. Leading firms are shifting from portfolio oversight to institutionalizing playbooks, data standards, operating metrics, and value creation frameworks that can be deployed repeatedly across investments.
In Protiviti’s global transformation survey, some 40% of COOs selected AI as the capability with the greatest potential to enable significant revenue growth — the highest percentage among the C-suite. Meanwhile, executives also pointed to technology ecosystems and data capabilities as key revenue-enabling opportunities. Some 78% named data platforms and governance a top investment priority, compared with 44% for AI deployments. The takeaway: Data is the operating layer required for AI-driven enterprise transformation.
From initiatives to execution systems
The common thread across all these themes is clear: Value is created when operations move from isolated efforts to integrated execution systems.
This requires a fundamental mindset shift:
- From cost programs → to structural margin improvement
- From transformation projects → to continuous execution
- From siloed initiatives → to portfolio-wide operating models
Protiviti’s experience working with private equity firms reinforces the point: The organizations that outperform are not those with the most ideas. They are the ones that convert insight into execution faster and repeat it consistently across their portfolios.
What comes next?
Stay tuned. In this blog series, Protiviti will break down each of these four themes and explore how leading PE firms and operating partners are turning them into durable sources of value, including:
- How to build sustainable cost advantage
- How to scale efficiency across portfolio companies
- How to institutionalize execution discipline
- How to turn operations into a growth engine
For operating partners and portfolio company executives, the mandate is increasingly clear: Build capabilities that scale faster than the next acquisition, execute improvements faster than the competition and institutionalize value creation before the next investment cycle begins. In today’s market, sustainable returns are no longer determined by what you buy but by how effectively you transform, scale, and grow what you own.
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