We recently sat down with our friend, Doug Grissom, a Managing Director at Madison Dearborn Partners, a Chicago-based private equity firm that has raised about 23 billion of capital from its investors. What started as a conversation around the recent high profile ouster of Uber CEO, Travis Kalanick, and the departure of Tim Westergren from Pandora became a wide ranging conversation around leadership effectiveness in growing organizations and how to navigate a rapidly evolving marketplace.

Doug’s core business includes identifying and investing in software technology companies that have successfully grown under the support of venture capital investments. After identifying and acquiring an organization with the bones to scale, Doug engages in a range of actions to enhance the sophistication and productivity of the firm so it develops through the middle market into an organization that is prepared for acquisition by a larger firm or an IPO. When we explored the core determinants of a successful investment, Doug’s approach to developing a technology company was laden with a heavy dose of simple leadership wisdom.

Adapt liberally

Although there are differing opinions on the degree to which technology has altered the pace of economic growth, there are some clear indicators the marketplace is actually different from previous generations because of technological advances. Consider how the once strong correlation between profitability and industry share has changed drastically in the last 60 years.  Since 1950 this figure has declined from 34% to just 7% in 2007. What does this tell us?  Competition for market share is fierce, adaptability is king, and if leaders are not careful they can easily become Goliath laying in shock at David’s feet.

To cope with this complexity, leaders must be agile learners, thinkers, and decision makers. To illustrate this further, there is a newfound relevance in the liberal arts education and an emphasis on developing thinkers who have novel perspectives and strategies to address confounding challenges.

Doug discussed how his European Studies and German undergraduate majors did not teach him to code, but did teach him to think. He highlighted leaders’ ability to parse through what’s relevant, and what’s not, as a core attribute of success. From this perspective, thought leadership is nonnegotiable and a leader’s ability to adapt in the face of opportunities and risks is the strongest indicator of long term organizational success.

Know what makes you worthy of being followed

Take a moment and think of the people that you most enjoyed doing business with and working with. What has made your best bosses so great?  What makes them trustworthy, inspiring, fun? These elusive elements of “chemistry” exist in the space between peoples’ behavioral traits, their values and personality, and are core to leadership success.

Doug highlighted the importance of leaders displaying approachability and humility in informing his sense of what makes leaders, and followers, great. Knowing when to lead from the ‘front,’ the ‘back,’ and when to be a ‘fast follower’ of other’s great ideas all contribute to a leaders dexterity and ability to align the efforts of their organizations in new ways. With this in mind, integrity and openness are core to not only a leader’s success but the viability of the organization.

Orchestrate outstanding teams

Having a keen eye for team dynamics is an essential aspect of Doug’s approach to determining which companies will be a successful investment. Listening and watching carefully to communication between team members gives a window into the camaraderie, or lack thereof, that exists in senior teams.

How do executives interact in meetings, what does their body language say about their comfort with one another, what do they share about each other behind closed doors? Are they having fun? All these questions yield insights into the powerful (or degrading) forces that can coalesce when teams attempt to build something that is bigger than their individual parts.

This is no easy process for the best teams, and identifying great teamwork through observation takes a keen eye. The interactions amongst a senior team are telling indicators of how aligned executives are around their strategy. If they do not agree on what they are doing, it is important to understand both where they are in terms of developing consensus and how effectively their leader is facilitating that process. For Doug, genuine alignment on a human and business level is likely the best indicator of whether a team is capable of achieving outstanding results.

Invest in talent; performance manage toxic individuals

Doug emphasized the importance of attracting Gen Y talent by developing a solid brand and reputation. Understanding if you have the right talent to drive the organization towards the strategic vision is a key. And, it is just as crucial to identify the people detracting from the vision, complicating team dynamics, and detracting from morale with the unmanaged ‘dark side’ of their personality.

To accomplish this, a thorough understanding of the individual team members is key. Additionally, understanding the interaction between brand, stated mission, and how a senior team embodies these elements of organizational identity go a long way to projecting the authenticity of a company.


In all, Doug’s insights were not only good reminders for us self-professed leadership nerds; they also provided a valuable window for evaluating the middle market viability of a growing organization. The discussion reminded us that when leaders are ideally selected, their development can parallel the growth of their organizations and enhance value in an exponential way.