Introduction

Start with a Better Foundation

Every organization produces exactly the results it is designed to produce. The simplicity of that truism belies just how difficult it is to get the design right in the first place. Most organizations can’t do it.

The problem doesn’t lie with the design of the product or service that a business offers—not usually, anyway. Instead, in a study of nearly 300 startup failures, the decline most often had to do with “ people issues,” matters to do with the organization itself—often the company’s culture or how it treated its customers. Only 2 of the top 20 reasons that startups failed was due to money or lack thereof.¹ Every account of a failed attempt to turn around a decrepit business model, to capture the benefits of a blockbuster merger and acquisition, or to scale a tantalizing startup inevitably points to fundamental missteps in handling some aspect of the people, culture, and organization. Consider the dissolution of blood-testing company Theranos, and its massive, years-long fraud to deceive investors. Or how Blockbuster’s debt and leadership challenges led to a fragile infrastructure that couldn’t pivot quickly enough to successfully move into streaming.

Organizations perform poorly because their leaders have overlooked organizational matters, in particular the health of the organization itself. By that I mean the effectiveness of the organization as defined by its strategic direction, culture, leadership, design, talent, employee well-being, and the workforce’s EID—how equitable, inclusive, and diverse it is.

Some would call these things the “soft side” of business. But with investors citing precisely those dimensions as responsible for more than half their portfolio failures, clearly they are anything but soft. Getting the people and culture right, in fact, appears to be foundational, the stone and mortar underlying success. As such, the conditions comprising an organization’s effectiveness or what is sometimes called “org health” enable the success of the business, both immediately and in the long term. Those conditions determine no less than the organization’s ability to achieve its strategic goals, change with rapidly shifting market realities, grow from within, and evolve over time.

The high success rate of well-designed organizations outside of corporate America confirms that idea. I’m thinking of course of professional sports teams. When it comes to the structure and management of teams, no one on ESPN questions the value of organizational health, although they might use different terms during their off-season debates. They’ll say, “They should fire the coach” or “The coach has lost the locker room—the team doesn’t respect him.” They’ll talk about how some coaches hate the management office because it’s too focused on analytics, when it’s often the little things that make all the difference on the field or on the court or the diamond, things you can’t necessarily measure. What those pundits understand is what analytics can’t tell you—like whether a player had a fight with his significant other last night and is in no shape to play today—but a good coach can.

In other words, it’s common to look at coaches, general managers, and even owners and discuss their prowess and success in terms of how well they invest, construct, and manage human potential. Precisely everything depends on the design of the team, on the people and their unique talents.

Today, as more and more of our corporate value comes from creating and monetizing knowledge and intellectual property, the focus on the element of people, whose well-being underlies the health of any organization, is sharpening. Accordingly, just as they do in sports, the rewards will accrue to managers and organizations who can build and construct a better team. This has never been truer than it is today, with the constant change and extreme uncertainty that the pandemic-laden era has engendered. Organizational health is even more critical in such times, when “the ability to quickly align, execute, and renew can be the difference between floundering and thriving.”² Indeed, the corporate highway is littered with once-successful organizations—Digital Equipment Corporation, Blockbuster, and Sears, to name a few—that rested on their laurels and failed to change because their choices around strategy and technological advancement were not integrated into their companies’ organizational health.

All of which brings us back to our opening conundrum. Clearly leaders need to get better at building better organizations, designing businesses with solid foundations that enable their people to perform to their full potential. But how? That is the question this book endeavors to answer.

In my direct experiences with leaders and organizations whom I’ve had the privilege to advise and work with (or work for), and based on hundreds of interviews I conducted with senior leaders, innovators, and investors in business and technology, I have identified three elements—inseparable, in my estimation—that together are crucial for building better organizations. Specifically, the types of organizations that will be needed to survive today’s uncertain environment and thrive in the future will depend on the following building blocks: (1) a solidly healthy organizational foundation, combined with (2) strategic and ethical use of artificial intelligence (AI)—all while (3) working in partnership with investors, including but not limited to entities such as venture capital funds, growth equity funds, leveraged buyout funds, and special purpose acquisition companies (sometimes called SPACs or “blank check companies”).

This book will explore in detail why those three elements are so crucial for building better organizations and how they work together. But here’s the short explanation: When the essential conditions of an organization are aligned, the business can more effectively tackle challenges like digitization, AI adoption, speed, and agility. And because of the nature of business today, from economic malaise to the ever-tightening vise of regulation and increased global competition, it’s more important than ever that the “players” in the organization—investors, founders, CEOs, board directors, and the like—understand how to approach the health of their organization in a digital context to fast-track business growth.

While a number of the ideas in this book have been put in practice by some organizations somewhere, no single company operates at the intersection of organizational health, digital advances like AI, while applying lessons from investors in the way I propose. Rather than a “best practices” book, then, this book is intended as a guide for agenda shaping around the most promising practices and directional strategies emerging today. My goal? To provoke corporate and investor leaders to think deeply about the organizational issues of their companies, or the companies they acquire and/or invest in, especially during periods of disruption, hyperscaling (the ability of an organization to scale appropriately as increased growth ensues), and growth. Accordingly, in this book I have attempted to capture what leaders intuitively know; integrate that with social, behavioral, and decision-science research (i.e., the quantitative techniques used to inform decision making at the individual and organizational levels), and research about organizational behavior; and offer a set of lessons that leaders across the investment landscape can use to set the stage for building a better organization in the digital era.

Several seminal articles and books have been written on organizational health and effectiveness, and I have learned much from them. (See the sidebar “Organizational Health: A Look Back.”) But none embed that perspective in a digital and AI-first context. This book is laser-focused on the role of the organization in the digital era, rooted in a value-creation (investor/owner) perspective, and indispensable to leaders of all kinds in their management of complexity—be they startup founders, investors, CEOs, senior executives, board directors, or consultants. Ultimately, this book intends to pull back the curtain on the hows and whys of building healthy organizations that will thrive in an AI-first world that in many ways is already with us.

In the remainder of this introduction, I will touch on the three elements—organizational conditions, digital/AI, and outside investors—that, working together, are crucial for building better organizations. I also will describe how various kinds of readers (in different roles and at an array of organizational levels) might use the ideas herein, and I’ll conclude with how this book will unfold.

But first, let’s look at one company’s efforts to craft what I consider to be the cornerstone of the three elements I’ve named for building better organizations: the health of the company itself.

The Case of National Grid

In the mid-2000s, the U.K.-based utility National Grid prided itself on being one of the largest investor-owned global energy companies. Moreover, it was on its way to becoming the second-largest utility in the United States, serving 3.3 million electric customers and 3.4 million natural gas customers in the Northeast.

But in 2007, when John Pettigrew became group chief executive at the company’s Electric Distribution Operations (EDO) business, he faced steep challenges.

EDO struggled with an array of divergent operating models, systems, performance metrics, organizational cultures, and wide-ranging labor-management conflicts. For years, it had been paying penalties to regulators due to service outages, and its dismal record of recovery from those outages had also hurt its reputation with customers. Profitable growth was unlikely in an organization hobbled by a culture of conflict, antiquated operating models encased in a siloed structure, backward-looking leaders, and broken talent practices.

Pettigrew understood that reviving National Grid’s EDO business would take nothing short of a radical transformation. He would have to marshal massive improvements in safety, reliability, and customer satisfaction. That would mean overcoming long-standing organizational obstacles blocking EDO’s way. In fact, Pettigrew’s analysis of the problem convinced him that the business’s financial health would depend almost entirely on how much he could improve the health of the organization itself—its culture, operating model, leadership, and talent practices. For Pettigrew and his top lieutenants, the arduous task of leading transformation would build a better EDO business—which would ultimately benefit the larger organization, National Grid.

The most pressing need, as Pettigrew saw it, was to find a way to quickly develop new leaders throughout the business unit who could tackle the unprecedented competitive pressures EDO faced. Simply put, he wanted to shape leadership behaviors that would foster a healthy organization, not just provide new knowledge. He began, therefore, by creating an immersive program—dubbed “action labs”—based on both reflection and action and grounded in the realities of the competitive environment and EDO’s need for transformation. The labs would help executives and managers learn from experience, not just from formal, classroom-based programs. Ultimately, these would give leaders a taste of what the future demanded. Before entering the action labs, however, managers were rigorously assessed on their individual personalities and leadership styles and given extensive feedback and individual coaching. In the action labs themselves, managers learned through a series of forums and workshops supported by laboratory-like environments for action learning. Practice assignments (carried out between lab sessions) gave leaders the opportunity to integrate their learning with on-the-job action.³

In the end, the action labs became a permanent, ongoing feature of EDO’s leadership development work. By aligning the EDO business’s extended leadership team around its strategic intent and operating model, and then by practicing the unique leadership behaviors necessary to navigate a difficult change journey, the organization was able to cultivate its next generation of leaders more effectively.

As a result of this transformational work, Pettigrew could point to a number of tangible business benefits. Whereas three years prior, National Grid had been paying more than $40 million in penalties for compliance failings on acceptable standards of electricity supply, Pettigrew’s transformation initiatives reversed that trend. For example, the number of “lost time” injuries was halved over a two-year period, and the utility’s reliability metrics became markedly better. A year’s worth of work on asset strategies and a 40 percent increase in capital investments also contributed significantly to this performance improvement. By 2010, the utility was meeting its reliability goals and had stopped paying penalties, which enabled EDO to raise and meet higher reliability targets.⁴

John Pettigrew is one of a handful of leaders in recent decades who have understood intuitively that without a healthy organization, their companies have little chance of reaching and maintaining their financial goals. Let’s review some of the main features of this all-important building block for businesses today.

Building Block 1: Mind the Health of Your Organization

Because organizational change can be difficult to carry out, especially in today’s volatile, uncertain, complex, and ambiguous world, many companies, especially young companies, never attempt it. Instead, they find workaround solutions and they plaster over the cracks in an attempt to avoid dealing with the organization’s foundation issues.

The problem is that, as companies mature and attempt to cross the threshold from startup to pre-IPO to mature incumbent—if they even make it that far—the plaster falls away and the cracks become apparent. So even though they might have the financial backing for scaling and fueling growth, these companies lack the organizational health they would need to truly run with the opportunities that the digital era offers. Simply put, if a leader wants different results from last quarter’s or last year’s numbers, then a different organizational design is called for.

Business and investor leadership are increasingly realizing they must care about their or their portfolio companies’ organizational health. As John Pettigrew did, these leaders are coming to understand the clear connections between healthy companies and strong performance: healthy companies generate total returns to shareholders (TRS) three times higher than those of unhealthy ones,⁵ with organizational health explaining up to 50 percent of performance variation across companies.⁶ Healthy companies are more agile too; a McKinsey study found companies with both speed and stability have a 70 percent chance of being ranked in the top quartile by organizational health.⁷ In an era in which sustainable competitive advantage is being replaced by “exploiting temporary competitive advantages” and the need for a “strategy of continuous reconfiguration”⁸—and at a time when companies are increasingly competing on speed even more than strategy—healthier companies are far more likely to achieve the holy grail of continuous adaptivity.

That is why I believe that org health, often under the purview of HR, is expanding to the domain of executive leaders—founders, CEOs, boards, and the like—who embrace a broader agenda for their organizations. These leaders understand that unleashing performance and scale with speed and agility will, in the end, depend on the health and well-being of their people and organization. Something remarkable happens when such a mindset originates from the top, as we saw in the case of John Pettigrew at EDO. It permeates the organization, guiding decision making and the business practices that drive people’s behavior. That is how leaders move from actively managing org health as a set of intangible assets to elevating those assets into tangible performance outcomes.

All of which brings us to the specific conditions—seven in total—that I believe are at the heart of building any organization’s health. These are the things that failed IPOs everywhere wish they had put in place—specifically: (1) a clear strategic direction, (2) an adaptive culture, (3) agile leadership, (4) top talent, (5) nimble organizational design, (6) a diverse workforce supported by equitable and inclusive practices, and (7) employee well-being.

For any real change to occur, all seven conditions are required. Giving insufficient attention to any of these conditions not only puts the organization in peril but also makes the job of the organization’s leaders much harder than it needs to be. With these conditions in place, organizations can find the balance between having a clear and compelling strategic direction while meeting standards that enable flawless execution. Without them, the prospects for winning become dim indeed.

For example, condition number 6—a diverse workforce and inclusive practices—has already been proven crucial when it comes to investment decisions and the way that firms function. “Diverse teams drive better performance,” notes managing director and chief diversity, equity, and inclusion officer Kara Helander of the Carlyle Group, a multinational private equity, alternative asset management, and financial services corporation. “The evidence from our experience of portfolio companies and the evidence that already exists out there gives [us] a pretty powerful thesis to move forward from. . . . We believe we can drive greater impact through ensuring diverse workforce composition in our portfolio companies, and a set of practices that drive equity, diversity, and inclusion throughout them.”

Yet many investment firms not only struggle to diversify their portfolio company boards and management teams, they also struggle to diversify their own firms from within. A study by the data analysis firm Preqin found that only 17.9 percent of private equity employees worldwide are women, the lowest figure of any asset class.⁹ And a variety of other studies point to low racial and ethnic diversity in the private investment sector: Black and Latinx founders, for example, still receive fewer venture capital investments than their peers do.¹⁰

Whether we’re talking about diversity and equity or any of the other six organizational conditions that foster optimal health, companies today simply cannot continue with business as usual and hope to succeed. Instead, leaders can work with these seven conditions to drive the behavior of people across all organizational circumstances—and through them, deliver results. The challenge, of course, is finding ways to help leaders understand those conditions well enough to guide action and change amid demanding and rapidly shifting market and social realities. Designing these conditions purposefully and using digital advances to scale them over time can make a constructive and meaningful difference. That is why, in the coming chapters, we will examine each of the seven conditions in detail.

Now let’s look at the second of the three building blocks required for disruptive innovation today: harnessing the power of AI and the digital era.

Building Block 2: Use Digital and AI Strategically

The next wave of digital technology—artificial intelligence—is of course already with us. Generally understood as “smart” machines that can perform tasks normally requiring human intelligence, AI has revolutionized how we live, work, play, and connect. Our smart devices create our grocery lists and tell us jokes. They adjust the temperatures of our homes and direct us around traffic jams. They suggest “friends” on social media and songs for our playlists.

Meanwhile, companies such as Amazon, Google, and Meta Platforms (formerly Facebook) have long been using AI to transform their businesses, targeting ads to consumers based on things like browsing behavior and demographics. Other companies are either wholly or on the journey to be AI-driven: health services provider Anthem and digital financial services company Ally rely on AI to scale up digital solutions for customers and accelerate growth. AI is shifting mindsets and behaviors so quickly that founders and product developers are likely to embrace the latest AI trends (and platforms) before most investors and senior business leaders even know they exist. That is why Kevin Kelly calls AI the “ur-force in our future.”¹¹ Companies that don’t follow suit will almost certainly be left behind as competitors and nimble new entrants reap the benefits of AI-based platforms.

The challenge today, then, is no longer how to craft “mobile-first” or “digital-first” organizations. “AI-first” is the only option—and soon, becoming an AI-fueled organization will likely be table stakes to survive and thrive, not only for tech companies but for all companies. Consider this: AI will add an estimated $13 trillion to the global economy over the next decade.¹² According to a report from KPMG, a total of $12.4 billion has been invested in AI technologies to date, with a predicted $232 billion in deal flow by 2025.¹³ From “digital born to AI-first,” digital disruption is creating change across many sectors at an unprecedented pace. More and more, companies are launching or transitioning to become platform companies, where their operating models are designed and built off AI and digital assets to absorb the necessary tasks of scaling and operating with speed.

Organizationally healthy companies in a digital and AI-first context operate from the premise that digital in general and AI in particular can shape their operating models and services. As Microsoft’s CEO, Satya Nadella, notes: “AI is the ‘runtime’ that is going to shape all that we do in terms of applications as well as the platform.”¹⁴ In their book Competing in the Age of AI, Marco Insanti and Karim Ikhani state that AI is becoming the new operational foundation of business—the core of a company’s operating model—defining how the company drives the execution of tasks and changing the very concept of the firm.¹⁵

Consider how one retailer in Asia Pacific boosted its margins by 4 percent to 7 percent. By leveraging an AI tool, merchandisers and buyers were able to effectively collaborate and avoid working independently. This enabled the Asian Pacific retailer to better match inventory purchased and store space.¹⁶ The upshot is that businesses today need to find ways to design a superior and relevant user experience, align the organization, processes, and technology to power it, and work with ever-widening ecosystems to achieve scale.

And make no mistake: AI will make organizational matters more important than ever before, not less—contrary to what some people might think. That is, AI is not going to eliminate the human factor or render it ephemeral through the massive substitution of machines for people. Instead, AI will make competition more dependent on leaders’ human intelligence, cunning, empathy, and resourcefulness. Those who fail to grasp this irony won’t just fall behind. They will miss out on one element that builds better organizations: businesses that can fast-track growth in a digital-first world. Why? Studies show that today’s workforce places more weight than ever on things like purpose and meaningful work. To prevent turnover, then, leaders must be adept at facilitating meaningful interaction. They need to build trust with their teams as those employees create and manage a range of digital systems that will continue to depend on human interaction.¹⁷ More broadly, organizational structures need to connect cross-functional and multidisciplinary teams across an ecosystem, help them better collaborate and form trusted relationships, and leverage those connections to ensure the best possible outcomes for innovation and impact—both on the business and society.

In short, today’s most successful companies not only understand the value of AI, they also understand how organizational health works hand in hand with such digital systems. They commit top management and financial resources to optimize their business models and organizational practices to accommodate AI.

Paradoxically, however, it’s often the leaders who champion an AI-first perspective to scale, grow, and govern their businesses who then find themselves at odds—both culturally and in terms of investment priorities—with the executives who can turn it into reality. Those are the leaders in charge of portfolio and business operations—management groups that, in turn, also have divergent priorities and perspectives from each other. The result can be a triangular discord that makes scaling, not a cakewalk in the best of times, even more perilous. Therefore, this book will examine the perspectives of each stakeholder group—investors, CEOs, and boards—to answer a vital question: What will it take to harness digital technologies and the conditions that foster an organization to reach its full potential?

For AI-centric organizations, that question won’t be answered by using the playbooks of the past. Rather, they must develop and re-think the organizational conditions and principles of the company to thrive in a new era. Namely, achieving and sustaining organizational health in the time of AI will require leaders to adopt a more holistic view of their organizations. That will mean applying advances in digital to scale and grow their organizations—and balancing a healthy risk tolerance with an investor mindset at an unprecedented pace and level of resilience. That brings us to our final building block.

Building Block 3: Think Like an Investor

Investors are in a unique position to look at whole portfolio companies, compared to one company, function, or point solution at a time. They are incentivized to deliver returns and to do so with speed. In a digital-based world where speed is the next currency for high performance, the investment industry thus offers more valuable insights than traditional publicly traded companies.

Investors and boards of private equity or venture capital– backed companies play a major role in providing effective governance and oversight of the organization’s health and how it achieves that health. Their approach to building a better organization and elevating the health of that organization will change depending on where exactly the organization is in terms of its growth phase. Regardless of the type of company or whether it is PE-or VC-backed, there are predictable “growing pains” specific to a business across a number of growth phases as a company matures. What goes right or wrong at each stage can affect the design of an operating model tailored to a company’s growth trajectory. As companies grow in size, scope, and complexity, they often feel a strain on their organization’s operating model. By taking stock of these conditions that uniquely shape the health of an organization, leaders can rely on advances in digital technology—namely, AI—to amplify human potential.

Who Should Read This Book

This book is devoted to helping CEOs and senior executives, board directors, consultants, startup founders, deal makers, and investors unleash the full potential of an organization in a digital, AI-first world. Its primary focus is on hypergrowth companies—those in a rapid expansion phase that seek to grow and scale quickly—although many of the lessons can apply equally well to large organizations seeking to continuously adapt and compete in a volatile digital economy.

I mentioned earlier that the leaders who champion the AI-first perspective to scale, grow, and govern their businesses often find themselves at odds with the executives who can turn it into reality. Consider, therefore, the varying perspectives that could be latent among a key stakeholder group. Each of these groups are also potential readers of this book.

• Investor and CEO perspective. Investors and dealmakers are ultimately beholden to the numbers and are often confronted with financial realities that force them to determine how to blend traditional practices with the luster and enthusiasm for costly investments in AI technologies. And they may wonder whether AI investments really yield enough value to justify the investment, as opposed to traditional cost-cutting and operational initiatives that would improve margins. No matter what the calculus, quantifying a return on AI investments, especially in today’s business climate, can be a precarious exercise, and this book can offer valuable perspective.

• Chief performance officer perspective. Increasingly, private equity firms and venture capital firms are appointing chief performance officers—sometimes called human capital partners or portfolio talent leads—to design and execute organizational interventions, such as mining people and organizational data as part of first-look audits and pre-/post-deal due diligence for portfolio companies that are relevant, simple, and pragmatic for the portfolio company’s organization effectiveness.

• Board perspective. For board directors, it can be daunting to see their domain intruded upon as environmental, social, and governance (ESG) issues take a starring role in board and top management agendas. And for them as well as for governance professionals, it can be a challenge to identify where to start and when to hold back in terms of driving new investments, which today can include everything from real-time analytics to 3-D printing, human-machine teaming, AI-laden operating models, and quantum computing power.

Given these perspectives, this book is for a number of key stake-holders, including general and limited partners who are interested in scaling their businesses, and investors, technologists, operators, and entrepreneurs interested in the successful investment and management of a business or portfolio of businesses (the latter includes startups from seed through IPO). More to the point, this book is for you, whether you are a wealthy business angel looking to invest your own money, a venture capital fund comprising entrepreneurs who are focused on seed/early-stage financing, a growth equity fund focused on later-stage financing, or a leveraged buyout fund affiliated with an investment management firm that uses a relatively small portion of equity and a relatively large portion of outside debt financing. To sum up, this book is for leaders who take a broader view of organizational issues versus individual point solutions or programs to determine how to transform a company to scale and grow effectively.

How This Book Unfolds

The book aims to help business leaders set an agenda for fast-tracking growth. It is divided into three sections, one for each aspect of building better organizations. It bears repeating that, although they are presented separately, in successful organizations each of the three aspects—organizational health, digital advancement, and investment—must work in tandem. Like three poles supporting a teepee, all are needed or the structure collapses.

Part 1: Design the Conditions for Effectiveness. This section sets the stage by drawing an analogy to organizational life from the field of holistic health. One of its core principles posits that human beings are greater than—and different from—the sum of their parts. Healing human malaise, the belief goes, requires a comprehensive view of mind, body, and spirit, and therefore should focus on understanding the underlying cause of the illness, not simply treating symptoms. Similarly, the sum of a company is greater than its parts, and organizational context requires consideration of all its components. Unfortunately, companies more commonly take a “Western medicine” approach and focus on isolated elements. These traditional approaches in the end rely on a machine model that, like Western medicine’s inherent weakness, is less useful in healing holistic, functional disorders than in treating the symptoms of discrete diseases.

Accordingly, each chapter in this section focuses on one of the seven conditions that must work with all of the others in order for the organization to succeed in the digital era: (1) a strategic direction that prioritizes purpose over profit, (2) a culture focused on creating a shared but adaptive identity, (3) leadership that is agile and human-centric in the age of intelligent machines, (4) talent whose full potential has been unlocked, (5) organizational design around agility and sustainability, (6) equity, inclusion, and diversity (EID) built on an organizational bias for radical transparency and belonging, and (7) employee well-being as an organizational priority. For a company to be healthy, the seven conditions must be aligned, in sync, and functioning well in coordination. Any indication that one is out of sync suggests the need for intervention and realignment. Moreover, the chapters in this section explore why each organizational condition matters against the backdrop of today’s business context in the digital era, and how each can be radically improved with new advances in digital technologies. Ultimately, investor goals too will be met as organizations align themselves with the conditions required for health.

Part II: Grow into a Better Organization. This section offers practical insights for using digital advances, AI in particular, to unleash an organization’s full potential to scale and adapt. I start by discussing how to invest in digital to conduct continuous organizational-health checks. Just as the monitoring of one’s physical health is critical to optimizing it, so too is monitoring the health of the organization indispensable to prioritizing management practices. I then explore the unique aspects of building a better organization in AI-first companies (by which I mean companies like Amazon, Alphabet’s Google, and Microsoft) and how having the right organizational conditions is the key to unleashing the AI-first enterprise.

Part III: Lead a Better Organization. This section looks at top priorities for leaders when it comes to the role of investors and boards of private equity or venture capital– backed companies in providing effective governance and performance oversight with the aim of improving the organization’s health. Because private equity sponsors and venture capitalists are relentless in their pursuits to invest in building better businesses, they focus on identifying the right value-creation levers and performance improvement initiatives to boost their returns. The promise of adopting the lessons and practices that this discipline of management offers could potentially elevate the performance of public companies. The section also includes a chapter on the critical responsibility, in VC and PE firms specifically, of the emerging role of the chief performance officer. It’s a role that falls somewhere between an operating partner (i.e., former C-level executives, functional leaders, or consultants) and an executive-in-residence. As investors seek to boost investment returns, leveraging people and organizationally focused senior advisors or experts has become increasingly prevalent to internal operating groups. Often these advisors or experts are tasked with providing strategic, organizational consultation and support to their portfolio companies. This includes conducting due diligence by assessing the organization’s overall effectiveness and leading initiatives to improve portfolio company value, growth, and exit support. The section ends with a chapter on how CEOs can become fluent in the language of change in order to build better organizations.

The book concludes with a few words about building agile and sustainable organizations in an AI-first era, and how this era is already so different from what came before. Research by McKinsey and the Harvard Business School, for example, reveals that organizations that launched agile transformations before the pandemic outperformed those that had not during the crisis.¹⁸ A more dynamic, agile approach to talent helped many organizations quickly redeploy employees according to changing business needs.

The promise of this book, in short, is to take readers in a new direction: toward understanding how healthy organizations can help navigate the emergent challenges and opportunities in the digital world, turning ordinary organizations into stellar ones that grow, scale, adapt, and create sustainable outcomes for all stakeholders. My mission here is to provide actionable insights that will help organizations rise to their full potential. When the right essentials and the digital and AI capabilities to exercise them are guided by a clear purpose—a vital prerequisite for organizations that are truly agile and sustainable in an era of turbulence and change—investors, CEOs, organizational strategists, and board directors can accelerate the growth of an enterprise.

Let’s begin by delving into the first requirement for a healthy organization: crafting a strategic direction that prioritizes purpose over profit.

Organizational Health: A Brief Review of the Literature