Private Equity Value Creation (via Jobs To Be Done)
What is private equity value creation via Jobs To Be Done?
Private equity value creation via Jobs To Be Done is an approach to building equity value in portfolio companies by focusing on how effectively they help customers execute their Jobs To Be Done. Unlike traditional private equity value creation approaches that often emphasize cost cutting, financial engineering, or consolidation, a JTBD approach centers on accelerating organic growth through superior customer job satisfaction.
This method systematically identifies underserved customer needs, develops strategies to address those needs better than competitors, and implements capabilities that create sustainable competitive advantages. By helping portfolio companies create more customer value more efficiently, this approach drives revenue growth, margin expansion, and multiple enhancement—the three fundamental drivers of equity value.
Why use Jobs To Be Done for private equity value creation?
Traditional private equity value creation methods face increasing challenges as competition for deals intensifies and multiple expansion becomes harder to achieve. A JTBD approach offers several key advantages:
1. Identifies overlooked growth opportunities
By mapping customer jobs and measuring unmet needs, this approach reveals growth opportunities that may be invisible using traditional market analysis methods.
2. Creates sustainable competitive advantages
Building capabilities that satisfy customer needs better than alternatives creates differentiation that competitors cannot easily replicate, supporting both growth and margin sustainability.
3. Reduces innovation risk
By focusing innovation on validated customer needs rather than unproven concepts, this approach increases success rates for new product development and reduces wasted investment.
4. Enhances exit positioning
Companies with demonstrated leadership in satisfying important customer jobs command premium multiples from strategic acquirers and public markets, enhancing exit returns.
5. Works across market conditions
While multiple expansion from financial engineering may depend on favorable market conditions, value creation from addressing unmet customer needs works across market cycles.
What are the key components of Jobs To Be Done value creation for private equity?
1. Job-Based Due Diligence
Before investment, evaluate potential targets through a JTBD lens:
Identifying the key jobs customers hire the company's products to do
Assessing how well these products satisfy customer needs compared to alternatives
Discovering underserved needs that represent growth opportunities
Evaluating the company's capabilities for addressing these opportunities
Sizing the potential value creation from improved job satisfaction
This job-based due diligence reveals value creation potential that traditional financial analysis might miss.
2. Value Creation Planning Through Needs Analysis
Post-acquisition, develop comprehensive value creation plans centered on customer jobs:
Mapping customer jobs in detail, including steps and needs
Conducting quantitative research to identify high-opportunity-score needs
Segmenting customers based on patterns of struggle
Analyzing competitor performance on key job steps
Developing strategic options based on unmet needs
These evidence-based plans create a clear roadmap for organic growth initiatives.
3. Portfolio Company Strategy Alignment
Align portfolio company strategy around customer jobs:
Refocusing market definition around customer jobs rather than products
Redefining competitive positioning based on job satisfaction advantages
Realigning product roadmaps to address high-value unmet needs
Restructuring marketing messages around job-based value propositions
Retraining sales teams to sell job satisfaction rather than features
This strategic alignment creates organizational focus on the highest-value opportunities.
4. Job-Based Operational Improvements
Enhance operations to improve job satisfaction capabilities:
Streamlining processes that directly impact customer job execution
Building capabilities that address high-value unmet needs
Reallocating resources from low-impact to high-impact job areas
Enhancing systems that improve job satisfaction measurement
Developing talent with deeper job insight capabilities
These operational improvements create sustainable competitive advantages rather than temporary cost reductions.
5. Strategic Add-On Acquisitions
Target acquisitions that enhance job satisfaction capabilities:
Identifying targets that address adjacent steps in customer jobs
Evaluating acquisition candidates based on job satisfaction capabilities
Integrating acquisitions to create seamless job execution across capabilities
Building platforms that comprehensively address customer jobs
Developing ecosystems that enhance overall job satisfaction
This job-based approach to add-ons creates strategic value beyond financial consolidation.
6. Exit Positioning Based on Job Leadership
Position for exit based on job satisfaction leadership:
Demonstrating quantifiable improvements in customer job execution
Documenting sustainable advantages in addressing key customer needs
Showcasing innovation pipeline aligned with emerging job requirements
Articulating strategic positioning for evolving job landscapes
Presenting growth potential from expanding to adjacent jobs
This positioning attracts buyers and public markets willing to pay premium multiples.
How is Jobs To Be Done implemented in private equity?
1. Investment thesis development
Start by identifying potentially attractive customer jobs:
Analyzing jobs with significant unmet needs and high willingness to pay
Identifying markets where job satisfaction is low but economic impact is high
Discovering platform opportunities across related jobs
Assessing job satisfaction capabilities that create sustainable advantages
Evaluating job evolution trends that might create emerging opportunities
These job-centered theses guide sourcing efforts toward high-potential opportunities.
2. Deal sourcing and screening
Screen potential investments through a job satisfaction lens:
Evaluating how well target companies understand customer jobs
Assessing current job satisfaction levels compared to competitors
Identifying unmet needs that represent growth opportunities
Determining capability gaps that limit current job satisfaction
Calculating potential value creation from addressing job satisfaction gaps
This screening approach identifies opportunities with high organic growth potential.
3. Due diligence and valuation
Incorporate job-based analysis into due diligence:
Conducting customer interviews focused on job execution and satisfaction
Quantifying unmet needs through structured surveys
Analyzing competitive job satisfaction through customer research
Validating market size based on willingness to pay for job improvement
Modeling growth potential from addressing high-opportunity-score needs
This analysis provides a more accurate assessment of growth potential and sustainable competitive advantage.
4. Post-acquisition value creation planning
Develop detailed value creation plans based on job satisfaction:
Creating comprehensive job maps for key customer segments
Conducting quantitative research to prioritize unmet needs
Developing strategic options based on job satisfaction opportunities
Building detailed roadmaps for addressing priority needs
Establishing metrics to track job satisfaction improvements
These detailed plans provide clear guidance for growth initiatives.
5. Portfolio company transformation
Implement value creation plans through portfolio company leadership:
Training management teams on Jobs To Be Done methodology
Realigning organizational structure around customer jobs
Implementing job-based metrics and incentives
Building job research capabilities within the organization
Creating governance structures that maintain job focus
This transformation creates organizations capable of sustainable job-based growth.
6. Exit preparation and execution
Position for exit based on job satisfaction leadership:
Documenting job satisfaction improvements through customer metrics
Demonstrating sustained growth from addressing unmet needs
Showcasing predictable future growth through job-based roadmaps
Identifying strategic buyers that value specific job satisfaction capabilities
Preparing narratives that explain job-based competitive advantages
This positioning maximizes valuation multiples at exit.
What are the value creation levers in a Jobs To Be Done approach?
1. Revenue Growth
Job-based strategies accelerate revenue growth through:
Target segment penetration - Capturing share in segments with high unmet needs
Premium pricing - Commanding higher prices for superior job satisfaction
Expansion revenue - Growing within accounts by addressing more job steps
Adjacent job expansion - Extending to related jobs with existing customers
New segment entry - Adapting solutions for segments with similar jobs
These growth vectors directly contribute to equity value creation.
2. Margin Enhancement
Job focus improves margins through:
Development efficiency - Focusing resources on high-value needs rather than low-impact features
Sales efficiency - Reducing sales cycles with clearer job-based value propositions
Marketing effectiveness - Generating higher-quality leads through job-based messaging
Customer acquisition optimization - Reducing CAC by targeting high-struggle segments
Support cost reduction - Decreasing support needs through better job satisfaction
These efficiency improvements enhance profitability while supporting growth.
3. Multiple Expansion
Job leadership drives multiple expansion through:
Competitive differentiation - Creating sustainable advantages in job satisfaction
Market leadership - Establishing dominant positions in specific jobs
Growth visibility - Providing clear roadmaps for continued job-based growth
Strategic value - Building capabilities valuable to potential acquirers
Reduced market risk - Creating more predictable growth through deep job understanding
These factors drive higher valuation multiples at exit.
4. Platform Value Creation
Jobs perspective enables platform strategies that create additional value:
Cross-job integration - Creating seamless experiences across related jobs
Ecosystem development - Building networks of solutions that enhance overall job satisfaction
Data advantage accumulation - Developing proprietary data that improves job execution
Network effect cultivation - Creating solutions that improve with scale and adoption
Capability stack development - Building complementary capabilities that create barriers to entry
These platform strategies create value beyond individual portfolio company performance.
What are common challenges in implementing Jobs To Be Done for private equity?
Investment time horizon constraints
The typical 3-5 year private equity holding period can create tension with longer-term job satisfaction investments. Balancing quick wins with strategic capability building requires careful planning and investor alignment.
Management team capability gaps
Many portfolio company management teams lack experience with job-based approaches to growth. Significant training and capability development may be required before effective implementation.
Resistance to customer-centric approaches
Companies with strong product, technology, or operations orientations may resist adopting customer job perspectives. Cultural and organizational changes are often necessary to implement job-based strategies.
Measurement complexity
While financial metrics are well-established, many organizations struggle to implement effective measurement of job satisfaction and its business impact. Building these measurement systems is a critical enabler of job-based initiatives.
Balancing organic and inorganic growth
Integrating job-based organic growth strategies with add-on acquisition strategies creates complexity. Ensuring consistent job focus across acquired entities requires strong integration capabilities.
How do we measure the success of Jobs To Be Done value creation?
Job Satisfaction Metrics
These measure how well portfolio companies help customers execute their jobs:
Job completion rate - The percentage of customers who successfully accomplish their job
Time to job completion - How quickly customers can execute their job
Job accuracy - How precisely customers can complete critical job steps
Job effort - How much mental and physical effort is required
Job completion confidence - How certain customers are of successful execution
Improvements in these metrics indicate successful strategy implementation.
Company Performance Metrics
Job-based strategies should drive company performance:
Organic revenue growth - Growth from existing products and services
Gross margin expansion - Margin improvements from premium pricing and efficiency
Customer acquisition cost - Efficiency of customer acquisition
Customer lifetime value - Total value captured from customer relationships
Net revenue retention - Growth from existing customers minus churn
These metrics connect job satisfaction improvements to company performance.
Portfolio Value Creation Metrics
Ultimately, job-based strategies must create equity value:
EBITDA growth - Improvement in earnings from revenue and margin effects
Multiple expansion - Increase in valuation multiple from market position improvement
Total equity value creation - Combined effect of operational improvement and multiple expansion
IRR improvement - Impact on investment returns
Exit optionality enhancement - Increase in potential exit paths and valuations
These metrics demonstrate the ultimate impact on investor returns.
Capability Development Indicators
Long-term value creation also depends on building sustainable capabilities:
Job insight depth - Development of proprietary customer job understanding
Need satisfaction leadership - Recognition as best solution for specific job steps
Innovation effectiveness - Success rate of new product and feature launches
Strategic position strength - Defensibility of market position
Management team capability - Depth of job-based strategy and execution skills
These indicators reflect the sustainability of job-based advantages.
How thrv helps private equity firms create value through Jobs To Be Done
thrv provides specialized methodologies and tools to help private equity firms create equity value through superior customer job satisfaction. The thrv platform enables firms to:
Identify high-potential investment opportunities through job-based market analysis
Conduct more insightful due diligence that reveals growth opportunities traditional methods miss
Develop evidence-based value creation plans centered on unmet customer needs
Implement job-based growth strategies across portfolio companies
Build sustainable competitive advantages through superior job satisfaction
Position companies for premium valuations at exit based on job leadership
For private equity firms seeking to create value beyond financial engineering and cost reduction, thrv's approach provides a powerful framework for driving organic growth through deeper understanding of customer jobs and needs. The result is stronger competitive positioning, superior growth, and higher exit multiples—all derived from helping customers make meaningful progress in their jobs.
