Hiring for the Future: Leadership Lessons from Private Equity

In this episode of the Leadership Quotient Podcast, Giacomo Sonnino, Advisory Director at Charlesbank Capital Partners, joins The Crucible CEO Lindsay Guzowski to discuss how private equity firms can create more value, faster, by building leadership teams with intention. Drawing on a career that spans engineering, strategy, McKinsey, and operating roles inside growth businesses, Giacomo explains why great leadership is not about fitting a single mold, but about understanding what a business needs in a specific moment and aligning talent accordingly. He and Lindsay explore why clarity is one of the most important drivers of performance, how asking better questions can unlock ownership and accountability across a team, and why leaders should be hired for the company they are trying to become, not just the company that exists today. They also discuss the challenge of balancing high performance with cultural fit, how Charlesbank approaches leadership diligence as an ongoing process rather than a one-time assessment, and why AI will only create value when leaders are clear enough to change how work actually gets done.

Transcript

SPEAKER_02 0:00

Welcome to Leadership Quotient, a podcast by The Crucible, where we explore how leadership teams and investor-backed companies are built, aligned, and scaled for impact. I'm your host, Lindsay Gazowski, and in each episode, we'll talk with the people shaping value behind the scenes, from operating partners to investors to advisors to C-suite executives, about what it really takes to drive performance through leadership. On today's episode of the Leadership Quotient Podcast, I chat with Giacomo Sonino, advisory director at Charles Bank Capital Partners, about PE's need to hire leaders for the company's future, the power of asking questions, and why great returns come from being yourself. Giacomo, welcome to Leadership Quotient. To get started and set some context, I'd love to hear your story about how you went from consulting and an illustrious career there into becoming an operating partner within private equity.

SPEAKER_00 1:12

So I'm originally from Italy and I can't undo my accent, so I apologize for that. I started my career as an engineer, but very quickly moved doing strategy and MA in a multinational conglomerate. I was lucky enough to be exposed to senior management from day one of my career, effectively. I made a traditional move that uh many people do. I moved to the US uh early on in my career to do my MBA at the Task School of Business at Dartmouth. And then again, as many others do, I went into consulting and I thought I'd do consulting for a couple of years. Turns out I spent 13 years at McKinsey, where I was a partner for a long time. I was a little bit of a non-traditional partner or non-traditional consultant in if you wish, where I really love executing and driving actual value for my clients. And from 2018 to 2020, 2021, I had the opportunity to run a business within McKinsey. I was the chief operating officer of Quantum Black in North America. Quantum Black is the McKinsey AI arm. Um that was a fantastic experience. Um explosive growth, ownership, PL ownership, building a team, all of that. And that experience kind of firm in my mind that I had a lot more joy and energy. And kind of my personal mission was to more into the doing and delivering and being closer to the action than just being on the sideline advising. So around the time I decided to leave McKinsey and uh I moved to a company called J Bell, which is a counter manufacturing uh business, and uh uh I went there to run a business. So I was uh running a business providing procurement supply chain services globally. And my ultimate goal though was like I need to, I wanted to go into private equity. Uh and that move in my mind is always was driven by ability to drive impact at scale and be in an environment where I could fulfill my potential. And I was lucky enough to join Charles Bank in in 2023. Uh at Charles Bank, I'm an operating partner, and my job, um, I defined my job, my job description is to create more value faster for our portfolio companies. Um, that means a lot of different things we can go into details, but I spend most of my time uh supporting our business services investment. Uh, I occasionally support our investments in consumer, industrial, and technologies. So uh along with my peers, uh I'm involved throughout the lifecycle of the investment, so from diligence underwriting to onboarding the new investment to executing value creation plans, and more and more helping them, helping the investment prepare for exit. So um there is a lot of potential for impact and a lot of potential to put to use the skills that I acquired through my career.

SPEAKER_02 4:26

Absolutely. And I'd I'd love to hear how that experience at McKinsey, where you got to see a number of different leadership styles and probably great management teams, and probably some that were a little more challenged. How those experiences on the consulting side before you got into Quanta Black. Um how that shaped your personal view of what great leadership looks like.

SPEAKER_00 4:57

During those years, I had the opportunity to see the full spectrum of what leadership could look like good and bad. And also that you can there is different types of leaders, and it's not that one is better than others, but you can accomplish great results being yourself, and and embracing who you are can be the way to succeed. Um it's not in certain cases you need a micromanager, in certain cases you need an inspirational leaders. And once you appreciate that there is different leadership style, different way in operating, then you start thinking about okay, how do I evolve myself and operate in different ways, depending on the challenge that in front of it? Um, so that a high level is an experience that I've I got turbocharged by seeing clients, different clients at different time, at different stage of life, different uh company going through restructuring, company going through explosive growth, company going through international growth, um, company facing new technologies disrupting the business. I've seen it all in a very compressed amount of time. And what that experience gave me is I call it almost a cheat sheet of what is the leadership style or the leadership, what a leader needs to do to be successful in specific uh uh situation and in specific functions. So, for example, in sales, you might need a different leader than in finance. And what are the traits of that leader? And what is the setup that those leaders need to succeed? Or I need to do a turnaround or restructure and transformation project. What is the leadership trait that you need through that situation to be successful? How do you set up the team to be successful? All of that I've done so many times, year over years now. I can say, coming into any situation, say, oh, this is what works here. Let's go to work. And that helps go faster and create more value.

SPEAKER_02 7:16

And when you're thinking about the traits that were consistent across function of some of these better leaders, were there any that really stuck out from you know that that McKinsey lab environment where you could see so many different different effective styles?

SPEAKER_00 7:35

Clarity of vision, uh ability to inspire, ability to create accountability, and ability to support. Um, I believe it on my skin uh a few times, but once you put those things into a team, the team will function better. Um and ultimately there is the the secret one is the power of asking questions. Um leaders often underestimate by how powerful asking a question is and how much you can get done or move people by simply asking them what they think or how they do it.

SPEAKER_02 8:27

And so when you're talking about the power of asking questions there, is it more about garnering new information or different perspectives, or is it more about connecting with others on the team to help them feel a part of the process?

SPEAKER_00 8:44

Uh I think it's the latter, but I would even expand it, which is as a leader, I'll give you a simple example. I've run several Salesforces. So I know, you know, that as a sales leader, you can only effectively manage six to eight direct reports, and each of them scales to a certain number of accounts, et cetera, et cetera, et cetera. And so I could come in and say, well, we should run the Salesforce this way, because that's the way it works. And I'm probably you could argue like, okay, well, in broad strokes, that's what works. But you can come in by coming in and asking questions like, why do we do things a certain way? Why do certain things work? Why what should we change? What should we not change? You create a mechanism of you have two benefits. Number one, you surface things that from people that live it day to day, like, oh, a specific account might have a specific problem that you cannot necessarily, you don't necessarily see top-down, but needs to be taken into account. And second, actually creates ownership and accountability. Um, I've learned through my experiences that the fact that you know something or you can do something as a leader, it doesn't mean that you should do it. And sometimes empowering talent people, giving them opportunities, they come back with things that are a lot better than what you'd have done. And maybe what you've done would be fine and will work. But very, very frequently you empower your team and they come back with something amazing. We shouldn't, as a leader, you should not have that opportunity. You should give that opportunity starting asking questions.

SPEAKER_02 10:26

That's a phenomenal insight. And I think that you're right that people underestimate the ability to generate value across the organization by engaging that perspective.

SPEAKER_00 10:38

Right. And look, I've uh I've had it so many times when I was McKinsey, but even even here at Charles Bank where you have this super talented um young analyst associates, and their mind and framing is completely unbiased and uh from previous experience. They go there with their brain power and thought, and you you kind of know how to build a model or how to do design something, and you're like, you know what, you do it. I'm not gonna bias you. And they come back and it's better than what you had in mind. And again, I could have told, like, I need A, B, C, and D, but that's certainly could be efficient, but might not necessarily be the best. And certainly from a people perspective, is it's it's not optimal. So there is a situation, by the way, in which that direct line of thinking, like this is what we have to do because we are in an emergency situation, and these are the things that need to get done, and this is how we have to operate, is uh totally appropriate. But that's not the norm, or that's doesn't apply all the time. There are things in times in which we need to allow space for that thinking, and we need to give opportunities, and we need to get together as a team, and we have to grow collectively. So, again, you we have as leaders, we have to move from one to the other and everything in between, depending on where we are.

SPEAKER_02 11:59

And uh the flip side of the question I was asking that generated this stream what are the traits that you've seen, whether at Charles Bank in your portfolio companies or you know, from past experience that were most detrimental to growth or actively you know deteriorating value within some of these companies?

SPEAKER_00 12:33

Number one, two, and three on my list is lack of clarity. Um and by mean, I mean by that I mean that if there are gray areas, if it's not clear where we're going, if you're not clear what we have to go do, if it's not clear who has to do it, if it's not clear the timeline and resources needed to do it, the outmen are not gonna be good. And so we as leaders have to force ourselves and everybody else to say to get to that clarity and make decisions where it's needed and give space where it's needed. But if we it's not clear where we're going and what needs to get done and who needs to do it, and when are we gonna do it, things are not gonna work out. Maybe I'm too too much of an engineer in that my way of thinking. But but once you do that, the flip side is once you have the clarity and accountability, people will and ownership, people will start doing things, and people and things were gonna get done. You start moving and and then build momentum, and then things will work out. Um, so clarity, clarity, clarity.

SPEAKER_02 13:48

I appreciate that. Um so Charles Bank has a really rigorous and thoughtful approach to talent teams and adding value through leadership. Talk to me a little bit about not just what that philosophy is, but how you personally engage in disseminating that information, promoting that, and building great companies.

SPEAKER_00 14:17

So let me step back a little bit and frame Charles Bank and thank you for the kind word uh about Charles Bank. So Charles Bank, uh at Charles Bank, we apply a very disciplined investing investment approach.

SPEAKER_02 14:32

Yep.

SPEAKER_00 14:33

We try to find underappreciated asset and we build great conviction and we specialize in effectively in situations where other might might acidate. And we do this uh across private equity, private credit in the middle market. And so, where is our edge? Our edge is in complex underlook situation, and so that's mana complex carbouts, misunderstood growth levers, fund their own businesses which may have great potential and great aspirations. Now we call it conclusion to clarity, which allows us to find these assets and then uh help them growth. But in all of that, leadership matters a lot, and so and thinking matters a lot. So we start with uh we have a sector-based approach, so we invest in a series of sectors, and we pick teams that we research for a long time to identify those assets. Once you've defined identified an asset that you really like, what we do is a very rigorous underwriting process. Through that value in underwriting process, we spend an enormous amount of time thinking, uh uh answering those clarity questions I mentioned earlier. So, what is the vision for this company five years from now at exit? What is what are we trying to build? What are the value creation levers that we want to build? Could be accelerating MA, could be driving organic growth, could be improving margin. But ultimately, we ask ourselves: do we have the leadership team that can serve against those levers? And we start asking those questions and answering finding answers through the diligence process. And once we make the investment and we partner with this um with the management team, we go through a very, very, very rigorous and structured onboarding process. To go back to the clarity point, we create a value creation plan with the management team. We figure out what they can do versus where we need to invest. We figure out where we have talent against each of the value creation levers of which talent intervention are needed. Um and we create a very detailed plan that we can go and execute. Um we also have we're very fun uh proud of having kind of a continuous improvement approach to driving our investment performance. So we do this all the time, and so every year you have to go back and say, what are the top two or three things that we have that this company A, B, or C have to do? And is the management team set up to do that? Where could we intervene and help? Where do we need to replace? How do we build a talent pipeline that can support the company at exit? So this is not a one and done for us through diligence. It actually happens all the time. And personally, I find I have a red line in my job, which is I sat when I joined Charles Bank. I made a conscious decision that I wasn't a PL and owner anymore. I didn't run the business anymore.

SPEAKER_02 18:19

Right.

SPEAKER_00 18:20

And I tell to all the management team I work with, your job is to run the company, it's not mine. And I don't cross the line. And so my job is to help them be successful and help figure out best practices, how I can help them uh solve problems they've never seen. I can help them think two or three years ahead of things that they have not seen that I have seen that know will happen, but I don't cross that line. So my job is to support the manager and it's not to do their job.

SPEAKER_02 18:54

Great. Well, as you guys are thinking through that leadership diligence, how are you assessing the team both behaviorally and relative to those value creation levers?

SPEAKER_00 19:15

It always goes back to our thematic investment, starts all there, which is in a specific sector, subsector investment theme. Um you have to do certain things. If it's an MA rollup, for example, or an organic growth story, um you answer first, is this the right asset that can execute that that story, a high quality asset, business, etc. But then you ask yourself, are is the management able to do that? And it's very rare that you pull all levers at the same time, but some larger companies do. But let's say if you have an MA story, then you have to ask yourself, do they have track record? Does the management team have track record doing MA? And can we scale that? And so we ask ourselves, well, can you source enough deals to make the investment case? Can you execute enough deals to make the investment case? Can you integrate enough deals to make the investment case? And then you start thinking, okay, how many leaders do I need? Are they in place? Where do I add? Where do I do not add? And in a way, you start with an idea of like we have to do more MA, and then uh you break that process, that idea into a series of steps, and then you match that with talent. Starts at the top is the CEO, an inspirational leader that can go and uh inspire uh potential targets. Is there uh an engine behind him that can source, process, and integrate those? And do we have the right skill set in each of these engines? And in the middle market, in particular, what I found is that it's very rare to find a build engine. And part of our job is to um design what that engine will be and go source the talent to fill it. And one of the conversations I have all the time with our CEOs, or the CEOs I work with, is like we should not hire leaders for today, for the company we are today. We should hire leaders for the company will be two, three, four years from now. Because otherwise we're gonna have to hire again and we don't want to. And um, once you inject this middle market companies with the next level of talent, you'll see incredible things happen.

SPEAKER_02 21:47

Yeah, I think that's I think that's a great point. And thinking about going from the thesis to the steps to understanding whether that person can be the leader that generates excitement in others. And that can communicate belief in where the business is headed. It's one of the things actually that Crucible looks at when we're doing our people assessments is this person able to be the leader that can get others on board and communicate that vision going forward. As you're building this engine, how are you ensuring that the you know that the pistons you're putting in aren't just phenomenally phenomenally wrought pistons, but also that they fit the engine perfectly?

SPEAKER_00 22:39

Yes. Many people follow the trap that you just need to hire a person with the right skill set. And I think what you have described is absolutely true, which is does the team work?

SPEAKER_02 22:58

Right.

SPEAKER_00 23:06

And this is where actually CEOs excel at creating and managing uh certain CEOs excel, I would say, create and managing a high-performing team. And people often underestimate and underestimate how a skilled person with the wrong, with the not perfect cultural fit can actually create a lot of trouble and disrupt the dynamic of the team. So I don't have a secret sauce there. I don't know if there is one. If you have one, please tell me. But it's something that needs to be uh looked at all the time. Uh what we do more and more is thinking about we do map the entire teams on a yearly basis for each of our portfolio company, and again, and and and continue check their fit against value creation levers, and are they fit for purpose for the next journey? Um and you have to keep asking that question. Again, it's not uh something you can uh you can do just once. Um and if there are people that are disruptive, then that those are the art. The hardest one is a person that is high performing and not perfect fit culturally.

SPEAKER_01 24:36

Absolutely.

SPEAKER_00 24:37

Um if you're not performing low cultural fit, the answer is easy. If you're high performing high cultural fit, um it's easy as well. But high performing, low cultural fit, it's uh it's a tough one to manage.

SPEAKER_02 24:50

Yeah, we see that all the time and frequently get called in when groups can't figure out exactly what's happening. Where is this person low performing by a fine cultural fit, which is one problem that can be addressed, or are they actually very high performing with a poor cultural fit? And that's a different question, especially in scenarios where the team may not be fully formed yet.

SPEAKER_00 25:16

Yes. And and in that situation, at least what I observe in the situation is that umce you eventually move on, that person, because eventually you will move on, uh the team will bounce back and feel relieved and less stressed and more focused and that better conversation, better bonding. So that again is a tough call to make, but eventually the cultural feed and the the team effective leadership team effectiveness should be prioritized.

SPEAKER_02 25:51

Good. Well, I want to pivot a little bit because you were in the AI space earlier than most and actually got to run a business that was focused there. So let's talk a little bit about AI, your just quick high level on how that's impacting the world of private equity, and then get a little bit into how Charles Bank is thinking about training and coaching people to use it more effectively.

SPEAKER_00 26:23

Uh my answer is gonna be highly shaped by what I experienced almost 10 years ago in running Quantum Black. Um and well, that was actually probably the hardest change management experience of my life. Um and the reason for that is that we had explosive growth, the company was doing well, we had the right investment pieces, if you if you wish, and I had an extremely high-performing team. Uh amazing talent, AI talent. We could do things that I couldn't even think we could. And as an individual, I had a challenge number one was to build a team that could scale. And through that experience, I learned the power of a high-performing team and the powers of uh how a strong leader and new talent, new person in a team with the right skill set can make things better for everybody else. And so there is the value of a high-performing team, the value of focus, the value of um business over single individual. Um, but the hardest thing I had to do there was the following. I had a new product, a new service, Advanced Analytics in 2018 was really new.

SPEAKER_02 27:46

Yes.

SPEAKER_00 27:48

And I had to go convince very successful senior folks at McKinsey in their late 40s, 50s that have been really successful in their whole career to say, hey, there is a different way of doing things. That was extremely hard. Say, hey, you've done lean manufacturing a specific way, you've done commercial effect in a specific way. Now we could do it differently because we have AI. That's a really tough sale for someone that has done successfully for 30 years. Right. And I think what we experience today is a little bit of that, which is obviously the technology has evolved and there is a lot of offering, but effectively, what we can do today is we can create value with AI, and I can tell you how. But we have to go convince leaders and businesses that have made money and been successful for many years that there is maybe a different way of doing things. It's all about change management. Um, our belief at Charles Bank is that we can create value with AI today. And the way we articulate it with our portfolio companies is in call it three buckets. Number one is you can uh your employees, your leadership team can start using Copilot or Cloud or Chat GPT and be more efficient in their journey. Absolutely true, absolutely great. We can make better decisions. You and I can save time in our daily tasks because we have um an LLM tool helping us. Direct impact to the bottom line, very hard to prove. Still helpful. I mean, we should use this tool. This they actually work, they make our life easier. Um, then yeah, bucket number two, which is there is a lot of things, a lot of AI solutions uh between automation and gen AI and all of that in between. Uh there are through and that create value today. And I'll give you four buckets. Number one is uh software development. If your company is not doing develops code and is not using um Gen AI to code and do quality control, then you're missing out. Um, customer experience, so customer support, call centers, uh text messaging, uh customer with uh and so on and so forth. Fantastic solutions out there of the shop you can go buy, then you can uh improve the customer experience and save some money. Um sales and marketing, plenty of opportunity out there, cross-sell, opportunity identification, marketing, content generation, sales content generation, you name it. There is plenty of proven use cases. By the way, and then finally, uh back office. I mean, there is so much you can do in the back office, uh, in finance, in legal, and so on, where again there is proven solutions that help us be better. Um, with one of our portfolio company according to develop plenty of the solution to automate clothes and automate cash flow management and so on and so forth. There is value there. And then the final bucket, which I think is most interesting, we have an opportunity to go change what we call workflows or domains, like how things are actually done in the core of the business. This is the hardest part and where the most value is. So leaders have to think about now. We have this technology, things can be automated, and our assumption is if they can be automated, someone will automate it, so better be us. And so you can start being uh think about offensively about okay, what are we gonna do and how are we gonna do things differently? And for lead, there is what I observe from a leadership perspective is that uh while what I just said is all true, you can go do it today. The people implication, the change management, uh, the skill set needed to execute some of those uh use cases that just described is typically very big compared to what we have on a leadership team and even skill set in the different portfolio companies. So effectively we have to go through a little bit of a journey and grow the what I call the AI readiness of the leadership team and of the company. So, number one, is the CEO um embracing AI or thinking about how AI can change the business and the terminal value of the different parts of the business? Do we have AI leaders uh in the business that, by the way, not technology leaders? I was very specific. AI leaders, business leaders that can drive this change, can be championed identifying what are the valuable items that we have to go address? Do we have clarity on AI roadmap and what are the use cases that we want to go and execute and how we want to change our business? Do we have technology teams and is technology out there available that can help us execute those changes? Again, you go back to the clarity point. Do we have clarity in all of this? And can we go and execute? And ultimately, uh, what you hear in the market today is that a lot of companies and doing AI, not many companies are seeing the value of AI yet. Why? Because we haven't changed the way you work. If you have to change the way you work in order to get the value, and that is hard and takes time, and that's where leaders should spend their time on creating the clarity, setting, creating the environment uh to execute, and making sure that things that actually get done and we work differently. But again, I go back to my original point: we can create value with AI today.

SPEAKER_02 33:44

Fantastic. Well, it sounds like if people could take one thing away from this conversation, it's that clarity is absolutely key, both now and going forward in the the new world of AI-enabled and AI-structured work.

SPEAKER_00 34:02

Absolutely. And then get things done.

SPEAKER_02 34:12

And that wraps up another inspiring episode of Leadership Quotient. I appreciate Giacomo's depth and practical perspective in today's conversation. To our listeners, if you found this conversation valuable, be sure to subscribe to Leadership Quotient wherever you get your podcasts. You can also learn more about the Crucible and how we're helping investor-backed companies align leadership teams for scale at thecrucible.com. We'll see you next time for more real conversations on leadership, talent, and value creation.