For years, a General Partner’s success was measured almost entirely by investment returns. A high IRR was the goal, and everything else was secondary. In a market defined by tight liquidity and delayed exits, simply delivering a great IRR is now table stakes. The best firms are looking for a new edge. As StepStone Group President & Co-COO Jason Ment puts it, “IRR, at this point, is table stakes. It’s the operational alpha…Those are what keep clients coming back.”
That new edge is operational alpha.
Historically, “operational alpha” meant improving a portfolio company’s performance—things like fixing supply chains or professionalizing a management team. Today, it means something more. It’s about turning your own firm into a high-performance machine through better decisions, faster execution, and scalable systems built on a strong foundation of culture, structure, and technology.
This isn’t just about cutting costs. It’s an investment in your firm’s core, giving you the freedom to do what you do best: make great investments and build lasting relationships.
Culture Is Your Catalyst
In an industry driven by numbers, culture can feel like a soft asset. That is a mistake. High-performing firms build their culture with intention, turning it into a powerful competitive advantage.
A winning culture starts with an ownership mindset. At Mavik Capital Management, COO Sarah Schwarzschild explains how they hardwire this into the firm’s DNA: “We think of ourselves as owners of this business, not renters. We want everyone to show up every day doing the best they can for our business. When we win, we’re all going to win.” This alignment drives a shared commitment to excellence.
A strong culture also embraces experimentation and learning. Chris Merrill, CEO and co-founder of Harrison Street, turns every misstep into a lesson. “We’ve made mistakes in operating partners…with the wrong lenders…with the wrong schools. And that’s helped us,” he explains. “Our battle scars are what define our edge.” This creates a culture of continuous improvement that protects against complacency.
Structure Your Firm for Scale, Not Control
As firms grow, complexity can become a major drag on performance. The answer isn’t tighter control; it’s a smarter structure that empowers your team. Great leaders set the vision, assemble the right talent, and then get out of the way.
Think of yourself as a coach, not just a player. As Chris Brimsek, Managing Partner at CAB Advisory, notes, many founders are superstar players. But to scale, they must become coaches who “assemble, manage, and incentivize a team…we can build sustainable deal teams that repeat top decile outcomes.” This means creating repeatable systems for success.
A smart structure also breaks down silos. Information must flow sideways, not just up and down a hierarchy. At LaSalle Investment Management, Global CEO Mark Gabbay transformed the firm from a “series of regional businesses” into a cohesive global entity. “We all look at decisions jointly. We talk about what’s best for the business [as a whole],” he says. This cross-functional collaboration creates a more resilient and efficient organization.
Consolidate Technology for a Single Source of Truth
Many GPs operate with a patchwork of systems, creating siloed data and manual workarounds. This technological fragmentation is a hidden drag on performance, distracting your team from high-value work.
Consolidation is the key to unlocking operational alpha. Len O’Donnell, CEO of Affinius Capital, spearheaded a three-year effort to unify two platforms after an acquisition. “Today, the businesses are one hundred percent consolidated…It makes us a more powerful firm,” says O’Donnell.
The ultimate goal is a single source of truth. Mavik’s Sarah Schwarzschild shares this vision: “My wish is end-to-end through Mavik’s process, real-time data, no Excel.” When all your data lives in one place, you gain real-time visibility that enables faster execution, stronger accountability, and more confident decision-making.
A unified data foundation also future-proofs your business. It is the necessary groundwork for adopting AI, which can transform everything from portfolio monitoring to investor reporting. With clean, consolidated data, you can train AI models to spot risks, identify opportunities, and personalize LP communications at scale.
The Time for Operational Alpha Is Now
In today’s competitive market, operational excellence is no longer optional. It’s what separates the firms that merely survive from those that thrive and grow.
Building operational alpha requires discipline. It’s a commitment to improving how your people work, how information flows, and how decisions are made. By investing in your culture, structure, and technology, you create a system that compounds over time, giving you a lasting competitive edge and a clear path to scale.
