Transformation Needs Owners Who Stay Close Enough to Understand

When I finished my five-year assignment, I told the team that five years felt too short to leave a real footprint. What I did not say was that those five years felt like five years of crisis mode.

Corona hit first. Then came supply chain disruptions in autumn 2021. Then came the war in 2022, followed by the energy crisis. And then Europe redirected investment massively, away from sustainability and automation, toward defense. One after another, the assumptions behind the original plan changed. That is what the last five years actually looked like, and it was not what anyone had planned for.

So when I sat down with Jesper Isaksen, Partner and Head of Talent at FSN Capital in Copenhagen, the question I had in mind was direct. If you build an investment case on assumptions, and those assumptions change, how do you cope?

Jesper called it the trillion-dollar question.

The Plan and the Reality Behind It

FSN Capital is a private equity firm with investments across Norway, Sweden, Denmark, Germany, Austria, and the Netherlands. It has 29 companies in its portfolio, a flagship fund of 1.8 billion euros, and a small-cap fund of 400 million euros. Its model is built on being the control buyer and owner of the companies it invests in.

The return requirement is specific. FSN promises its investor base a 3X return on investment, with a 25 percent internal rate of return. The holding period is normally four to six years. Jesper was clear about what that means in practice. A company can triple in value over ten years. But that may still be too slow for the commitment made to investors.

The investors FSN serves are not abstract. Jesper used the image of the gray-haired lady, someone who worked a full life and now depends on savings and pension returns. It is a simple image, but it brings the abstract world of investment back to a human level.

Significant changes have to be made, and they have to be made with speed. In five years, coronavirus, supply chain disruptions, war, and energy crises arrived one after another. The assumptions behind the original plan changed.

Jesper's answer was grounded in discipline. We do not live in a world where everything is constant, and the company is the only variable. A plan is necessary. And then the plan has to be monitored against performance, against the world around the company, and against customer patterns. If something changes, the company needs to ask what it means for the supply chain, demand, pricing, and profitability.

This sounds straightforward. In my experience, it often does not happen with sufficient discipline at the board level.

What Boards Actually Need to Understand

Boards do not do the strategy. Strategy is the task of management. But boards need to understand the assumptions behind the strategy. They need to understand the business model deeply enough to see whether those assumptions still hold. That does not mean knowing every operational detail. It means understanding the go-to-market model, where value is created, and who the customers are.

If those assumptions change and the board does not see it, the board cannot ask the right questions. It also cannot ensure that management adapts the plan.

In my experience, that discussion was not always taking place at the board level. The assumptions were not revisited sufficiently, and not at the level where they needed to be.

FSN's way of working is built around staying close to this reality. Jesper explained that FSN reviews four to five companies per month, in addition to monitoring overall financial performance. They have conversations with the CEO and the chair. They check in and ask how things are actually going. And they systematically encourage what they call going to Gemba, getting out there and seeing for yourself.

I like that expression because it cuts through abstraction. Are the messages from the strategy plan reaching the people doing the real work? If there is a disconnect, it has to be fixed.

The Troika and the Logic Behind It

FSN's governance model rests on what Jesper calls the troika, three people in three roles working closely together.

The CEO carries full responsibility for business performance. The chair is appointed by the shareholders, has sector experience and seniority, and has typically been a CEO. The chair is someone the CEO can mirror themselves into, a natural role model. The point person is a senior person from FSN, typically a partner or principal, responsible for the base case and focused on delivering the expected return.

These three people bring different roles, different backgrounds, and different competencies to the same table. They need to work together with clarity about what each of them sees and with respect for what each of them brings.

Jesper was direct about what happens without that clarity. If there is no clarity between the owner and the management team, the company ends up in a bad place.

I would add that trust is also important. This is true in private equity, and it is true in listed companies. The structures are different. But the relationship between the board and management has to work. In a listed company, especially a larger one, the board plays a more supervisory role. When a crisis arrives, that difference becomes smaller. If results are bad or if the company faces a significant technological disruption, listed company boards become more hands-on. The same movement happens from the owner side in private equity. When everything is going well, there is more space. When things do not go according to plan, the owner comes closer.

What FSN insists on, in either situation, is transparency. Disagreement is possible, but it has to happen on the basis of facts and numbers.

Founder Culture and the Limits of Transparency

That discipline is harder to establish in founder-led companies, and I have seen this pattern from a different angle.

When I was working for a large company, we integrated smaller, family-owned businesses. The reaction from founders was often the same. Are you not trusting what I am doing? I have done this all my life. The request for numbers, KPIs, and structured reporting was read as a lack of confidence in the founder's judgment.

The issue was never trust. The issue was having facts in order to make the best possible decision. But in a company built on intuition, proximity to customers, and the founder's personal understanding of the business, that distinction is not always obvious.

Jesper described the same dynamic. The trade-off is between the creativity and passion of founders who are genuinely good at building businesses, and the structure and sophistication needed to scale. Both are necessary. The risk comes when the new owner implements systems and processes in a way that removes the innovation edge, and with it, the people who carried that edge.

I have seen cases where that happened. A centralized view was imposed on a business where decentralization was an asset. The belief was that doing everything in exactly the same way would create value. Key people left. Capabilities disappeared. The value that had been acquired was weakened. The financial impact on the larger company was not always large, but the destruction of value was visible.

FSN tries to avoid that pattern. Rather than bringing in large consulting firms to cut costs across the organization, FSN focuses on where money should be saved and where it should be reinvested. The aim is to build growth, organic and inorganic, while preserving the existing culture and adding structure and sophistication on top.

Capital Allocation as the Real Test of Strategy

We can discuss a strategy for a long time. Strategy becomes real when investment is directed.

When capital is allocated in one direction, other things stop. Choices become visible through funding. Jesper described FSN's process as helping the management team understand the opportunities themselves, using their own data and their interactions with customers and competitors, rather than simply calling in a consulting firm to deliver an answer.

The question then becomes how to allocate resources to the critical priorities that can accelerate growth. FSN can bring capital. It can use leverage. But the organization also has to focus. Some waste has to be reduced. Some layers may need to be simplified. The company becomes more coherent, and people understand the purpose, the plan, and where they are going.

Jesper gave the example of Danaher, where he worked before joining FSN. The model was built around people, plan, processes, and performance, with the same board setup and processes across companies, continents, and sectors. He described what he called the three-second rule. You could enter a board conversation with a local leader and, within three seconds, know how things were going and where the pain points were. The discussion was not spent identifying the numbers. It was spent on how to deal with the numbers and what countermeasures to take.

That kind of discipline assumes continuity, in philosophy, in management, in strategy. In my experience, the most successful teams and companies, large or small, kept a decentralized element. They understood that customers and people are in a specific geography. They allowed local teams to use their entrepreneurial and innovation capabilities, while still benefiting from the financial strength and processes of the larger organization.

The Layer That Boards Often Miss

There is one part of the transformation that boards regularly underestimate. Middle management.

Boards focus on the CEO, the senior leadership team, and CEO succession. Those are clear board responsibilities. But the second, third, and fourth layers often receive less attention.

Middle managers can become the center of gravity of a very profitable core business. If the company is being redirected, they may have no visible reason to support that change, and the slowdown can happen without any open resistance.

At the same time, middle management is where much of the practical intelligence of the company sits. It is close to customers. If technological disruption is coming from the market, it may be visible there before it reaches the top management team or the board.

Jesper was direct on this point. FSN has seen a clear correlation in its portfolio. Where there has been a consistent, strong upgrade of middle management, and no conflict between top management and middle management, FSN sees the best performance. They call it the talent flywheel.

FSN monitors employee net promoter score across its companies. If a division or entity has a very low score, something is going on. People are unhappy, not proud, and unwilling to recommend the company as a workplace. Most often, the issue is leadership. Sometimes it is structural. FSN insists on understanding what is behind a low score and making changes accordingly.

What Active Ownership Actually Means

There is a lot of literature on leadership. There is much less clarity on what good ownership means.

I have asked myself many times why owners allow bad CEOs or top managers to continue destroying performance. Jesper's answer was simple. That is a failure of active ownership.

Good ownership does not mean controlling every detail. It means staying close enough to understand. And it means deciding when to act.

Jesper gave the example of Håndverksgruppen, a company that started in Oslo with 30 painters in surface treatment. FSN drove inorganic growth and acquired a company every week for more than two years. The group expanded from Norway into Sweden, Denmark, and Germany. Jesper described a picture of 150 founders standing together, all having sold their companies and now being part of a shared journey toward a possible listing.

The question was whether the entrepreneurial spirit could be maintained. His answer was yes, while making clear that this does not mean complacency. If some of those 150 companies fall behind, there has to be a serious conversation. Options exist. The decentralized philosophy can still be maintained.

That balance between structure and entrepreneurial spirit, between the return requirement and the culture of the company, is something FSN manages continuously. Ownership is staying close enough to understand and deciding when to act.