The Decision Economy
EXECUTIVE PERSPECTIVES
Data helps. But judgement sets the pace Operating data is often incomplete, lagging or distorted by the very issues the business is trying to fix. “The data is never perfect,” Phil said. “Experience tells you when you’ve got enough to act and when waiting will genuinely change the outcome.” In practice, many of the most important decisions, particularly around pricing or customer relationships, only move once a conversation starts. At Archant, early decisions helped the leadership team engage with the numbers differently, shifting decision- making from cautious debate to active problem solving. “You make a decision, you execute it, you measure it and you circle back,” Phil said. “That process builds confidence, and once people see that the business keeps moving, decision-making becomes easier.” Building decision capability One of the more subtle but important points was that the decision framework does not change once a business stabilises. The principles remain the same, even as the focus moves from headcount and working capital to capex, property, integration or growth initiatives. Confidence as a turning point Confidence emerged as one of the most important enablers of good judgement. In businesses that have been under pressure for a long time, decision- making often becomes defensive, with boards and executives worried about making the wrong call rather than focused on moving the business forward. In distressed environments, even small decisions can feel loaded with consequence, which often leads to avoidance rather than action. Rcapital’s role is to break that cycle by creating the confidence and permission to act.
As Phil put it during the discussion, “You’d always rather make a decision quickly than wait to try and get a better decision, because even if it’s only 80 or 90 % right, you’ve still moved.” That preference towards action reflects the reality that in businesses facing stress or a critical moment, time itself is often the scarcest resource. Why speed matters more than certainty One of the strongest themes was that decision- making needs to be grounded in judgement rather than certainty. Waiting for perfect information tends to narrow options rather than improve outcomes, this is particularly true in carve out situations. “There’s a temptation to think that if you just wait a bit longer, you’ll get a better answer,” Phil said, “but most of the time you just lose options.” Trios FM was acquired the day before lockdown losing £1.5 million per month on a £60 million turnover. The COVID period forced rapid decisions before the situation was fully understood. “Putting as many people as we could onto furlough meant that you bought yourself the time,” Phil reflected, which created the space to understand what the business really was and what needed to change next. The business was sold 17 months later to Arcus FM following an award-winning turnaround and business transformation.
Phil Emmerson Partner Rcapital Connect on LinkedIn
Background Rcapital is a private capital investor focused on the UK mid-market, specialising in turnaround, carve outs and complex situations, investing its own capital into businesses that are under-performing, constrained or facing a complex situation. Emphasis is on judgement, pace and practical action inside the business to achieve meaningful transformation. Phil Emmerson is Partner at Rcapital. He is responsible for the performance of the portfolio and works directly with management teams across Rcapital’s investments, which places him at the centre of operational decision-making at precisely the moments when it matters most. The reality of turnaround investing Rcapital invests in businesses where the issues are immediate, with limited headroom, which means many situations demand early intervention to stabilise performance and protect value, even though the picture is rarely complete when those calls need to be made.
The compounding cost of hesitation Across the portfolio, hesitation shows up
consistently as a source of value leakage. “The cost for us is almost always increased losses,” Phil said. “You prevaricate, you lose options, you dig yourself further into the hole and you end up much closer to failure than turnaround.”
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