Making Sense of Strategic Change in the Private Equity Value Creation Process

Abstract: Traditional views on change management are outdated whilst contemporary practitioners are constantly seeking to improve the success rate of change programs given the historically high failure rate of change. Private Equity (PE) actors and their change capabilities under the value creation mantra seem to contradict this adversity. Drawing from existing PE literature and deploying sensemaking as a theoretical lens, this study unpacks the change implementation process through an in-depth qualitative case study of the value creation process at a PE portfolio company within the Swedish retail sector. From the perspective of change recipients, a traditionally overlooked organization constituent, the study elucidates that, given the PE attributes such as the concentrated ownership structure and the board's stringent focus on monitoring, change recipients settle on the embellishment and elaboration of a performance measurement system as the single point of reference in change. They both consciously and unconsciously engage in socially constructing the change in a fluid flow sustained by monitoring. By demonstrating the importance of sensemaking conditions, focus and clarity of change goals and institutionalized monitoring, the study presents new dynamics in how change recipients embrace and make sense of change.