In our early days, especially from 2001 to 2007, we tried to add value by sharing our ideas, providing solutions, and sometimes doing work for the investee companies. We applied value-addition programs to implement operational performance enhancement projects (such as six sigma or lean manufacturing systems), financial management, human resources recruiting, and corporate governance advisory.

We were going to Board meetings and giving suggestions that we thought were valuable. We even hired Six Sigma and Lean Manufacturing experts to show the companies how to improve their operations, but in most cases it just wasn’t working. No matter how great our ideas were, they had little or no impact on the rate of profit growth or shareholder value creation.

In 2007, when the founder of Mekong Capital, Chris Freund, attended a public program called the Landmark Forum in Singapore. This journey is documented in the story How my personal transformation led to the transformation of Mekong Capital.

In December 2007, Mekong Capital embarked on a journey from which there would be no turning back. We reinvented everything about Mekong Capital, including how we communicate, what behaviors lead to results (i.e. our culture), how we add value, ours ways of looking at things, etc.

What emerged was a new model of Private Equity, grounded in what actually worked or didn’t work are our investors, trial-and-error and actual experience – not based on theory or copying “best practices”.

This transformation period continued for around 3 years and by 2010 had led to a substantial breakthrough in the performance of Mekong’s investment portfolio. This was highlighted in Harvard Business School’s case study published in 2010: Mekong Capital: Building a Culture of Leadership in Vietnam. The following year, Professor Eli Talmor, founder of the Private Equity program at London Business School, published the case study: Mekong Capital: The importance of corporate culture in emerging market private equity.

Our new approach was grounded in some insights about human nature, for example:

• The way a person sees something (i.e. their perspective) shapes what actions they take and what results they get.
• A person shifts their perspectives and takes new actions when they discover something for themselves, not when someone gives them an answer or solution. Self-discovery is the outcome of practice and experience, and sometimes arise from conversations in which the person experiences the space to discover something new.
• Co-creating or aligning on shared goals in the future gets relevant people working together towards those goals.
• Much of the value that gets created in growth private equity, at least with us, happens in communication. Therefore, effective communication has a huge impact on investment success (or lack thereof). Our ability to ask great questions until new insights are discovered, listen to others to really understand what is going on for them, and our ability to get difficult and uncomfortable issues fully handled in conversations all have a big impact on our success.

For more on our approach to adding value please see The World of Ontological Private Equity.