The three pillars of operational alpha

Private markets GPs are grappling with constrained liquidity, delayed exits, and limited distributions, forcing a shift from chasing IRR alone to building enduring, profitable businesses. As StepStone’s Jason Ment notes, “IRR is table stakes—it’s the operational alpha and service alpha that keep clients coming back.”

Once defined at the portfolio level, operational alpha now means something deeper: the compounding effect of better decisions, faster execution, and scalable systems built on culture, structure, and technology. Leading firms like LaSalle Investment Management, Affinius Capital, and Harrison Street are embedding ownership mindsets, feedback loops, agile structures, and integrated platforms to reduce friction, empower people, and future-proof operations—laying the groundwork for lasting scale and differentiation in an unforgiving market

The highest-performing organizations don't treat culture as secondary to strategy. They build it with intention. "We think of ourselves as owners of this business, not renters," says Mavik COO Sarah Schwarzschild. "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."

Operational alpha emerges through thoughtful delegation and lateral information flow. The goal is to build systems that empower talented people to do their best work.

At StepStone Group, structure is built through deliberate "disaggregation" of responsibility. With nearly 1,110 employees globally, department leaders operate independently with clear mandates and full accountability. This approach enables StepStone to harness its full scale without slowing execution or compromising client service.

For many GPs, the barrier to scale isn’t a lack of tools—it’s fragmentation. Multiple systems, duplicative processes, and siloed data create hidden drags on performance, showing up as bloated budgets, inconsistent reporting, and manual workarounds. At Affinius Capital, Len O’Donnell led a three-year effort to unify two previously separate platforms following a major acquisition—migrating off legacy infrastructure, fully integrating the acquired credit platform, and centralizing IT, accounting, and reporting into a single, firmwide infrastructure. The result is a consolidated source of truth that gives teams real-time visibility into performance, investor activity, and operational readiness.

As the private markets landscape evolves, GPs must ask themselves: "How do I scale without scaling operational burden and costs?" The answer lies in viewing operations not as a necessary evil, but as an imperative for sustainable success. Operational alpha isn't about cutting costs or working harder—it's about building smarter.

Ready to unlock operational alpha at your firm? Get the full whitepaper featuring detailed insights from senior leaders at LaSalle Investment Management, Mavik Capital Management, StepStone Group, Affinius Capital, and CAB Advisory and discover how these industry leaders have built lasting competitive advantages through culture, structure, and technology.