EBOOK
Strategies for Creating Operational Alpha
Redefining "Operational alpha"
Constraints on liquidity, driven by macroeconomic headwinds like high interest rates, inflation, trade wars, and geopolitical uncertainty, have created a vicious cycle for private markets GPs. Mired in delayed exits and limited distributions, fund managers are being forced to rethink the way their firms operate and find new ways to build an enduring business where profitability is a core area of focus, not just IRR at the asset or deal level.
"IRR, at this point, is table stakes,” says StepStone Group President & Co-COO Jason Ment. “It's the operational alpha. We also talk about service alpha. Those are what keep clients coming back.”
“Operational alpha” historically refers to driving value at a portfolio company level: optimizing supply chains, improving margin profiles, or professionalizing teams. But a deeper approach to operational alpha is now imperative for GPs, and it's what will separate the proverbial “one-time playoff team” from dynasties.
Operational alpha, redefined: The compounding effect of better decisions, faster execution, and scalable systems built through investments in culture, structure, and technology.
Rather than just cost savings, this approach to operational alpha is about investing in the cultural and technical foundations—everything from the firm's strategy, product road mapping, compensation culture, and succession plan—to give fund managers the freedom to focus on what successful GPs do best: making great investment decisions.
Drawing on insights from senior leaders at LaSalle Investment Management, Mavik Capital Management, StepStone Group, Affinius Capital, Harrison Street, and CAB Advisory, see how leading firms are unlocking operational alpha by:
Fostering ownership mindsets, normalizing experimentation, and embedding rapid feedback loops, so teams can move fast, adapt, and outperform.
Accelerating decision-making, empowering leaders, and creating lateral information flow that allows for scale without hindersome bureaucracy or executional drag.
Consolidating with integrated platforms, centralizing data, and embracing outsourcing to create enterprise-wide leverage, future-proof operations, and lay the groundwork for AI-driven insights.
The long-tail outcome of creating operational alpha? Lasting success.
There are a lot of people out there who can get a couple of hundred million of AUM doing really good deals. The market does not question whether you can do that. They question whether you can scale and repeat it."
Chris Brimsek
Managing Partner and Founder
CAB Advisory LLC
Culture as a catalyst
In an industry where performance is everything, culture is often miscast as a soft asset. That's a mistake.
The highest-performing organizations don't treat culture as secondary to strategy, talent, or deal flow. They build it with intention. Chris Merrill, CEO and co-founder of Harrison Street, has long prided himself on seeing opportunities where others did not—whether investing early in Central Europe or backing student housing before it was an institutional asset. Merrill looks to hire those with the same entrepreneurial mindset to ensure the firm is staffed by those willing to challenge assumptions, look at unconventional opportunities, and embrace new ideas rather than defaulting to “the way it’s always been done.”
This entrepreneurial spirit fuels a culture of learning: every mistake becomes a lesson, and every lesson becomes a process. Across its 1,500 investments, Harrison Street has documented its missteps and codified them into proprietary scorecards that guide future decisions. “We've made mistakes in operating partners. We've made mistakes with the wrong lenders. We've made mistakes with the wrong schools. And that's helped us,” Merrill explains. “Our battle scars are what define our edge.” Merrill ties this culture of open-mindedness directly to the firm's success, as keeping an open mind is how his team safeguards against complacency.
A culture of openness requires meaningful commitment to feedback. When employees are given space to honestly reflect on their priorities, successes, challenges, and what they need to operate effectively, GPs don't just surface individual issues—they reveal trends, friction points, and organizational blind spots in real time, enabling leadership to act quickly and decisively.
Meanwhile, at Mavik Capital Management, every employee—from investment professionals to assistants—receives carry. Why? To hardwire ownership into the firm's cultural DNA. "We think of ourselves as owners of this business, not renters," says Mavik COO Sarah Schwarzchild. “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."
LaSalle Investment Management has taken a similar approach to build a culture of alignment and shared responsibility.
The GP equity in all of our funds almost exclusively comes from employee co-invest. We have our own money in any of the strategies we put into the market…I don't think there's another platform out there that has half [of employees] invested in and aligned on the strategies."
Mark Gabbay
Global CEO
LaSalle Investment Management
Cultural alignment, in turn, encourages speed and flexibility. When Schwarzchild joined Mavik, she heard from numerous stakeholders that their investment process wasn't nimble enough. In a commitment to "extreme flexibility," she decreed the investment committee could meet whenever they wanted or needed, whether that was once a week or multiple times a day. "We have to react quickly to our deals, because that's a competitive advantage. Anything we can do to support our teams in making their decisions better, faster, easier, and with less friction is going to support our mission of providing long-term outperformance."
Takeaway #1:
Using culture to create operational alpha
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Encourage teams to test new ideas without waiting for explicit permission
Embrace experimentation as a core part of operations, not a side project
Leverage insights gained from the things that didn't work as much as the things that did
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Reinforce that failed initiatives are part of the learning process, not a sign of incompetence
Avoid post-mortem analysis paralysis and move forward quickly with lessons learned
Don't let broken systems linger; replace or fix them quickly
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Use purposeful check-ins to surface both friction and wins
Actively solicit feedback from all levels of the organization
Look for themes across teams, not just individual pain points
Maintain flexibility in operational workflows
Don't manage harder, structure smarter
Operational alpha is created not through tighter control but through thoughtful delegation and building systems that empower talented people to do their best work. A good structure allows leadership to set the vision, build the right team, and then step back. Most importantly, it gives firms the ability to do proper succession planning, which is key to building a firm that lasts beyond a single leader or vintage.
As Brimsek points out, "The founders or managing partners are superstar players who came together and won a bunch of games. Then they scaled and became player-coaches. Today, they're coaches. They have to assemble, manage, and incentivize a team of separate people…To get back to this operational alpha point, we can build sustainable deal teams that repeat top decile outcomes.”
Brimsek pushes his clients to think about how their internal structures drive deal-making. "At the end of the day, are there regular instances where you go down the path on a deal and you know that it comes down to the whim of one person on the IC and how they feel that day?" He warns that kind of setup will keep GPs from scaling. Firms need the operational systems in place—people, process, and technology—that make successful decision-making repeatable, not ad hoc.
At StepStone Group, structure is built through a deliberate "disaggregation" of responsibility, as Ment put it. With nearly 1,110 employees globally, department leaders are empowered to operate independently, with clear mandates and full accountability. This approach enables StepStone to harness the full power of its size and scale without slowing executional velocity or compromising on client service. “I would never take on such a role if I didn't have unbelievable confidence in each of the leaders within the organization to help drive success,” he says.
At LaSalle, Gabbay shares that "In the past, if I was running Asia, how much did I really care about what was going on in Europe?" Under his leadership, the firm embraced a more collective approach in order to turn the company from what he called a "series of regional businesses" into a global firm. This required a fine balance between flexibility and cohesion. "While the last thing we want to do is sort of put a lot of rules and regulations and micromanagement around people, given the size of our organization…we all look at decisions jointly. We talk about what's best for the business [as a whole].
Operational alpha can be achieved by moving beyond a structure built on siloed departments—information must flow laterally as much as it does vertically.
Ment encourages leaders to encourage peer-to-peer collaboration not only on problems that they're working on together, but also on things affecting the organization that they may not deal with on a day-to-day basis. "We try to inorganically create situations to drive organic relationships for the future.” For instance, working groups are deliberately formed with members from different functions and regions to tackle firmwide initiatives, ensuring lateral collaboration rather than just top-down direction. Meanwhile, non-investment support teams (like finance, accounting, compliance, legal, technology, operations, HR) are organized to serve the enterprise as a whole rather than siloed business units, encouraging shared accountability. By ensuring the firm's teams are more efficient, “[our clients are] getting the benefit of that operational alpha.”
While the wrapping paper may be different for each client, the underlying structure is often the same. Ment pushes his teams to think about what can be standardized. If it can't be standardized, how can they harmonize so that they're not operating in opposition to one another? And finally, how can they “tolerate the entropy that exists beyond that?” Shared dashboards, enterprise service models, and structured touchpoints not only speed execution but also build resiliency and scalability across the organization.
TAKEAWAY #2:
Creating operational alpha through a well-defined structure
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Ensure information flows laterally, not just top-down
Use shared dashboards, enterprise services, and structured touchpoints to connect teams
Prioritize systems, tools, and processes that make collaboration frictionless
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Focus on assembling, managing, and empowering the right team
Shift from "doing the work" to creating the environment where others thrive
Design systems that can outlast individuals
The power of consolidation
Len O'Donnell, CEO and Chairman of Affinius Capital, understands how consolidation is necessary for driving operational alpha. He spearheaded USAA Real Estate's acquisition of Square Mile Capital and pulled the combined investment management platforms under a new name, Affinius Capital, in 2023. O’Donnell stresses that while M&A can be transformative, it inevitably introduces new layers of complexity and operational stress. “As two businesses,” he admits, "We accepted certain inefficiencies from an operating standpoint.” Successfully integrating multiple systems, cultures, and operations requires patience, clarity, and trust—not just routine playbooks. “It’s a process, not an event.”
Affinius underwent a three-year effort to unify the two platforms, reducing operational drag by migrating off legacy infrastructure, fully integrating the acquired credit platform, and finally centralizing its IT, accounting, and reporting systems. The result: one completely integrated firm built on a unified infrastructure. “Today, the businesses are one hundred percent consolidated through all aspects of the business. It makes us a more powerful firm,” says O’Donnell.
For many GPs, the barrier to building a unified infrastructure isn't a lack of solutions or innovation—it's technological fragmentation. As Ment warns, "Technology is an area where you can spend yourself bankrupt.” Over time, multiple systems, duplicative processes, and siloed data create a hidden drag on performance. The costs show up as bloated budgets, inconsistent reporting, and manual workarounds that slow decision-making and distract teams from higher-value activities. Brimsek argues that layering on too much tech without rethinking workflows actually slows GPs down. He emphasizes the importance of fit-for-purpose tools and the need to look at what's going to make the whole firm more efficient, not just become another system to manage.
Schwarzchild pushes that vision further, underscoring that the real promise of consolidation is real-time visibility. “I love Excel, but that is not the best way to do things. My wish is end-to-end through Mavik’s process, real-time data, no Excel.” For her, a unified source of truth is what enables faster execution, stronger accountability, and more confident decision-making.
This isn't just about cleaning up back office noise; the ultimate goal of consolidation is future-proofing the business. An integrated data warehouse, for example, lays the groundwork for eventual AI adoption, where real-time insights, predictive analytics, and intelligent automation could transform everything from portfolio monitoring to investor reporting. With clean, consolidated data, firms can train AI models to spot anomalies in valuations, flag compliance risks before they escalate, and even personalize LP communications at scale. Without that foundation, AI becomes little more than a buzzword—powerful in theory, but impossible to operationalize. By unifying their operating infrastructure today, GPs create the conditions for AI to work smarter, move faster, and focus on relationships and returns.
TAKEAWAY #3:
Creating operational alpha through consolidation
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Audit your current systems for duplication, manual workarounds, and inconsistencies
Quantify the hidden costs of piecemeal technology: bloated budgets, redundant platforms, and resource drain
Invest in foundational infrastructure that enables faster decision-making
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Invest in a firmwide data warehouse that integrates fund accounting, investor reporting, and investment data
Make clean, structured data accessible to decision-makers
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Automate or outsource repeatable tasks
Let third-party providers or tools handle time-consuming, low-value operational tasks
The discipline behind the edge
Operational alpha isn't a one-time initiative—it's a continuous discipline. It requires rethinking how people are organized, how information flows, and how decisions are made. It’s not about squeezing out marginal efficiencies; it's about building a system that compounds over time, creating leverage as firms scale. In a constrained capital environment, this discipline isn't optional. It's the new competitive edge. To build that kind of organization, GPs need to adopt the three core principles that underpin operational alpha: focus, flexibility, and feedback.
Takeaway #4:
The operational alpha framework
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In many firms, talent and resources are squandered on the wrong work: duplicative processes, manual reporting, or reactive firefighting. When teams are free from distraction and empowered with the right tools, they can focus on what matters most—high-impact, enterprise-value-building activities that move the business forward.
“You can’t be all things to all people. We have a very specific focus. If you're chasing too many different strategies, it’s hard to deliver consistent results.” — Len O’Donnell
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Operational alpha requires designing for agility at every level of the organization, ensuring that the firm can adapt to changing market conditions, new products, or new investor demands without breaking. This means tearing down silos to enable better collaboration across teams and geographies and adopting interconnected technology that evolves with the business, rather than locking teams into disconnected point solutions.
“We fundamentally believe in the idea of empowering our leaders and disaggregating the responsibility… We think about having a lot of transparency around our mission, values, roles, and responsibilities, and then not getting in the way of your leaders.” — Jason Ment -
No matter how well-designed your structure or processes, you can't fix what you can't see. Feedback is the engine of operational alpha, allowing firms to spot friction early, course-correct quickly, and continuously improve over time.
“Something that's key about all of our initiatives is high-frequency feedback. We can also understand where the firm is. We can read across the trends, what people are talking about, and we get a lot of information from [that]." — Sarah Schwarzchild
The time is now
When market tailwinds fade, capital becomes scarce, and competition intensifies, operational alpha becomes the differentiator that will separate the firms that merely endure from those that grow. To do this, GPs need to ask themselves, "How do I scale without scaling operational burden and costs?" Operational alpha isn't just about tightening the budget or working your people harder. It's about becoming more efficient from end-to-end and focusing on turning what has historically been seen as a cost center into a competitive advantage. As the leaders featured in this e-book show, the path to operational alpha is built on a culture that moves fast and adapts, on structures that streamline decision-making without losing control, and on technology that connects people and data in real time. It's a discipline, not a destination.
Get more insights
Listen to the full episodes of The Distribution by Juniper Square now to get more insights into operational alpha.
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Mark Gabbay, Global CEO, LaSalle Investment Management
Episode 29: A CEO’s perspective on risk, culture, and real estate’s return
Listen now → -
Sarah Schwarzchild, COO, Mavik Capital Management
Episode 71: Operational alpha: How to build a high-performance real estate firm
Listen now → -
Jason Ment, President & COO, StepStone Group
Episode 74: From complexity to clarity: Scaling operational models in private markets
Listen now → -
Chris Brimsek, Founder & Managing Partner, CAB Advisory LLC
Episode 79: Operational alpha: Why details matter for GPs
Listen now → -
Len O’Donnell, CEO & Chairman, Affinius Capital
Episode 81: From a 5-page business plan to a $60B of AUM - Patience and perseverance pay off
Listen now → -
Chris Merrill, Co-founder & CEO, Harrison Street
Episode 82: From first mover to market leader: How Harrison Street scaled to $70B
Listen now →
About Juniper Square
Juniper Square is the fund operations partner to more than 2,000 private markets GPs worldwide. Our unified platform connects software, data, and fund administration services to help firms scale faster, streamline operations, and enhance the investor experience. Juniper Square’s technology brings LPs and GPs together and powers everything from fundraising and onboarding to treasury, reporting, and business intelligence. Today, more than 40,000 funds, 650,000 LP accounts, and $1 trillion in LP capital are managed through Juniper Square.
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