The best operating partners I’ve worked with share one skill that rarely shows up on a resume: altitude control.
The altitude problem
When an operating partner lands inside a portfolio company, they face an immediate decision — conscious or not — about where to focus their attention. That decision determines everything that follows.
Too low, and you’re debating office supplies while the balance sheet bleeds. You’re optimizing a cost line that represents 2% of SG&A while $15M sits trapped in receivables no one is tracking. You’re in the weeds, solving problems that feel urgent but aren’t important.
Too high, and you’re presenting frameworks to a leadership team that needs someone to help them close the month. You have a beautiful 90-day plan built at 30,000 feet that no one on the ground can execute. The board deck looks great. The operations don’t move.
The best operators hover at 3,000 feet. Close enough to see the terrain. High enough to read the map.
ROIC is the altimeter
In practice, altitude control means one thing: knowing which number to look at first.
Most turnaround teams start with the P&L — revenue, margins, cost structure. That’s ground level. Important, but reactive. You can spend months optimizing individual cost lines without ever asking whether the capital in the business is generating an adequate return.
The operator at 3,000 feet starts with ROIC. Because ROIC tells you something the P&L never will: whether the capital invested in this business is working or just sitting there.
A company can have reasonable margins, growing revenue, and positive EBITDA — and still be destroying value. The P&L won’t show you that. ROIC will.
Two dials, not twenty
From ROIC, you decompose into exactly two levers:
Dial A — Operating margin. Is the problem in pricing, cost structure, or product mix? If margins are compressing while revenue grows, the issue is usually portfolio complexity: too many SKUs, too many customer-specific terms, too much overhead that scaled linearly with revenue instead of being absorbed by it.
Dial B — Capital turnover. Is too much capital trapped in the operation? If capital turnover is declining, the issue is usually working capital: excess inventory, slow-paying customers, or fixed assets that aren’t generating proportional revenue.
That decomposition is your altimeter. It tells you exactly where to zoom in — and what to ignore.
The wrong altitude produces the wrong diagnosis
A portfolio company with healthy margins but declining ROIC doesn’t need a cost program. It needs someone to find the capital that’s trapped in inventory, receivables, or underutilized assets. Launching a cost reduction initiative in that company is treating the wrong disease — it might improve EBITDA temporarily, but ROIC will continue to decline because the problem was never in the P&L.
A company with strong capital turnover but compressing margins doesn’t need a working capital sprint. It needs someone to fix pricing, renegotiate contracts, or rationalize the product portfolio. Running an accounts receivable collection program in that company is wasted energy — the cash conversion cycle is fine, the margin structure isn’t.
The altitude you fly at determines what you see. The wrong altitude produces the wrong diagnosis. The wrong diagnosis produces a plan that looks good in the board deck but fails on the ground.
Why this matters for PE sponsors
When a sponsor deploys an operating partner into a struggling portfolio company, the implicit question is: what’s wrong, and what do we fix first?
The OP who starts with a cost-cutting playbook — headcount reduction, vendor renegotiation, overhead consolidation — is operating at ground level. These actions might be correct, but only if the diagnosis supports them. Without first understanding whether the problem is in the margin structure or in capital efficiency, every intervention is a guess.
The OP who starts with ROIC decomposition has an altimeter. In one analysis, they know whether this is a Dial A problem (fix the margins) or a Dial B problem (free the capital). From there, the playbook writes itself — because the diagnosis drives the intervention, not the other way around.
The sequence that works
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Calculate ROIC — the real number, not the adjusted version. NOPAT divided by invested capital. This is the honest measure of whether the business is generating value.
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Read the two dials — is ROIC declining because of margin compression or capital inefficiency? The DuPont decomposition answers this in one step.
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Zoom in on the right dial — if it’s a margin problem, dig into pricing, cost structure, and mix. If it’s a capital problem, dig into working capital, capex, and asset utilization.
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Ignore the other dial — this is the hardest part. The best operators know what not to fix. A working capital sprint in a company with a margin problem is wasted motion. Discipline means accepting that some things can wait.
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Execute at ground level — once the diagnosis is clear, drop to ground level and execute. Weekly cadence, clear milestones, quantified targets. This is where the work happens.
The sequence is altitude-dependent. Start at 3,000 feet (ROIC), identify which dial is off, then descend to ground level on the right problem. Skip the altimeter step, and you’re guessing.
The altimeter, not the playbook
The best operators don’t start with a playbook. They start with an altimeter.
The playbook comes after the diagnosis — not before. And the diagnosis starts with one number: ROIC.
At Sintelo, we build the altimeter. ROIC decomposition, lever identification, and value bridge — delivered in 2-6 weeks at fixed fee. The diagnosis drives the plan, not the other way around.