Operational Alpha in Practice
What Top Private Markets Leaders Are Doing Differently
In the latest episode of The Distribution podcast, I sit down with Jason Ment, President and Co-COO of StepStone Group, a leading private markets firm to dive deep into operational and service alpha.
Below is what I learned from Jason along with my perspectives on what I have learned so far in my deep dive series on operational alpha where I have interviewed operational leaders across private markets.
The Playbook from StepStone: What GPs Can Learn
Operational and Service alpha can work at scale but you need a few things to make sure it happens the right away.
A culture of change. The organization has to understand the mission. You need to trust your key leaders and you need to repeat, repeat, repeat the message.
Having good data helps with monitoring the business and performance. Invest in tooling like dashboards and BI to help you understand your business. Doing so early will pay dividends down the road. Reporting isn’t a PDF—it’s a 24/7 dashboard.
Put clients first. If clients are successful and happy, your business will grow. Client education isn’t a pitch deck—it’s secondments and hands-on training. It’s flexibility and customization… at scale. Never loose sight of the client since without them, you have no business.
Operational alpha is internal. Service alpha is external. Together, they drive client satisfaction measured by retention and growth.
“So that to us is probably the most obvious vote of confidence that we're bringing to bear, not only good investment returns, but IRR at this point is table stakes. It's the operational alpha. And we also talk about service alpha. And those are what keep clients coming back as well.” - Jason Ment from episode transcript
Standardize What You Can, Harmonize the Rest
The wrapping paper changes (interval funds, BDCs, SMAs), but the “bones” of operational process must be scalable.
“What parts can you standardize, what parts can you harmonize, and then tolerate entropy at the edges?”Jason Ment
Don’t Build Alone—Buy with Intention
StepStone tests new software at the department level. If it works, they scale. If it doesn’t, they build only what’s truly needed.
“We decide buy or build on pretty much every software use case. And I like to bring in different people to debate it. Like our programmers, they're fantastic and they'll code up anything we ask them to. And they do it faster than I think they can and better than I could have imagined. But that's not always the most efficient way to do things..”Jason Ment
Looking back on the last 3 discussions I have had on Operational Alpha in private markets as part of The Distribution podcast, a few themes have emerged:
1. Operations as Strategy, Not Support
All three leaders treat operations as a strategic function embedded in capital formation, portfolio construction, and investor experience—not just execution.
GP Lesson: If you don’t have a strategic operational leader, find one. If your strategic leader is not at the decision making table, put them there. Stop treating ops as reactive. It will help you look over horizon zero. Make it core to how you scale your business. It will give you flexibility.
2. Data Architecture as the Foundation of Alpha
Each leader calls out clean, structured data as the prerequisite for unlocking technology, AI, and client value.
GP Lesson: Your data should not be an afterthought. The days of “I will figure it out later” are over. Treat data like it’s your best people/your capital. You can’t scale complexity—or transparency—without it. Invest in people and system that will help you make sense of your data and you will create leverage for yourself and your team.
3. Customization Without Chaos
All three emphasize the need to balance client flexibility with internal scalability.
GP Lesson: Build flexibility into repeatable systems, not around them. Don’t be afraid to break the model. Yes - this may mean doing this the old fashion way. The first question doesn’t always have to be “can I automate it” but rather, “is this what the client needs” and if you solve for that… at scale… you will be able to see where you can unlock efficiency.
4. Empowered Leadership and Talent Leverage
Overlap: Strong operational talent—and how you empower it—is central to scale.
GP Lesson: Trust your colleagues. Delegate what you can and know your role. As a operational leader your role is not to be in the details but to ensure all the trains are on time, entering and leaving the station. Most strong operational leaders I speak to prefer to promote from within. A great way to do this is to start with a special project. Remember, you may see something in people that they don’t see in themselves (yet). You can lead them there. Your best strategic ideas will die in weak org design.
5. Change Management as an Ongoing Discipline
Each leader reinforces that scaling operations is not a project—it’s a permanent, iterative process.
GP Lesson: Build muscle around change management. Adoption matters more than design. To do this, your teams need to understand the “why” or the mission. Why do you want them to change? What impact will it have on them? Everyone always thinks about the worst case scenario. You need to ensure your over communicating every change, even when it seems so basic and obvious.
High performing organizations expect change. They expect progress. They expect failure. There are all signs of success.
Despite differences in scale and strategy, all three leaders converge on a shared operating philosophy: operational excellence is a competitive moat in private markets. GPs who treat ops as strategic infrastructure—and invest accordingly—will be better positioned to scale, differentiate, and deliver lasting investor value.
If you know a private markets operational leader that has a unique aproach to operational alpha, please send me a message with your suggestion.
Resources:
Jason Ment - President and CO-COO at Stepstone Group
Jay Maher - Global COO at H.I.G
Sarah Schwarzchild - COO at Mavik Capital