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The Value Creation Imperative

A three-part series on where business value really comes from, once growth can no longer simply be bought.

  • For a long time, growth could be bought: more people, more capital, more footprint. 
  • Longer holds and harder exits have changed that, for PE-backed and corporate businesses alike. 
  • Value now has to come from performance, which means getting more from the people and capital you already have.
  • This series sets out how to measure that, how to tell whether your last gains were bought or learned, and what to do next. 
  • The analysis draws on the published accounts of companies you'll know, so the thinking can be tested against your own numbers.
  • Written by Andrew Roberts, founder of LIME Group and a former Mars and Wrigley operator.

Series Content at a glance

Measure.

 What does value per person tell you about your business? Paper One 

Mechanism.

  What actually drives value per person?  Paper Two 

Map.

  Were your gains bought or learned, and where should you go next?  Paper Three 

Multiplier.

 Engagement is the multiplier on growth and efficiency. Runs through all three 

Paper One

How private equity creates real business value

When the easier sources of return do less of the work, the value in a business has to come from how it performs. Paper One sets out a practical frame for that: price, volume and cost as the levers, and efficiency that funds growth rather than competing with it. It proposes revenue per head as a North Star, a single number that shows how a business turns people into revenue. It also introduces the thread that runs through the whole series: engagement as the hidden multiplier on everything else. 

Paper Two

More from the Same

Apple, Amazon and Nestlé report almost identical gross margins, between 46% and 47%. Yet the value each creates per person differs by 6.5 times. Paper Two goes one line deeper than revenue per head, to gross profit per head. It breaks that into three parts: the margin you keep, how hard you work your capital, and how much capital sits behind each person.

Paper Three

Bought or Learned

Put two questions together: how much of your capacity is in use, and whether your last gains were bought or learned. Answer both and you know what kind of growth problem you actually have. Paper Three turns that pairing into a map. 

It sets out four positions a business can occupy, what each one calls for next, and where some of the world's best-known companies sit today. 

Most growing businesses cycle between two of them. 

Only a decision takes them to the fourth. 

Downloads

Where does your business sit?

The papers work from the outside in, using published numbers. 

The inside work starts with a conversation: what is really driving your numbers, and what would move them.

If the questions in this series are ones you're asking of your own business, we'd be glad to talk them through. 

The first conversation is about your numbers, not our services.

P1 The Value Creation Imperative (pdf)

Download

P2 More from the Same (pdf)

Download

P3 Bought or Learned (pdf)

Download

P3 Methods Note (pdf)

Download

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LIME Group | Value Creation

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