By Cindy Yendell, Senior Partner, Culture Practice

Ask most leaders what drives value creation and you will hear the usual answers: smart deals, financial discipline, tight execution, and a strong value creation plan. The common belief is that value is a technical outcome. If the model is sound and the playbook is clear, performance should follow.

Yet in my 25 years advising investors and leadership teams, as well as building and selling companies myself, I have learned something different. The technical and financial disciplines matter enormously, but they rarely tell the full story.

What really shapes outcomes is human behavior:  how people interpret risk when pressure rises, how they make decisions when information is incomplete, and how they react when their sense of status or autonomy shifts.

The misconception is that culture is a soft variable, something to “keep an eye on” once the real work is done. In reality, culture governs everything that happens when the strategy meets the people responsible for executing it.

Leaders who understand that psychology sits at the center of value creation make fewer avoidable mistakes, see risks earlier, and move faster with less friction. They read the room as carefully as they read the model, and that combination is what consistently sets them apart.

Bias shapes the deals leaders chase and the risks they miss

In the early stages of a deal, excitement and time pressure can cloud judgment. Even the most seasoned professionals fall into confirmation bias, noticing only the evidence that supports the story they want to believe.

I saw this firsthand on a deal we called Project Falcon. The team was energized by a compelling founder story and strong margins. When a junior analyst questioned customer churn, the concern was dismissed as temporary noise. Months later, churn proved structural.

The issue was not intelligence. Human nature was. Once we become attached to an idea, the mind begins to protect it.

And confirmation bias rarely travels alone.

Groupthink amplifies it: when everyone is enthusiastic, dissent feels socially costly.

Anchoring reinforces it: once a valuation or assumption hits the table, everything else tends to orbit around it – even when new data suggests starting again.

The best investors counteract these traps widening the lens. They designate a challenger in the room, use pre-mortems, and ask very deliberating unsettling questions: What might we be missing? What assumptions are we treating as facts?  If this deal failed, what would the story be?

This does more than reduce risk. It builds a healthier decision culture, one that treats dissent as clarity rather than disruption.

Influence and alignment are psychological, not procedural

As deals move toward close, leaders often assume alignment will follow from logic and well-structured negotiation. In reality, alignment depends on something more human: whether people feel respected, involved, and understood.

Neuroscience gives us a useful frame. Status, certainty, autonomy, relatedness, and fairness (the SCARF factors) shape how people react under pressure. When any of these are threatened, resistance rises even when the strategy is sound.

In Project Atlas, investors believed they could “professionalize” a founder-led company once the ink was dry. Instead, every initiative was met with quiet pushback. The founder was not being difficult; he was experiencing a loss of status and control.

Contrast that with Project Horizon, where investors co-designed decision rights with the founders and acknowledged his achievements publicly. Once people feel seen and respected, their tone shifts. Trust grows. Conversations open.

This is the real engine behind influence. It isn’t persuasion.

It’s Trust Capital - influence earned through empathy and psychological awareness.

This is what keeps people open rather than guarded.

After the deal, culture determines whether value accelerates or erodes

Once the deal closes, value is either created or diluted.  This is where cultural clarity becomes differentiating.

When leaders introduce new systems or reporting frameworks without context, teams often interpret the change as a sign of mistrust. Energy drops, not because the plan is flawed, but because the story around it has not been told well.

Project Orion is a clear example. A fast-moving founder culture felt constrained when new structures appeared overnight. Momentum slowed.

By comparison, Project Summit used the same playbook but framed it differently. The changes were presented as away to scale what already made the business special. People saw themselves in the future state. They felt part of it.

This is identity reframing: connecting who people have been with who they are becoming.

It turns compliance into commitment.

Sustained value creation depends on three levers:

• Behaviors (what leaders consistently model),‍
• Symbols (what gets recognized or funded), and‍
• Systems (how decisions and rewards actually work).
  

When these are aligned, performance feels supported rather than enforced. Teams become more resilient, honest, and decisive—especially under pressure.

Some leaders still believe psychology and culture are important but sit second to strategy or financial discipline. And it is true that no amount of cultural clarity can rescue a company with a flawed business model. However, when two organizations have comparable strategies, capital, and opportunity sets, the difference in performance often comes down to human dynamics. Culture acts as a multiplier or a bottleneck. Leaders who understand this gain an advantage: they see risks earlier, earn trust faster, and create momentum that lasts beyond the first 100 days. Strategy may set the direction, but psychology determines the speed.

Conclusion

The tension at the heart of value creation is simple. Many leaders believe it is a technical exercise, yet the real drivers of performance are psychological.

Culture shapes how people interpret change, how they surface risks, and how they behave under pressure.

For CEOs, CHROs, PE partners, or boards, the invitation is clear:

Treat culture and psychology not as background conditions but as core components of your investment thesis and your value creation plans.

Because when technical precision, financial discipline, and psychological insight come together in decision-making, businesses don’t just execute well-they create value with less friction, more foresight and far greater resilience.

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