Commercial is the one value creation lever whose metrics don't roll up to its number
A value creation plan has a number for commercial growth. It sits in the revenue bridge, it flows to the EBITDA bridge, and everyone signed off on it. The number is fine. What breaks is underneath it: the functions delivering it each manage to a different proxy, none of those proxies rolls up to EBITDA, and the commercial system grows whatever the proxies point it at.
Why operational targets stay on track
Operational improvement stays aligned because the metrics teams manage to are the same arithmetic the plan is built from. Cost to serve times volume is the cost line. Time to go-live sets when implementation revenue starts. Days in A/R converts directly to cash. Cost per fill, denial rate, and throughput per site all work the same way.
That's what makes the operational levers self-correcting. If a team falls behind on its metric, the plan falls behind by a calculable amount in the same month. The disagreement surfaces while it's small, cheap, and easy to settle.
What four leaders manage to when the plan says growth
Commercial is where the arithmetic breaks.
The sponsor says growth and means EBITDA. The CEO hears revenue. The head of sales hears new accounts, and often isn't watching retention, so they churn and burn through customers. The head of marketing hears satisfied customers and the social proof they feed back into the commercial system, which keeps marketing focused more on existing customers than on winning new ones.
Four people, one word, four meanings.
In the pattern I see, the split shows up in more than one way. I've been in rooms where the market was changing so fast that the internal team was thinking about growth through current customers and current offers, while the sponsor was thinking about growth through innovation, new customers, and new markets. I've been in others where some people at the table wanted to invest to grow revenue or gross profit, and others wanted to grow EBITDA by cutting spend.
None of these readings is wrong. Each proxy measures something real, and each leader is managing to the number they're accountable for. What's missing is the arithmetic that connects any of them to the EBITDA bridge. New accounts don't add up to margin if existing ones are churning out the back. Satisfied customers don't either, if the business never grows past them. Even the revenue line doesn't, because revenue and margin can move in different directions.
Other parts of a plan are hard to measure too. Talent is the obvious one. But talent isn't a line in the revenue bridge. Commercial is, and it's the one line in the bridge whose delivery metrics can't be added up to reach it.
Independently owned companies run the same pattern with an operating plan instead of a value creation plan. The owner is watching one number and the commercial team is reporting three others.
Why the gap opens as the company scales
When a company is small, none of this matters. The CEO sees every account that counts, knows roughly what each one cost to win and what it earns, and corrects course on instinct. The proxies exist, but nobody is steering by them.
Scale removes that. Sales and marketing specialize. The CEO stops seeing every account. Proxies replace direct sight, because they're the view of the work that fits in a meeting. And a commercial system built to grow does what it was built to do: it grows whatever it's aimed at, faster than before. Aimed by proxies that don't reach the bridge, it gets very good at winning the wrong business.
That's why the gap tends to appear as the company scales and not before. Nothing broke. The CEO's direct view used to do the aiming, and nothing replaced it.
How a proxy can climb while the business doesn't
Specialty pharmacy makes this easy to see. Provider sales teams are paid on referrals, so referrals are what the team manages to and what gets celebrated.
But a referral is only the first step. Whether it becomes an admitted patient depends on the pharmacy's limited distribution drug contracts and its payer contracts. What that patient's therapy earns depends on the therapeutic class, and on whether the drug is brand or generic.
So referrals can climb all year while the admit rate stays low, or while the business that does come in carries thin margins. The sales team is on plan. The sponsor is looking at an EBITDA line that barely moved. Both are reading their numbers correctly.
Healthtech has its own version. Companies that sell to health plans often lead with lives under management, because it's the number that grows fastest and reads best in a board deck. But a covered life only becomes margin through the contract behind it. Contracts are priced per member per month, and the largest plans often negotiate the lowest rates. Implementation can take months before fees start. Some contracts put fees at risk until outcomes are proven. Lives can climb sharply while margin barely moves.
No dashboard caused this. The team went where its comp plan and its scoreboard pointed it.
Why the gap doesn't show up in monthly reporting
Each function reports against its own proxy, and each proxy can be on plan. Referrals and new accounts were ahead. Customer satisfaction held. Revenue came in above plan. Nothing in that reporting computes the EBITDA line, so nothing in it forces anyone to notice that the EBITDA line is moving differently.
The sponsor's number is still in the plan. It's just not in anyone's monthly report until the aggregate stops reconciling.
Why the miss gets diagnosed as execution
Some plans fall apart right away because the organization can't execute them: not enough capacity, competing priorities, or a team without the talent or experience to run it. This failure is different. The plan executes, every proxy looks fine, and the plan drifts anyway. In the pattern I see, it takes a year to 18 months to show up in the financials.
By then, the commercial team is out of runway. After a sponsor acquisition, the commercial team has a short window to show it's the right team to deliver the value creation plan. Sponsors replace the people who aren't built for the high-pressure environment PE ownership requires, and that's sometimes the right call. They only clear out the whole team if the whole team needs to go.
But replacing people can't fix a system aimed wrong. The new team inherits the same targets, the same value case, and the same comp plan, and the cycle starts over.
Paul B. Carroll and Chunka Mui studied more than 750 significant US business failures for Billion Dollar Lessons (Portfolio, 2008). They found the leading cause was flawed strategy rather than poor execution.
A commercial system aimed by proxies that don't reach the plan's own number is a strategy flaw of exactly that kind, in my read. Nobody decided which business the plan needed, so no amount of execution against those proxies could deliver it.
Why better reporting won't fix it
The usual response, once a team sees the problem, is to define growth more carefully or report it better. Both help, and neither changes where the system aims.
A better report would have shown referrals climbing while admits and margin stayed flat. It wouldn't have changed who the team targeted, what it led with, or what the comp plan paid for. The next year would look the same, just better documented.
Where the fix sits: aiming the commercial system at the bridge
The fix is upstream of the reporting. The commercial system has to be aimed at the business that moves the bridge, and the aim is set in three places.
Who you target. The accounts the system pursues should start from the bridge line each one would move, not from the volume each one would bring in. In specialty pharmacy, some pharmacies are organized around winning the most profitable business. Others take all of it, including business they're underwater on.
What you lead with. The value case in the room should be the one that wins business worth winning, which isn't always the one that wins the largest accounts fastest.
What comp rewards. If comp pays only on new accounts or new referrals, nobody is paid to keep what you have, and the system will chase volume while the base churns. Rewarding what an account contributes over its life changes which accounts get pursued first, and which ones get kept.
One person is positioned to change all three. Each of the four leaders reads growth through a proxy, the CEO included. But the CEO is the only one of the four who sits across sales and marketing and answers to the sponsor. Sales can re-aim sales and marketing can re-aim marketing. Only the CEO can aim the whole commercial system at the bridge.
How to know the system is aimed correctly
A shared unit for commercial is how you check the aim. It isn't the fix. It's the number that tells you whether the fix is working, and it has four requirements.
Every role's version of growth has to be inside it. If one of the four leaders can't see their own definition in the number, they'll keep managing to the one they can see.
No single function can move it alone. A unit that sales can improve without marketing, or marketing without sales, reproduces the original problem.
Someone outside the commercial team can recompute it. Usually the CFO. A check the commercial team can't be second-guessed on doesn't check anything.
It has to carry cost and margin over the life of the account, not the moment the business came in. A unit that credits a win on arrival will favor volume over value, which is how referrals can climb while the business barely moves.
A unit that meets all four is harder to build than any proxy it replaces. It lags, and it takes the work to trace each account's margin back to how it was won. That's the price of a commercial number that argues back the way the operational ones already do.
Without a shared unit, growth is the one target in the plan nobody can be wrong about early. They can only be wrong about it late, which is when it costs the most.
Dr. Roxie Mooney is founder and CEO of Legacy DNA. Legacy DNA builds the commercial systems that let mid-market PE-backed and independently owned healthtech and pharmacy companies grow, scale, and exit at a premium.
