Can You See Who is Healthy?

To See What Others Do Not, That Is True Genius.

The Organisational CT Scan: See Beyond the Surface

Using human homeostasis insights to prevent financial collapse

Executive Summary: The Organisational CT Scan – See Beyond the Surface

Organisations, like individuals, often project robust health while masking critical, unseen vulnerabilities. Leaders steer strategy and ensure long-term viability (CEOs, Boards, CSOs). However, relying only on standard business metrics can create a dangerous illusion of control. These metrics often overlook hidden friction or customer disconnects, factors silently paving the way towards financial collapse. History confirms relying on surface indicators is dangerously unreliable.

Treating visible symptoms like high turnover or lagging sales without diagnosing the root cause is costly, unsustainable symptom-based management. This reactive approach fails to address the underlying pathology. It risks deeper dysfunction, a key concern for executives accountable for financial and operational health (CFOs, COOs, PE Investors). The fundamental underlying challenges persist: what is not measured cannot be seen, managed, or fixed.

This paper argues for a crucial shift towards a diagnostic mindset akin to an organisational 'CT Scan'. It presents a framework designed to penetrate the surface and reveal the true internal state of organisational health. This approach moves beyond reactive firefighting. It enables leaders to quantify hidden financial risks and significant unrealised revenue potential. Such potential is often linked to customer disconnects or operational inefficiencies.

Adopting this pragmatic diagnostic view provides critical advantages for the entire leadership team and investors. It empowers informed strategic decision-making, including M&A validation, due diligence, and sustained organic growth strategies. It also mitigates catastrophic threats by addressing missed root causes. Furthermore, this approach unlocks untapped value by pinpointing specific areas for improvement and builds the authentic organisational resilience essential for navigating uncertainty. For those managing brand and customer relationships (CMOs, CCOs, Retail Heads), it offers clear insight into the drivers of loyalty. It also reveals why customer disconnect occurs, directly impacting the bottom line.

Ultimately, this paper provides a stress-tested methodology to gain the foresight needed to move beyond surface appearances, cultivate deep organisational well-being, and ensure sustainable success by addressing the unseen factors that truly determine long-term performance and survival.

1. Introduction: The Illusion of Health

Look around you. Can you reliably tell who is genuinely healthy and who might be harbouring a hidden ailment or illness simply by looking at them? Age, gender, ethnicity, and even BMI are not foolproof indicators of underlying well-being or health. Someone seemingly fit could have high blood pressure or underlying inflammation, which are not visible. While someone appearing less robust might possess surprisingly healthy biomarkers.

These same rules apply to the corporate world. This poses a significant challenge for leaders responsible for organisational stewardship. A company with a gleaming headquarters, impressive press coverage, or strong quarterly earnings – the very surface metrics often reported upwards – might appear to be the picture of health. Yet, beneath this polished surface, unseen issues could be compromising long-term viability and shareholder value.

These might include operational friction, eroding customer trust, or toxic cultural elements. Often, this decline is slow and silent. Judging human health requires looking beyond appearances, akin to never judging books by their covers. Similarly, assessing true organisational health demands a deeper diagnostic approach – one that is unseen and unexplored by conventional methods. This approach must move beyond potentially misleading surface indicators.

This white paper explores how principles of human homeostasis provide a powerful lens to diagnose organisational health. Understanding these principles can help leaders gain the foresight needed. This foresight helps prevent financial collapse before surface symptoms become critical. This isn't just conjecture. Leading research consistently confirms that organisational health is arguably the strongest predictor of long-term value creation. Extensive studies by firms like McKinsey support this view. Indeed, the healthiest companies deliver multiples of the shareholder returns generated by their less healthy peers – a differential directly relevant to CEOs, Boards, and investors.

The critical challenge, however, lies in accurately diagnosing this underlying health beyond broad strokes. Furthermore, it requires understanding its quantifiable impact. Surfacing and addressing these 'unhealthy' unseen markers has been my life's work.

2. Mapping Human Homeostasis: A Model for Organisational Balance

Human homeostasis is the body's remarkable natural ability to maintain a stable, balanced internal environment despite external changes. It maintains a dynamic equilibrium across complex interconnected systems. These systems regulate temperature, blood sugar, hydration, and countless other variables. This ensures our bodies function optimally. Crucially, this internal balance point, or 'baseline', isn't fixed or always optimal. Just as an individual's baseline blood sugar level might settle too high, the body maintains stability around that higher set point. This established equilibrium, the new norm, itself can sometimes be unhealthy, even if outwardly stable.

Being undiagnosed long enough can lead to long-term, often preventable Type 2 Diabetes, which has many unintended consequences, including huge financial and physical implications. Therefore, achieving health might require more than maintaining balance. It can involve proactively 'resetting' or 'recalibrating' the baseline to a healthier, more efficient and optimised level. This requires conscious intervention, such as dietary changes and movement. However, the optimised 'baseline' goal isn't identical for everyone. Each person has a unique homeostatic balance. This is influenced by genetics, lifestyle, environment, and other factors.

This is why 'One size fits all', no matter how beautifully it's packaged, delivers optimal results only for the 'average' person. However, targeting this narrow 'average' means the unique characteristics and untapped potential of the vast majority remain unaddressed.

This concept translates powerfully to every organisation. ‘Organisational health' represents the state of its dynamic internal balance, adaptability, and effective functioning. This state should be viewed relative to the organisation's strategic goals. Understanding this health marker is critical for leadership and involves assessing the following:

• Balance: Equilibrium between competing demands - short-term profit vs long-term investment, innovation vs efficiency, sales targets vs operational capacity, employee well-being vs productivity. Imbalances here often signal underlying stress or strategic misalignment.

• Interconnectedness: Recognition that departments and functions don't operate in isolation. Dysfunction in one area, like poor leadership communication, inevitably impacts others. This can lead to low morale, project delays, or customer dissatisfaction, resulting in measurable performance dips.

• Adaptability: The capacity to sense and respond effectively to market shifts, competitive threats, and technological disruptions, much like a body's immune system. This is fundamental to long-term resilience and survival.

• Contextual Health: Understanding that what constitutes peak health for a nimble tech startup differs vastly from that of a mature, regulated financial institution. Performance must be judged against relevant benchmarks and potential.

Furthermore, maintaining this dynamic balance often involves managing complex internal 'ecosystems' - much like the crucial, symbiotic role the vast gut microbiome plays in human health, influencing everything from immunity to nutrient absorption.

Similarly, organisational well-being depends on fostering beneficial elements: interactions, efficient processes, and value-creating cultural norms (the 'good bacteria'). Simultaneously, it requires mitigating elements that drain resources or create friction (the 'bad bacteria'). All these factors contribute to the overall homeostatic 'healthy' state. Ignoring this unique, context-specific balance is dangerous. Organisations must understand and actively manage it.

Failure to do so is often where organisational 'malaise' and hidden costs accumulate, setting the stage for financial collapse.

This concept of diagnosing an organisation's potentially unseen baseline holds profound lessons for executives and investors. On the surface, a company might appear stable, consistently hitting specific targets - effectively maintaining its 'organisational homeostasis'. However, like the individual with undiagnosed high blood sugar, this unseen malaise might be a symptom of a suboptimal or even damaging baseline – representing significant hidden financial and operational risk and substantial unrealised potential.

Merely reacting to surface symptoms (Section 3) fails to address whether the underlying organisational equilibrium needs recalibration.

True organisational soundness requires moving beyond surface stability. Leaders must interpret health deviations from the current state. Critically, they need to assess (through robust diagnostics) whether the current state represents an optimal baseline. This optimal baseline should support authentic resilience, operational efficiency, and peak growth performance (Section 4).

3. The Danger of Symptom-Based Management

When something feels wrong in our bodies, our first instinct might be to treat the symptoms, and if that does not work, visit our general practitioner or family doctor. Various individual symptoms might appear, each seeming treatable in isolation. Often, they go unnoticed for many years or even decades. However, collectively, certain seemingly unrelated symptoms can be the early undiagnosed signs of a person with unregulated blood sugars, where the damage is already present before a diagnostic is requested or suggested.

For example, consider these specific symptoms, which individually might be dismissed but collectively indicate a much deeper issue:

• being very thirsty,

• passing urine more often than usual,

• feeling tired,

• feeling hungry,

• blurred vision,

• frequent infections (including UTIs),

• and having wounds that heal slowly.

Organisations frequently fall into the same costly and ineffective trap:

• Symptom: High Employee Turnover.

  • Symptomatic Fix: Offer hiring bonuses and implement superficial perks (more free snacks!) – interventions that often require significant, unbudgeted expenditure without guaranteeing retention.

  • Potential Root Causes: Toxic management, lack of career development, poor work-life balance, unclear company direction causing frustration, and feeling undervalued – issues rarely solved by surface-level perks.

• Symptom: Declining Sales.

  • Symptomatic Fix: Initiate aggressive discount campaigns and boost short-term ad spend, which may erode margins and attract unprofitable customer segments.

  • Potential Root Causes: Product/service becoming obsolete, poor customer experiences damaging loyalty, misalignment with market needs, ineffective sales processes – strategic issues requiring deeper analysis, not just promotional pushes.

• Symptom: Missed Project Deadlines.

  • Symptomatic Fix: Implement more status meetings and demand stricter reporting, often increasing administrative overhead without addressing the core bottleneck.

  • Potential Root Causes: Unrealistic planning, resource constraints (staff, budget), poor cross-functional communication, skill gaps, conflicting priorities – fundamental operational or planning failures.

Merely treating the symptom offers no lasting solution. It wastes valuable resources and ignores the underlying organisational imbalance. This reactive approach prevents leaders from understanding the true drivers of poor performance. It can even inadvertently harm beneficial elements. This is much like how broad-spectrum antibiotics can disrupt a healthy gut microbiome while targeting a specific infection.

Organisations treating surface issues with blunt instruments are often driven by pressure for quick fixes. This approach risks damaging efficient teams, positive cultural pockets, or effective informal networks. These represent the very 'good bacteria' essential for long-term health and sustainable value creation.

Failing to diagnose the root cause doesn't just delay solutions. It allows underlying problems to fester. This potentially leads to compounded risks and deeper dysfunction.

4. Adopting a Diagnostic Mindset: The Organisational CT Scan

How do we move beyond symptom-based management to accurately measure and proactively manage organisational health? Leaders need reliable diagnostic tools that can look 'beyond the surface,' much like medical science uses advanced imaging technology.

Imagine trying to predict someone's ten-year heart attack risk based only on appearance. Even adding a standard blood work panel makes this unreliable. Being unreliable has critical health consequences. However, a specific tool like a Coronary CT calcium scan offers more. It can detect hidden plaque buildup. This provides a strong statistical indicator of future risk and enables preventative action.

Therefore, a deep diagnostic tool akin to an organisational 'CT Scan' is essential for informed leadership. Its purpose extends beyond spotting immediate problems or deviations. It must also consider the health of the organisation's internal 'ecosystem'. This includes the balance of productive versus counterproductive norms, information flow, inter-departmental relationships, and the overall cultural 'microbiome' influencing resilience and efficiency.

It helps answer the critical strategic question: Is the organisation simply maintaining a flawed status quo, or is it operating from a truly healthy, efficient baseline? Identifying this is the first step towards the missing 'reset' required for sustainable health and preventing collapse.

Established frameworks like McKinsey's OHI offer valuable insights by benchmarking management practices based on employee perspectives. However, a different diagnostic lens is required for certain tasks. Specifically, for pinpointing and quantifying the direct financial impact of hidden issues, like operational problems or negative customer sentiment. Understanding the precise cost of unseen friction, including the 'unrealised revenue' potential, demands a specific type of framework. This model must be capable of acting like a financial 'CT Scan'.

My proprietary SØRENSEN framework and model serve this function precisely - acting as a pragmatic, stress-tested organisation's 'CT Scan' health check. It moves beyond traditional financial reporting or surface-level surveys to diagnose and quantify a brand's underlying health and efficiency.

My approach was born from curiosity and a decade-long pursuit of clarity, transparency, and transformative growth. It meticulously analyses customer behaviour, competitor strategies, market trends, and operational efficiency. It focuses on the critical link between customer sentiment and financial performance, quantifying the specific impact of factors like customer disconnect or operational friction on the bottom line.

It reveals insights that standard due diligence often misses. These insights illuminate unseen growth opportunities and quantify potential risks. This directly informs strategic decisions, including M&A validation.

The framework and model have been calibrated to calculate a Brand Efficiency Score (BES) to provide a clear, actionable metric for leadership. This score incorporates five key performance indicators (KPIs), each weighted based on its importance to overall brand performance:

• Customer Experience: Measures customer satisfaction with all brand interactions, including service, product quality, and brand image – directly linking sentiment to value.

• Retail Excellence: Evaluates the effectiveness of retail operations, including store experience, online presence, and omnichannel integration – key drivers of revenue and cost.

• Brand Management: Assesses the strength and consistency of brand messaging, marketing campaigns, and brand equity – crucial intangible assets with tangible impact.

• Operations: Analyses the efficiency of operational processes, including supply chain, logistics, and inventory management – identifying sources of friction and hidden costs.

• Financial Performance: Examines key financial metrics, such as revenue growth, profitability, and return on investment – grounding the analysis in traditional measures while providing deeper context.

The Brand Efficiency Score is calculated as a weighted average of these five KPIs, providing a holistic view of the brand's effectiveness in transforming actions into revenue and growth. This score isn't just a number; it's a powerful diagnostic indicator. It directly correlates underlying issues (particularly customer disconnect and operational friction) with tangible financial impact. Specifically, it quantifies the unrealised revenue potential lost due to hidden health problems. It also pinpoints areas for targeted intervention.

5. Case Study: The SØRENSEN Framework in Action: Prada Group Acquisition Analysis - What due diligence won't reveal

To demonstrate the practical application and power of this diagnostic methodology, consider this illustrative case study. This unique methodology has many applications. One example is seen in a deep-dive report examining Prada Group's potential acquisition of Versace and possibly Jimmy Choo.

It analyses each brand's customer base, financial implications, brand performance, and alternative strategies. Standard due diligence might focus on financials, market share, and obvious synergies. However, the SØRENSEN framework revealed key hidden insights often missed by traditional due diligence. These included crucial aspects of customer alignment, quantifiable unrealised potential, and customer sentiment. Such factors are critical for accurate valuation and risk assessment.

Applying the pragmatic, stress-tested framework and model yielded the following Brand Efficiency Scores:

• Prada Group (consolidated view of Prada, Miu Miu, Church's): 33.6%

• Versace: 26.5%

• Jimmy Choo: 35.1%

These scores immediately indicated significant room for improvement across all brands. More importantly, the scores demonstrated the core value proposition highlighted earlier. They surfaced vast, quantified amounts of unrealised revenue potential. This potential was directly linked to customer disengagement stemming from underlying operational and service issues:

• Prada Group: €3.2 Billion unrealised potential, linked to issues like delivery problems, poor customer service, billing/fraud concerns, and gift card policy friction.

• Versace: €717 Million unrealised potential, driven by poor product quality, terrible customer service, delivery/returns issues, and price/quality concerns.

• Jimmy Choo: €380 Million unrealised potential, connected to poor customer service, high prices relative to perceived value, defective products, and delivery/repair issues.

Furthermore, the analysis revealed minimal customer overlap between the brands, challenging assumptions about easy cross-selling synergies. Standard due diligence wouldn't typically expose the depth of these customer sentiment issues. Nor would it quantify their direct financial impact in this way. This leaves potential acquirers blind to significant integration challenges and value traps.

Acquiring brands with significant underlying problems, quantified by the diagnostic score, carries inherent risk. Doing so without a clear plan to address the root causes introduces considerable unseen financial strain and operational risk. For leadership and investors, this insight is crucial: such a move could jeopardise the entire group's health rather than strengthen it.

The framework's diagnostic power extends beyond M&A contexts into deep product analysis as well. For instance, a separate analysis was applied to CHANEL eyewear. It revealed how specific choices in acetate sourcing and manufacturing impacted customer perception of quality. These often misunderstood choices contributed to a significant unseen customer disconnect. The choice of acetate reveals a quantifiable unrealised potential exceeding €222 million.

These examples from the luxury sector illustrate a universally applicable diagnostic capability. Hidden inefficiencies and customer disconnects exist across all sectors. Because of this, the SØRENSEN framework and model are, by design, industry-agnostic. They provide critical insights for retail, consumer, luxury, B2B, and B2C organisations alike.

Its core design is to expose unseen inefficiencies in processes, products, or services. It makes visible the fundamental executive challenge: what is not measured cannot be seen, managed, or fixed. A copy of the full Prada Group Acquisition Analysis - What due diligence won't reveal report findings can be found here, and I hope it offers a helpful perspective on the value of looking beyond conventional analysis.

6. From Diagnosis to Treatment: Addressing Root Causes for Sustainable Futures

Identifying risk via a diagnostic approach like the Brand Efficiency Score is only the first step. A CT scan's findings require interpretation by a specialist. Similarly, organisational diagnostic results demand careful analysis. A practitioner must interpret these results and pinpoint root causes. Only then can they define specific, targeted interventions. This addresses the actual causes, unlike ineffective symptom management.

This is the intersection where diagnosis translates into actionable strategy:

• If the diagnosis reveals customer churn driven by poor service (as seen across Prada, Versace, and Jimmy Choo), the effective 'treatment' isn't just apologising more; it's investing in fundamental service training, empowering frontline staff, streamlining return processes, and potentially re-evaluating quality control to rebuild trust and loyalty.

• If the diagnosis points to operational inefficiencies causing delivery delays, the solution involves systematically optimising logistics, supply chains, and inventory management to reduce friction and cost.

• If brand perception suffers due to a price-value discrepancy, informed strategic decisions about pricing, product quality, or brand positioning are required to realign with market expectations.

Or, as is the case in most cases, a combination thereof.

Organisations build authentic resilience and competitive advantage. They do this by addressing the core fundamental issues – often unseen – revealed by the diagnosis. As of the writing of this white paper, the global economy shows signs we're heading towards recession. Understanding an organisation's fundamentals and root causes becomes even more critical to increase survivability.

Acting on these insights yields multiple benefits.

• It helps reduce friction;

• unlocks significant untapped revenue;

• improves customer loyalty;

• and enhances adaptability.

Ultimately, it creates the foundation (reset) for sustainable growth and prevents the slow decline towards financial collapse. As the Prada analysis suggests, focusing squarely on sustainable organic growth by improving and optimising their customer challenges could unlock €3.2 billion in value across the existing group.

This diagnostic insight presents leadership with clear strategic alternatives. For example, it might reveal a statistically more efficient and less risky path to value creation than acquisition, depending on the market size strategy. Brunello Cucinelli and Hermes are two examples. Both excel at quiet luxury and have executed reliable growth flawlessly. Addressing the fundamental issues revealed by an organisation's health scan unlocks significant untapped revenue and potential. This aligns with broader findings: genuine improvements in organisational health can yield dramatic performance increases, potentially tripling long-term shareholder returns compared to unhealthy peers.

Advanced diagnostics like the Brand Efficiency Score provide leadership with a clear view of the road ahead. They offer a roadmap to target interventions precisely. These interventions should focus where they will unlock the most value. Ultimately, striving for organisational health means looking beyond surface stability. It requires embracing a diagnostic mindset borrowing from the principles of human homeostasis - including the critical understanding that sometimes, an organisation's baseline itself must be reset. But only if you can see why.

Leaders must identify and recalibrate suboptimal operational equilibria. By doing so, they can move beyond mere symptom management. Their goal should be fostering truly resilient, adaptive, and optimally performing organisations capable of weathering challenges and preventing collapse.

7. Conclusion: Cultivating Organisational Well-being

The health of any organisation, like human health, is complex. It often hides beneath the smooth surface, under layers of polished veneer. Relying on outward appearances or superficial metrics is dangerously unreliable for making critical decisions. The dashboard views, often presented to leadership, is like guessing cardiovascular health based only on physique. But human nature is annoying; relying on the surface often seems the easiest and quickest option.

Leaders can gain vital, deep-dive insight into their company's underlying health. This requires embracing homeostasis principles and adopting a rigorous diagnostic mindset – the organisational 'CT Scan' approach.

Methods like the Brand Efficiency Score act as a proactive organisational health scan. Using them enables the shift from reactive fixes to proactive strategy. This allows for the identification of root causes, enabling targeted and efficient treatment rather than ineffective symptom management.

Crucially, this approach unlocks significant untapped value. It fosters authentic organisational resilience. It also provides the essential foresight needed to navigate an uncertain future effectively.

Moving beyond the surface to understand, measure, and cultivate deep organisational well-being isn't just good practice. It's essential for long-term survival and achieving sustainable success. It is key to preventing the catastrophic failure that can arise from unaddressed, unseen weaknesses.