Tuesday, August 19, 2008

In one door, out another

On the surface, the two don't appear to be connected. Lou Gerstner's decision to step down as chairman of The Carlyle Group comes as little surprise, while serial private equity executive Greg Brennerman's move to a smaller fund leaves even less suspense.

Do they know something we don't? It's likely that they do but don't tell them that. We can't take anymore hubris than what already exists.

With private equity deal flow down, premium on proven niche has increased. So has getting back to what business is about vs. what some PEGs have tried to dictate.

Business leadership is about finding ways to grow, and if that can't be done right way, getting into future position to do so. Private equity investors' role is to squeeze every dime or nickel out of a business -- often to the point where it's impossible to invest in what needs to be invested in to grow. They often want quick fixes, such as big name talent, when building an organization is the best solution.

We're not suggesting that every PEG has this philosophy or that some don't strike a balance. Certainly there are fund investors taking a longer view.

The larger net effect, however, has produced an adverse impact on the marketplace. It's transactions at all costs, or in this case, fewer costs and fewer deals. Relationships and building for tomorrow have been replaced by greed and squeezing margins for short-term ownership reward. Some may say that's the name of the business game. But we're not buying it and suspect others who have led businesses through ups and downs aren't buying it either.

Maybe Gerstner will treat us to his views on private equity sometime soon. "Who Says Elephants Can't Dance?" remains must reading for any aspiring leader.

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Tuesday, August 12, 2008

Public apology, take seventeen

John Edwards' mea culpa should lock the door shut on a 24-7 culture phenomena otherwise known as the public apology spectacle, take seventeen.

We're a nation of many things, but empty apologists, we are not. In Edwards' case, his attempt to come clean came after years of lies, millions of dollars in hush money and potential violations of federal election law. Sorry, dude, but the time to apologize came and went awhile ago. What's really scary here is how this same individual came close to becoming vice president and that his wife, a lawyer in remission with cancer, felt compelled to defend her husband's latest indiscretions. Truly amazing. We have now arrived at full scale public delusion.

Some private sector leaders probably look at John Edwards and say to themselves, "oh, he's in the public eye, that's why he got caught." While that may be technically true, it's misguided rationalization that needs no projection. YouTube will gladly show what you think no one else is watching -- no matter whether you're a CEO of a publicly traded company or leader of a small town school system. If that doesn't make the case, then maybe a passage from the New Testament will: Nothing is hidden that will not be revealed, and nothing is secret that will not be known and come out into the open. (Luke 8:17)

Leaders, if you do something that requires saying you're sorry, please do so privately and then exit the stage gracefully without further word. "This is a private matter" has a much better ring these days than "I'm sorry, but let me tell you what really happened."


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