How to Build a Company Culture That’s Sustainable in Any Market

This is a Guest blog post from Ines LeBow.

10 Quotes on Organizational Change To Inspire Teams | Change ...

 

Herodotus, the ancient Greek intellectual who became known as “The Father of History” coined the phrase “Culture is King”. Companies rise and fall based on their culture, and challenging situations like we’ve faced here in 2020 test company culture to determine if it’s real or just a façade. In a recent article, I gave advice on how to “Pandemic-Proof Your Funding Pitch Deck”, but as an entrepreneur, are you really able to pandemic-proof your company culture? The answer is a resounding “yes”! In fact, you can create a culture that thrives in any market situation, including Covid and beyond.

 

Leadership-Driven Culture

 

How you, the entrepreneur, and the executive team lead at the outset of your business and through “normal” times sets the tone for your culture that will carry you through times that are trying. As Frances Hesselbein so succinctly put it, “Culture does not change because we desire to change it. Culture changes when the organization is transformed; the culture reflects the realities of people working together every day.”

 

For the leadership team that truly prioritizes the culture of their organization, there are a few core values that will be emphasized down the management ranks to the front-line employees and a call to have the actions of all personnel align with these values. The top core values include:

 

  • Two-Way Communication – Consistent and ongoing opportunities for the executive team to interact with staff (both speaking and listening) and for all team members to interact with customers (again, both speaking and listening)
  • Engagement – Fostering a sense of ownership and a common purpose throughout the organization to energize all employees and get them working toward a uniting vision
  • Wellness and Balance – Setting policies that value employees’ work-life balance, mental and physical health, and general wellness
  • Programs and Tools – Enacting programs and implementing tools that allow employees to thrive in personal and professional development, workplace collaboration, idea innovation, mobile and remote work setups, knowledge sharing, and more

 

 

The combination of forced and voluntary business shutdowns that occurred nearly overnight as a result of the Coronavirus response quickly led to 88% of companies that either required or encouraged their employees to work from home, according to a Gartner survey. Some companies were ill-prepared for this rapid shift. Many of the companies with the technical capabilities for hosting a truly remote workforce, however, lacked the type of culture that would keep employees engaged, communicating, and thriving when not in an in-person environment.

 

Having a great framework in place is essential and must include employees who come to a physical office location as well as employees who work from home, in the field, or from a remote office. As companies return to work, executives and board members are going to re-imaging how the company operates. The old approach of leasing large office spaces may alter significantly, causing companies to adopt a more aggressive mobile and remote work model. Re-thinking how these core values that contribute to the corporate culture can be dealt with is just as important to strategize over.

 

To learn more about creating an engaging culture or how to create an epic fundraising story for digital presentations to investors, contact me for a complimentary consultation by phone at 314-578-0958 or by email at ilebow@transformationsolutions.pro.

 

Ines LeBow is the CEO, Transformation Executive for ETS. She is a known catalyst for business operations, bringing 30+ years of hands-on experience. Ines has a long history of being recruited into senior executive roles to improve the execution of business operations and to drive revenue growth. You can see her LinkedIn Profile at http://www.linkedin.com/in/ineslebow, view the ETS website at http://www.transformationsolutions.pro, or email her directly at ilebow@transformationsolutions.pro.

How to Hire a Stellar Sales Team to Accelerate Your Recovery

This is a Guest blog post by sales and sales management expert Chris Tully.

 

 

How to Hire a Stellar Sales Team to Accelerate Your Recovery 

If there is a silver lining to the pandemic-related economic shut down, it is that a lot of excellent salespeople are now available and hungry to contribute to your business. The opportunity here is to rehire your best performers and then build a stronger team than before.

To hire a stellar sales team to accelerate your recovery, you need a plan. Here are some things to consider that will help you create an excellent hiring plan.

 

1. Are your business goals different than before the shut down? 

In the past few months, you’ve had time to really think about your company. You may have revised your strategic business plan and reprioritized your goals. If so, take a look at your new focus and figure out, “what sort of sales power will get me there?”

As an exercise, picture your previous sales team. Imagine how they would – or would not – achieve your new goals, and what sort of salespeople you need going forward.

 

2. Are you clear about the sales role?

What is it that you really want your ideal salesperson to do day to day, and accomplish overall? What specific skills would that person need? Most importantly, be clear about the personal attributes of the ideal person to represent your business.

3. Are you willing to invest in a professional recruiter? 

Sure, LinkedIn JobsIndeed, and other free job posts or low-cost ads will get responses. But you and your HR people will spend an inordinate amount of time sifting through a lot of junk to get to the few gems. Unless you’re adding entry-level people, don’t cheap out – invest in a professional recruiter, particularly if you’re looking for experienced sales professionals with a proven track record.

Talent recruiters screen against your hiring profile, verifycandidates’ work history, and validate their self-stated strengths and accomplishments. Recruiters also help you find employed candidates who are not looking for a job but who may be perfect for your business.

 

4. Do you have your sales incentive structure worked out?

Although it isn’t a jobseeker’s market right now, people are still going to ask how they get paid. That’s completely reasonable. As the job market strengthens, candidates who know their worth are going to hold out for appropriate compensation. In addition to your hiring plan, you’re going to need an incentive plan to attract and retain the caliber of salespeople you expect.

 

5. What third-party tool are you using to assess candidates?

Third-party assessment tools are a must with hiring decisions. Let’s face it – salespeople are often chameleons. They are trained to probe for needs, listen actively, and position their products (themselves, in this case) in the best possible light to solve your problem.

You need some objectivity to balance those impressions, especially if you don’t hire that many people each year. There has been a lot written about the cost of a bad hire, which I won’t repeat here. Get some help!

These are three salesperson assessment tools that I recommend: 

6. Do you have an effective on-boarding process?

It’s important to have a well thought-out plan to get new sales hires acclimated to their role in your company. For that, you need to a road map that new hires can follow (as well as trainers) so nobody gets lost.

 

7. Can you “hire slow”?

This last question is a trick one: the answer has to be “Yes.” You’ll want to take your time and think about the answers to all of the questions I’ve laid out, in order to hire superb salespeople. It’ll be so worth the time and effort when the right team propels you to reach – and exceed – your goals.

 

 

 

 

 

Chris Tully is Founder of SALES GROWTH ADVISORS. He can be reached at (571) 329-4343 and ctully@salesxceleration.com

“For more than 25 years, I’ve led sales organizations in public and private technology companies, with teams as large as 400 people, and significant revenue responsibility.
I founded Sales Growth Advisors to help mid-market CEOs execute proven strategies to accelerate their top line revenue. I have a great appreciation for how hard it is to start and grow a business, and it is gratifying to me to do what I am ‘best at’ to help companies grow faster and more effectively.
Let’s get acquainted. I am certain I can offer you an experienced perspective to help you with your growth strategy.”

CONNECTpreneur enters our 9th year with a bang

Recently, I was interviewed by the Montgomery County Economic Development Corporation about The Big Idea CONNECTpreneur Forum, of which they are a sponsor. Following is the transcript of the interview. I have been a Board Member of this tremendous organization for the past 4 years.

CONNECTpreneur recently entered our 9th year. To date, we have hosted 47 events, the last 4 being “virtual” events. Over 20,000 business leaders, investors, and entrepreneurs from around the world have attended our events. Our website is connectpreneur.org. Please check us out!

 

THE BIG IDEA
CONNECTPRENEUR FORUM

IN CONVERSATION WITH TIEN WONG, CEO, OPUS8, AND
FOUNDER & HOST, CONNECTPRENEUR

Get to know CONNECTpreneur, a unique forum which attracts the region’s top entrepreneurs, investors, innovators and game changers. Organizers of the top tech and investor networking events in the region.

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WHY IS IT IMPORTANT TO MAKE CONNECTIONS BETWEEN BUSINESS LEADERS OF ALL STRIPES – CEOS, VCS AND ANGELS – TO EARLY STAGE COMPANIES?

Not just for early stage companies, but all businesses of all sizes, the old adage, “It’s not what you know, it’s who you know,” still applies very relevantly. People want to do business with people. Early stage companies, in particular, have many needs: capital, talent, customers, vendors, partners, product development, marketing, etc. and having a large and deep network gives an entrepreneur a huge advantage in the marketplace, for obvious reasons. There is a proven correlation between the size and quality of one’s network, and one’s overall success — in entrepreneurship and most endeavors.

 

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WHAT IS THE SECRET SAUCE THAT MAKES CONNECTPRENEUR A TOP TECH NETWORKING EVENT IN THE REGION?

It’s our ability to attract the region’s top entrepreneurs, investors, innovators and game changers. We pride ourselves on organizing the top tech and investor networking events in Montgomery County and the Washington region as a whole. We think that the reason that over 70% of our surveyed attendees rate CONNECTpreneur as the “number one” tech and networking event in the Mid-Atlantic region is because of the high quality and seniority of our attendees, which is unprecedented. Over 20% of our attendees are accredited angel investors or VCs, over half are CEOs and founders, and we intentionally keep the ratio of service providers as low as possible. This makes for more meaningful connectivity among the participants.

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HOW DOES CONNECTPRENEUR SUPPORT FEMALE ENTREPRENEURS AND ENTREPRENEURS OF COLOR?

CONNECTpreneur is very intentional about providing a diverse set of presenters and speakers in our programming. Our community of entrepreneurs and investors is highly diverse, and our selection committee is very tuned in to the benefits of gender and cultural diversity. We actively work with and partner with local, regional, and national players who share our values of “double bottom line” ethics which value social impact as well as financial gain. Some of our partners include Maryland Tech Council, TEDCO, Startup Grind, Founder Institute, Halcyon and Conscious Venture Labs to name a few.

 

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WHY IS MONTGOMERY COUNTY A GOOD LOCATION FOR AN INNOVATIVE STARTUP COMPANY? AND, WHAT’S YOUR BEST ADVICE FOR SUCCESS?

Montgomery County is a top tier County nationally for startups, and that’s evidenced by numerous awesome success stories. MoCo has a tremendously educated talent base, world class government institutions, top schools, and a large base of angel and high net worth private investors who can provide seed funding. The best advice for success is to understand thoroughly your customer and their needs and pain points very deeply. That way you can get to “product market fit” more quickly, de-risk your opportunity, and be more capital efficient. Too many companies get enamored with their product and design, or culture, or getting media coverage whereas the true essence of any successful business is to provide excellent products and solutions to its customers and sell into their markets like crazy.

 

WHAT ARE SOME UNIQUE CHARACTERISTICS OF AN EARLY STAGE COMPANY THAT SPARK YOUR INTEREST TO EXTEND AN INVITE TO PARTICIPATE IN THE FORUM?

We are looking for presenting companies which have truly disruptive ideas, products and/or solutions which could be sold into huge markets.  And of course, the most important criteria are the quality, expertise, and coachability of the founding team. We have had presenters from all kinds of sectors including life sciences, cyber, telecom, blockchain, wireless, mobility, e-commerce, marketplaces, fintech, medical devices, IoT, etc.

Learn more about CONNECTpreneur at our website: connectpreneur.org

 

 

 

Next Mission: Co-founder, Seth Goldman, exits Honest Tea to focus on plant-based “meat,” a segment of the $300 billion meat category

This is a Guest blog post from Janice Mandel.

It made sense to sell to Coca-Cola in 2011 for greater distribution, scale and purchasing power. The Honest brand is selling billions of servings through McDonald’s, Subway, Chick Fil-A, and Wendy’s while supporting communities through fair trade and a healthful alternative. He says that his work with McDonald’s alone has removed 1 billion calories from the American diet.

CONNECTpreneur founder, Tien Wong (L), interviews Seth Goldman at George Washington University.

 

 

Seth said his company has been connected to Coca Cola for longer than it was an independent company: “The brand has its own life, its own momentum. The teams in Atlanta and Europe we’ve seen they’re doing the right thing with the brand. They are innovating the right way and it’s large enough that I can’t see anyone saying ‘Let’s make it sweeter or discontinue certifying it as organic or Fair Trade.’  I’m not putting a toddler out into the world. This is a 22 year old entity with its own personality and it’s strong enough to survive on its own.”

What’s Next?

Seth remains Executive Chair of the Board of Beyond Meat and says he will continue to support the alternative protein brand as it pursues its mission to transform the supermarket’s meat case into the protein case.

He summarized Beyond Meat’s approach: “Rather than define meat by its origin, which says meat always comes from animals, we’re going to define it by its composition. So when you look at it that way, meat is just an assembly of amino acids, which form the proteins; lipids that form the fats, 70% water and some trace minerals and carbohydrates.”

Although some are concerned that products such as Beyond Meat are “processed,” Seth says it is produced with the same equipment used to extrude pasta. And, the sustainability benefits are well worth pursuing.

“It will take 2 1/2 worlds to feed the growing population the same kind of protein diet we have in the United States, but we have only one,” Seth observes. The brand counts the Bill and Melinda Gates Foundation among its early socially responsible investors out to feed the world responsibly.

Seth also remembers fondly another major “investor” without whom Honest Tea would not have been able to fill its first order for 15,000 bottles for Fresh Fields, which became Whole Foods. He’s referring to the bottle supplier in Pennsylvania who helped him respond to the cyclical nature of the beverage industry by agreeing to extend payment through each difficult winter.  Seth is proud of bringing the payments each spring, well before the seasonal 90 day payment terms were up. The weekend before his fireside chat at GW, Seth learned the bottle supplier who had believed in him since the beginning had passed away.

“I would not have been able to succeed without him,” he says.

Read more about Seth Goldman’s detailed account of his co-founding Honest Tea here.

About Janice K. Mandel

I’m a multimedia storyteller following evolving voice-first opportunities. Early adopter experience in New York City included: Sr. Editor, EIC/Intelligence, the first online, commercial database (1980s);Communications/Voice of Equinta.com, like Zillow but in 1999; and Reach networks — like Mosaic, only four years sooner. I’ve recruited speakers for VOICE Summit (https://voicesummit.ai) and conducted its microcast leading up to the event. Would love to do more microcasting in the future.

 

Smart People Might Be Killing Your Strategy

This is a Guest blog post from Mark Haas, CEO of the Association for Enterprise Growth. He helps boards and executives create powerful strategies to help them make decisions with greater confidence, impact and pride.

 

Fotolia_60434083_SCorporate restructuring, M&A, competitive intelligence, strategy, new product development, and process reengineering.   One thing required for success that they all share is the need for the best and brightest. The smartest person in the room. World class minds to solve world class problems. Top grads from the best schools.

I disagree. While intellect has its place in business, being smart is no replacement for creativity, agility, innovation or insight. Yes, sometimes these capabilities are rolled into one person, but rarely.  Several decades helping clients create strategy has led to some insight into where smart is a help and where it can be deadly.

You wouldn’t want only the “smartest” surgeons, engineers, artists or teachers wholly responsible for your welfare. You’d want the right team of individuals, each bringing appropriate skills for the task. Creativity is about being able to see alternatives. Agility requires anticipation. Innovation is more about flawless execution than the up-front ideas. Insight needs, well, a lot more than intellectual horsepower.

The Risks From Being Smart

Being smart has a huge downside for humans. It derives from how we were raised, trained, rewarded and placed in corporations. As children, most of us were rewarded for being on time, orderly and respectful of adult norms. In school, being smart was equated with getting the “right” answer, quickly. Most professions promote a body of knowledge that implies adherence to widely accepted professional standards. Our advancement in most business settings is a result of knowing the right people, performing well on tasks and knowing the rules of promotion. All this seems appropriate because it is so familiar.

In strategy formation, high intellect can be a hindrance; in a team of only “the smartest of the smart,” it can be a disaster. Especially in an increasingly VUCA world, there is no single answer and the first answer is often not the best answer. For the highly intelligent person, the learned (both personally and socially) rigidity and linearity of problem solving to reach an elegant, perfect solution gets in the way of seeing the possibilities of which powerful strategies are made.

Use Smart, But Leverage It

The solution is not to ban smart people from the strategy team. Rather, recognize that the skills you need for a powerful strategy team go far beyond intellect. A high-horsepower car engine is great in theory but is useless without fuel injectors, cooling system and brakes. Fill your team with staff (this also applies to external advisors) who can turn off their brains for a bit and participate more fully in the other essential parts of the strategy process.

 

Mark Haas is CEO of the Association for Enterprise Growth. He helps boards and executives create powerful strategies to help them make decisions with greater confidence, impact and pride. He works with companies and nonprofits to develop strategies, create and validate business models, and execute with discipline. Mark is also an international trainer, facilitator and speaker in ethics, strategy and performance management. He can be reached at  mhaas@enterprisegrowth.org and (301) 442-5889.

Musings about Work, Equality, Social Justice and Capitalism: Human Capitalism

This is a Guest blog post from Jeff Cherry, Founder and Managing Partner of The Conscious Venture Fund and Founding Partner of The Laudato Si Startup Challenge. He is a tech CEO and mentor, investor, philanthropist, and community builder.

 

What comes next?

I recently listened to a thought-provoking episode of the TED Radio Hour on NPR entitled What We Value. Its premise was that this economic and societal crisis in which we find ourselves is accelerating the move towards a new set of values when it comes to the practice of capitalism. Those of us in the social impact and Conscious Capitalism space are heartened to see this discussion gaining momentum, but the question remains: How will capitalism change now that the unhealthy state of business and our major societal institutions have been laid bare?

There are many indications that this shift was in the offing far before the onset of the coronavirus pandemic. Although late to the game, the statement released by the Business Roundtable in August 2019 signaled a transformative move away from the outdated notion of shareholder primacy and towards a more human and effective form of business. It certainly garnered the attention of the press. And others in the business mainstream who had been either unaware or hostile to the market forces driving this change, are now finding it hard to ignore discussions of stakeholder management and whether business should have a broader role in society.

These ever-expanding discussions about the purpose of business in society are now taking place in the context of what does a return to “normal” look like in the economy. And a growing sentiment that the normal we were experiencing — where greed, inequity, declining living standards, crony capitalism, rent-seeking, regulatory capture, share buy-backs, corporate welfare and environmental depletion were the norm — isn’t in fact normal. Nor a state of being for which we should collectively yearn. As you might imagine, I agree.

The challenge we face now then, is how do we actually execute on this new idea? Many people talk about business for good and changing the purpose of the firm. But in the real world of competitive advantage, pricing models, customer needs, shareholder demands, supplier, employee and community relationships, knowing what to do is hard. We speak to entrepreneurs all the time who are philosophically aligned with a new narrative about business. They can cite anecdotes about others who have been successful, and they lack a cognitive frame that they can use to build an organization that embodies this day-in and day-out.

I’ve written at length about why I believe a focus on stakeholders in business and capitalism needs to replace the old story. In this article, the first of a two-part series, I’ll describe a framework to begin the journey to business as an institute of societal well-being: Or Human Capitalism.

Photo by Koushik Chowdavarapu on Unsplash

The New Narrative of Business in Society: Human Capitalism
What does a new story about the practice of business and capitalism look like in practical terms?

In order to fully bring this new narrative to life, I believe we need to re-define the purpose of business as a societal institution. Then, we need to translate that definition into tools that real entrepreneurs and executives can use every day to guide how they formulate strategy, individual decision making and implementation.

When a new cohort of the Conscious Venture Lab convenes, I ask a question to frame the work we’ll be doing over the ensuing 16-weeks: “What kind of world could we create if investors, executives and entrepreneurs cared as much about people as they care about profit?” It isn’t a question I expect any of the teams to answer outright. It’s a rhetorical challenge to think about how these ideas impact their businesses and the broader society.

Over the last few months, I’ve reframed that question: What kind of world could we create if we decided our first duty in business was to simply care for each other? This is the essence of Human Capitalism.

This version of the question doesn’t pit people against profit, which I believe is a false construct. Instead, it captures the meaning we’re all experiencing in this moment: can we be a complete society if the overarching purpose of business is only to increase profits and not primarily to improve the human condition? Both of these questions are variations of the age-old investigation of “What is a business for?” Academics, economists, politicians, social scientists and businesspeople have been asking this question for decades, if not longer.

Liesel Pritzker Simmons, co-founder of the impact investing firm Bluehaven Initiative, has said, “A crisis gives us an excuse to have conviction earlier.” What we are experiencing in this moment has emphasized how interconnected we are as a society and as a world. It has emphasized the importance of health as a public imperative. The importance of economic, community and personal resiliency as interdependent societal imperatives to which individuals and all societal institutions, even businesses, need to contribute. This crisis is bringing along those who may not have reached a level of conviction to move to a more human form of capitalism had things stayed … normal.

In this new reality it’s clear that the question about what type of world we want to create can no longer remain abstract or rhetorical. The coronavirus pandemic has exposed the truth, that a focus on our interdependent well-being is necessary for society’s survival. Succeed together or fail together the choice is ours, but we can no longer hide behind a narrative that separates individual financial self-interest from our mutual survival.

In the post-COVID world, the new narrative of business in society is a narrative about authentic caring, societal resilience and collective well-being.

Practical Ways to Integrate Human Capitalism
Herb Kelleher, the legendary founder of Southwest Airlines, once said, “The business of business is people — yesterday, today and forever….” But what does it actually mean to structure your business around people? What can you do tomorrow to transform the structure of your business, respond to this new reality and become the type of leader that society needs?


Caring is Job 1:
Above all there is one thing leaders must do first in order to be successful in this new world: They must actually care! To be clear, leaders who embrace the idea of caring for stakeholders as a core value and primary motivation for running a business will be well-positioned to succeed in this new world. They’ll be more able to execute on the ideas described later in this article and more likely to attract talent, customers and investors in a post-COVID world of business as a vital instrument of society.

At first this seems obvious and perhaps, some would say, no different than the status quo. But the nuance of authentically treating employees, suppliers, customers and communities as individuals deserving of your care for their own sake, as opposed to primarily as fodder for creating returns is critically important. Not only to how your company will be perceived, but authentic caring — or the lack thereof — will have a tremendous impact on your competitive performance. People understand instinctively if you are treating them fairly simply as a form of manipulation for other ends. And, unless you’ve created a true culture of caring in your organization, you’ll be tempted to abandon that care when it comes into conflict with your “real goals.” The best leaders however will understand this simple truth: how we think about creating financial value is now, more than ever, clearly tied to the way we create societal value. Authentically caring is a key component of this new narrative.

What wins in the marketplace is that you are responsible for taking care of everyone who encounters your organization” Tom Gardner: CEO and Co-Founder, The Motley Fool

With that as our foundation, there are two things that every leader can do to build caring into the operational DNA of their business:

First, adopt a specific set of guiding principals about what it means to care for each other in service of societal well-being. And second,

Institute a practical business operating system that provides a framework for living into those guiding principals.

Here in Part-1, I’ll discuss a set of guiding principles we’ve created at the Conscious Venture Lab to help entrepreneurs execute upon these cultures of caring.


Guiding Principles: The Five Promises of Collective Well-Being
In order to seed this new culture of caring into the DNA of your operations, it is crucially important that you articulate and codify a set of guiding principles that the entire company can use to organize your thought processes and create operating norms, policies, procedures and metrics that will keep your culture on track in good times and in challenging times…like during a pandemic.

Companies that will lead us into a more effective model of capitalism and a future of broadly-shared prosperity have structured their business to deliver on what I call The Five Promises of Collective Well-Being, through which we vow to use business to make the world:

  • More just,
  • More joyous,
  • More equitable,
  • More sustainable and
  • More prosperous for all.

Let’s examine each principle:

Business as a path to a More Just society:
Leaders who are best at this will work to create social justice by structuring their organizations to level the playing field and authentically create access to opportunity for all those in their ecosystem who want to contribute.

Conscious Venture Lab and SHIFT Ventures portfolio companies Hungry Harvest and R3 Score have built this promise into their business models, which drives impact and returns.

Hungry Harvest creates a more just world by providing fresh food to communities that wouldn’t otherwise have access to it and dignified work opportunities to people in need. As a result, they create scores of “Harvest Heroes” who loyally buy wholesome food from the company that otherwise would have gone to waste. In the process they have increase sales by more than 34,000% over the last 4 years.

R3Score creates a more just world by providing a dignified return to civil society for millions of formerly incarcerated Americans and allowing banks a way to engage with people they would otherwise ignore. Thereby expanding the banks’ customer base, putting financial assets to work that would otherwise lay fallow and giving the 1-in-3 Americans with a criminal record the opportunity to build a new life.

Business as a path to a More Joyous life:
Leaders who bring more joy into the world will do so by focusing on a combination of the quality of the human interactions in their operations, eliminating misery as a core aspect of their business and/or creating products that bring authentic joy to more lives.

One of my personal favorite companies, Union Square Hospitality Group, uses a culture of caring and enlightened hospitality to bring joy to employees, customers and suppliers alike.

Startup Aqus Water, that was a part of the Vatican Laudato Si Challenge in 2017, has created a product that puts “three years of clean water in the palm of (the) hand(s)” of people in places where lack of clean water has been causing extreme hardship for centuries. With more than 780 MM people in the world lacking access to clean water, bringing joy will undoubtedly bring prosperity to many.

Business as a path to More Equitable communities:
When leaders focus on creating a mutual exchange of value between all stakeholders, they move their organizations away from the negative consequences of shareholder primacy and create more equitable communities for everyone. Paradoxically, an equitable approach to business, or removing the shareholder blinders, often creates new paths to greater value for shareholders.

Greyston Bakery in Yonkers New York is a pioneer of open hiring. They create a more equitable world by focusing not on the tyranny of weeding people out in the hiring process but by providing the dignity of work to anyone who wants it.

Here in Baltimore, Jacob Hsu and his company Catalyte have created an entirely new way of identifying undervalued individuals who have the aptitude to become exceptional engineers. Creating new paths to equity and unleashing massive financial potential for communities, his clients and the company.

Business as a path to a More Sustainable world:
The winning leaders of the new narrative think and plan for the long-term. They understand that sustainability in every sense is the key to enduring organizational health. They establish a circle of growth for the planet, the people who serve or are served by the organization and the organization itself.

Billion-dollar clothing company Patagonia has rejected the world of “fast fashion” by creating high quality, long-lasting products and offering a repair and reuse program to discourage customers from buying things they don’t need.

Orsted, a $9BB energy company based in Denmark was named the Most Sustainable Company in the World by Corporate Knights in 2020. The company has transformed itself from a fossil fuel company to a total green energy juggernaut, significantly outperforming its peers, the European stock indices and returning over 42% ROI over the last 12 months.

Business as a path to a More Prosperous existence for us all:
The best leaders view value creation with a polarity, or both/and mindset. They actively look to create real wealth for employees, customers, communities, suppliers and shareholders. They work to manage the polarity of creating value for all stakeholders by asking themselves questions like: “How do we simultaneously achieve the upside of paying our employees as much as possible, and, the upside of creating great returns for shareholders?” This is in contrast to shareholder value leaders who see all stakeholder relationships as tradeoffs that need to be solved for the benefit of shareholders.

Starbucks has fed more than 10 million people through its FoodShare program, redoubled its commitment to eliminate gender pay equity gaps, and committed to becoming “… resource positive — storing more carbon than we emit, eliminating waste and providing more clean fresh water than we use …” — all while rewarding shareholders handsomely — even during the coronavirus pandemic.


Why Human CAPITALISM?
In Part-2 of this series I will discuss how the tenets of Conscious Capitalism and stakeholder management will allow organizations to clear the clutter and build these principles into everyday operations.

For now, a note before we end to my main audience: The Skeptics:

I spend the majority of every waking hour thinking about how to support entrepreneurs who have previously been neglected and who are creating world changing companies despite the immense hurdles they face. I also spend a majority of that time thinking about how to invest on behalf of my limited partners in a way that will create exceptional returns. I am a capitalist who believes capitalism can and should be practiced in a way that unleashes its power to elevate all humanity. That we can create a more humane form of commerce and human cooperation. What I am suggesting is that capitalism, like any man-made system, must evolve as society evolves. To paraphrase my friend and mentor Ed Freeman, professor at the Darden School at The University of Virginia, the alternative to capitalism as we know it today is not socialism, but a better, more human form of capitalism.

For those who would push back on these ideas as leaving shareholders behind and giving away profits I would simply ask you to suspend disbelief for a bit. Take a few minutes to think not about what you might lose, but about what you might gain. What kind of world could we create if we decided our first duty in business was to care for each other? Look around…I think that time has come.

 

Jeff Cherry, is CEO and Managing Partner of SHIFT Ventures, and Founder & Executive Director of Conscious Venture Lab, an award-winning and internationally recognized early stage accelerator. He is also Founder and Managing Partner of The Conscious Venture Fund and Founding Partner of The Laudato Si Startup Challenge. Jeff is a pioneer in conscious capitalism and double bottom-line investing. He can be reached at jcherry@consciousventurelab.com.

Caring is Sharing: Show your compassion for others during this very challenging time

This is a guest blog post from Shellye Archambeau, humanitarian, author, speaker, tech CEO and Fortune 500 corporate board executive.

 

Shellye-Archambeau-1.jpg

“Noel, caring is sharing!” my five-year old granddaughter reprimands her three-year old sister, who doesn’t want to share her toy.  It’s a mantra my daughter uses to teach her children. As I witness this exchange while I “shelter in place” with them in Tampa, Florida, it strikes me that the whole world needs to be reminded of this simple concept.

What do we need to share? Compassion. Simply said, demonstrating compassion means to show kindness, caring and a willingness to help others.

Each of us is being affected in very different ways.  For some, it is a real inconvenience, but work and life for the most part continue. Our meetings have turned into video conference calls. Our normal support infrastructure has vanished, childcare, school, household help, etc…  We aren’t able to gather for celebrations such as weddings, birthdays or a friend’s successful battle against cancer. Worship, gym exercise and self-care routines are being disrupted. Our travel is curtailed. These impacts are a nuisance, but frankly not that hard.

At the other end of the spectrum in addition to the tens of thousands of people battling the virus itself, there are many people out of work or whose businesses are fighting for survival.  They are facing real hardship and there are a lot of them: hairdressers, retail and restaurant workers, performers, event planners, housekeepers, etc. The federal reserve reported last year that 40% of Americans don’t have $400 in the bank for emergency expenses. I know the government is also working on stimulus packages for Americans and business owners however the ramifications of now several months without pay will be felt significantly. If we all can take some measure to support, help, comfort and lend the proverbial hand – it will make a difference.

I had the honor of meeting and speaking with the Dalai Lama several years ago.  Compassion is one of the key tenets of his teachings.

Compassion brings inner peace and whatever else is going on, that peace of mind allows us to see the whole picture more clearly.” Dalai Lama

Research backs up the Dalai Lama statement.  The Greater Good Science Center at UC Berkeley has conducted research that supports the premise that leading a compassionate lifestyle improves both mental and physical health.  “The reason that a compassionate lifestyle leads to greater psychological well-being may be that the act of giving appears to be as pleasurable as the act of receiving, if not more so. A brain-imaging study led by neuroscientists at the National Institutes of Health showed that the “pleasure centers” in the brain—i.e., the parts of the brain that are active when we experience pleasure (like dessert, money, and sex)—are equally active when we observe someone giving money to charity as when we receive money ourselves!”

Now is the time to help where you can.  A couple in my Mountain View neighborhood literally started knocking on doors of neighbors who they didn’t know to see if people needed anything.  They met several elderly people who indeed needed help with grocery shopping. Another person in my Nextdoor Whisman Station community reached out to offer to talk on the phone with anyone who needs to talk to someone, to rant, combat loneliness or for any reason at all.  I’m continuing to pay my housekeeper and my hairdresser for my regularly scheduled appointments even though the services aren’t being provided. Their income is being severely impacted by the necessary Shelter in Place policies.

So, find ways to show your compassion for others during this very challenging time.

  1. This can be done through donations to charities that support the most vulnerable in our society.  Such as the American Red Cross who is facing massive blood shortages due to blood drive cancellations, your local food bank, Meals on Wheels who feeds the elderly, No Kid Hungry which deploys funds to ensure that kids don’t go hungry especially with schools being closed, etc.

  2. You can also financially support the Arts or your local businesses.  For those not in a position to help financially, you can give the gift of time or effort.  For example, there are thousands of people in nursing homes whose families can’t visit. Call one and offer to speak to residents on the phone.  Many high-risk people are afraid to go to grocery or drug stores. Offer to do their shopping when you go.

  3. Use your influence as a leader in business, offer free coaching, support, or tools that can be readily provided to help struggling small businesses and entrepreneurs. Not sure how to get started. Check out organizations such as Score.org and businessadvising.org, both of whom provide confidential business advice through a network of volunteer business people.

  4. Now is a time more than ever to be a mentor within your company and community. For example I launched online “Ask Me Anything” live sessions to provide perspectives and support to people working through professional or entrepreneurial issues.

  5. Give your teams the ok to share their concerns, etc..  Sometimes people just need to be heard and know someone cares about them. There’s also a lot to be learned by just listening to the challenges and issues faced by team members.

We are in this together and together we will get through this just as we have overcome past crises.  I believe that most of us are compassionate people. Let’s all take at least one action to demonstrate it.  As my granddaughter said, “Sharing is caring”.

Reference link – https://ceoworld.biz/2020/04/10/caring-is-sharing-show-your-compassion-for-others-during-this-very-challenging-time/

Shellye Archambeau is a humanitarian, speaker, author, technology company CEO, and Fortune 500 Board member.  She is the author of Unapologetically Ambitious and a leading figure in Silicon Valley. She sits on the boards of Verizon, Nordstrom, Roper Technologies, and Okta. She is the former CEO of MetricStream and former President of Blockbuster. Please follow her at http://www.shellyearchambeau.com

The Success Formula: Success = BD+GM+F+C+P

5 Ways to Overcome Obstacles and Achieve Success | EHS Today

Almost 9 years ago, I published this, my first Blog post on WINNING IDEAS. As I work with students, mentees, and other business colleagues of late, I find myself reverting to various “Fundamentals” in our conversations, this one perhaps being the most important of all.  Please enjoy and let me know what you think!

What does it take to be Successful? Everyone has an opinion on this for sure.

The Success Iceberg - Uncovering What Success Really Looks Like

Success is Winning, and everyone loves Winning.

Having been a student and analyst of the subject of Success for over 40 years, I think I have boiled down the formula of what creates Success:

SUCCESS = BURNING DESIRE + GOAL MANAGEMENT + FOCUS + COURAGE + PERSISTENCE

Each of the great thinkers and each successful person has their own personal take on what it takes to achieve success, but these are the 5 essential elements.

 

7 ways to position IT for success in 2020 | CIO

Of course, I left out a couple of other important elements like Serendipity, Luck, Sacrifice, Hard Work, and others, but I believe that these “sub elements” are a part of one of these 5 essential ingredients.  For example, if you have a Burning Desire (passion), then you will make the sacrifices and work hard.  Goal Setting includes goal review, and is the roadmap to the destination.

Courage in Business – Vividcomm

Courage is an interesting one and we don’t hear it mentioned often, but to me, Courage is all about taking action, and stepping up and going outside your comfort zone to make things happen.  Without Courage, thought cannot easily be transformed into Action.

And what about luck?  Well, the more persistent you are, the luckier you get.  By never giving up and hanging in there, opportunities will inevitably come your way.

Napoleon Hill Quote: “Failure cannot cope with persistence.” (12 ...

Persistence is my favorite, and I conclude this, my first ever Blog Post with my favorite quote:

“Never give in. Never give in. Never, never, never, never–in nothing, great or small, large or petty–never give in, except to convictions of honor and good sense. Never yield to force. Never yield to the apparently overwhelming might of the enemy.”   – Winston Churchill

 

 

 

 

 

 

You don’t know how good you have it!

This is a Guest blog post from Todd Youngblood, These thoughts are more applicable today than when he first published this almost 2 years ago.

Never knew I had it so good ... - Imgflip

Is there anyone alive today who did not hear the words, “You don’t know how good you have it,” from one or both parents during childhood? I seriously doubt it. I heard it so often growing up that I swore I would never say it to my own kids. I failed. The fact of the matter is they didn’t know how good they had it. And to be honest, I didn’t either.

Is the world today awash in problems and injustice? Yes! Is the U.S. in particular, awash in problems and injustice? Yes! Are there more, bigger, more complex, thornier problems than even before in human history? Yes!

My contention is, that’s good news!

In fact, it’s downright bizarre to me that only 6% of the U.S. population thinks the world is getting better. Seriously? Think! Of course we have lots of problems today, but they are due to the unanticipated, unintended consequences of the amazingly dramatic advances in standards of living that have alleviated or eliminated the problems of the past.

Are the problems we’re dealing with now real? Yes! Are they tough, horrifying, heart-wrenching, unfair, unethical, immoral and just-plain-wrong? Yes, Yes, Yes, Yes, Yes, Yes and Yes. So what? Let’s look at a few facts about the relentless, positive progress in our world, courtesy of Our World In Data

First, world population:

  • 1800 – 0.9 Billion
  • 1900 – 1.7 Billion
  • 1960 – 3.0 Billion
  • 1980 – 4.4 Billion
  • 2015 – 7.4 Billion

That’s an increase by a factor of more than 7. Are 7 times more people alive because the overall average standard of living has been going down? I don’t think so. How about the % of world population living in extreme poverty?

That’s about as direct a measurement of improvement in living standards as you can get. From virtually all human beings living in extreme poverty to less than 10% in just 2 centuries. For perspective, humans have been around for something like 2,000 centuries. So that’s virtually everybody in extreme poverty for 1,998 centuries, and now only 10%.

How about the % of world population that is illiterate?

 

That’s from 88% illiterate to 88% literate. …along with the immense value of literacy.

How about global child mortality?

That’s 43% – almost half – of children dying before their 5th birthday to only 4%.

How about freedom – the % of global population living in democracy:

That’s less than 1% of people living in a free, democratic society to 53%. Amazing progress!

These statistics tell the story of a remarkable, inexorable and MASSIVE increase in quality of life. Let’s take a look at some numbers that put a totally different spin on this supposed problem of having so many problems. Is all the stuff we can buy to make our lives easier and better getting more or less expensive? Inflation and different currencies and exchange rates around the world can make answering this question quite difficult. So forget about how many dollars it takes to buy something. Look at cost in terms of how many hours you need to work to buy whatever it is you want.

Light, for example. Every time the sun goes down, we’re switching on the lights. What does that actually cost in terms of hours worked?  In 1994, Yale economist William Nordhaus answered the question. He calculated how much light could be purchased for 60 hours of work. Here’s what you could buy:

  • 88 minutes of light from your oil-burning lantern in 1750 BC
  • 10 hours from your tallow candle in 1800
  • 16 hours from your gas-burning streetlight in 1810
  • 72 hours from one of Edison’s early incandescent bulbs in 1880
  • 1,200 days – over 3 years – from a fluorescent bulb in 1950
  • 51 years from a modern compact fluorescent bulb

How about some other modern conveniences?

And these prices do not reflect the dramatic improvements in quality. In ‘59, the “big screen” TV was 21 inches. Are you old enough to remember complaining about too much “snow” in the picture? Today, not only is the fuzzy “snow” effect gone, you can see every pimple on an actor’s face as it marches across the 6 foot wide screen.

How about travel? To cross the U.S. by horse takes 70-80 days depending on the weather. Or you could hop on a jet and do so in less than 5 hours for less than $200. And for the record… I gripe and moan A LOT about my discomfort in those teeny-tiny airplane seats. It’s a bit embarrassing to contemplate the pain in my seat that would be caused by sitting on a jostling horse all day, every day for 2 1/2 months…

Forgive me for bringing some mathematics into the mix, but it’s a really good way to think about what happens when a problem gets solved. Think about a circle. A line through its center, the diameter, represents all the problems that have been solved by your society. The area inside the circle represents your standard of living. Around the circumference is where all of the unsolved problems facing your society are lurking, (Take a look at the show notes for this episode at IntentionallyVicarious.com to see an example of this and where I’m going with the idea…)

OK, here comes the math. Let’s say that the diameter of your circle is 10. Again that means your society has become aware of and solved 10 big problems. The area, your standard of living, is π r2, which works out to about 79. Around the circumference, which is π times that diameter, is roughly 30, meaning your society is aware of 30 big, ugly problems.

Now… Your society functions pretty well, so it goes about solving every one of them. The diameter of your circle is now 40 – the 10 problems that were already solved plus the 30 you just knocked down. Your standard of living, therefore, jumps up to 1,275! But uh-oh, you can now see 125 new problems around the circumference you didn’t know about before.

Your society attacks those, and solves every one. Your socienty has now successfully solved 165 big problems, which rockets your standard of living up to 21,382. But here’s another uh-oh… You are now aware of yet another 450 new problems.

I think you get where I’m going with this. It’s one of those glass half-empty or half-full things. Your society has solved 165 of the earth’s biggest problems, and all you see and hear on the news and social media is how you – you greedy, selfish SOB – have screwed the needy by “creating” 450 ugly problems and inequalities while only solving 165.

NO!!!!! Wrong perspective!

So what that you’re now aware of 450 new, ugly problems and inequalities? The vastly more important point is you did in fact solve 165 old, ugly problems and inequalities and ratched up your standard of living from 79 to over 12,000. That’s cause for celebration …and more work, more effort, more achievement. Dare I say more fun?

Run through the cycle again and your living standard will be nearly 300,000. Are you going to gripe and moan about how society is sooooo much worse because you now have 1,900 ugly issues instead of only the 450 you had before? Go ahead and whine if you want to, but stay out of my life.

The fact that I, you or anyone can identify an ever-growing number of examples of pain, suffering, injustice and horror is good news. It means that all of us have collectively solved a boat-load of old problems and made life on earth better – MUCH, MUCH BETTER – than it was before. The more problems we solve, the more – and uglier – problems we can identify. Get over it!

The instant any one of us as an individual, or all of us as a culture, a country, a species; stops identifying the huge and growing number of agonizing problems that cry to solved, is the instant we are doomed.

Recognizing – KNOWING – about the pain, suffering and inequality of outcome that exists; and about how much MORE needs to be done, means that we have the opportunity to get better – MUCH BETTER – all the time.

So again… As we solve more and more problems, the more we will increase the world’s standard of living, AND the more terrible and agonizing problems we will identify. Lets get over it! And let’s get busy – stay busy – and continue our 2,000 century long habit of improving everybody’s quality of life.

 

Todd Youngblood is Executive Producer and Host of Intentionally Vicarious, which is dedicated to help you have more fun than anybody else you know! He is also Managing Partner and CEO of The YPS Group, Inc., a management consultancy focused on sales and sales management. Check out Intentionally Vicarious at   
https://intentionallyvicarious.com. Todd can be reached at todd@ypsgroup.com.

 

 

The (Not So) New Game in Private Equity

This is a Guest blog post by Kerry Moynihan, Partner at Boyden.

Top Private Equity Firms Investing in Education Businesses ...

 

WHY LEADERSHIP MATTERS MORE THAN EVER

A Very Brief History of Private Equity

The origins of today’s private equity industry (which I would define as including both venture capital and leveraged buyouts) date to 1946 with the foundations of American Research & Development Corp. (ARDC) & J. H. Whitney.  Prior, risk capital had almost exclusively been the domain of wealthy families.  Venture capital pioneers Mayfield and Kleiner Perkins were founded in 1969 and 1972, respectively.  In the buyout realm, the origins of LBO pioneers KKR began at Bear Stearns with “bootstrap” investments in the early 1970s, forming the foundation of the firm as we know it today.  TH Lee; Forstmann Little; Welsh, Carson, Anderson & Stowe; and GTCR were all in operation by 1980 and became major players.  The modern private equity business continued to emerge in the 1980s with the realization that there were major discrepancies between public company management interests, the age old “agency problem” and the values that could be unleashed were business units to be decoupled from large public companies.  The year 1980 saw some $2.5 billion raised dedicated to the emerging alternative asset class and in the decade that followed nearly $22 billion was raised by venture and buyout funds.

The wide availability of junk bond financing fueled a boom during the 1980s, followed by a crash as the stock market tanked in October 1987.  High yield financing, or “junk bonds,” dried up for a time, and Drexel Burnham, the leading purveyor of these instruments, later went down.  However, institutional investors had certainly picked up on the higher returns available to PE than in the public markets.

Key to these were the availability of debt financing, the disparity between management that were merely salaried and those that were incentivized by equity, and the discrepancy between public and private market information.  For much of the next two decades private equity vastly outperformed the public markets.  Clearly, the emergence of technological innovation in software, semiconductors, and telecom fueled the venture side, while widespread industry consolidation and globalization largely propelled the LBO market.

As ever more money flowed into pensions and other institutional investor funds, the demand for higher yields accelerated.  This put more capital into the financial markets seeking higher returns and the boom continued.  Of course  there were blips and shocks, including the Foreign Debt crisis of 1997/98, the bursting of the dotcom bubble around 2000, the cessation of normal market activity following the 9/11 attacks, and perhaps most seriously, the major Financial Crisis after the collapse of Lehman Brothers and Bear Stearns in 2008.

However, markets rebounded, time and time again.  Institutional capital, which seems to have a short collective memory, always seeks ever higher levels of Alpha (relative return) and will accommodate Beta (risk), often in unison, seemingly without independent, objective decision-making.

Institutionalization & Growth of the PE Industry

Funds were usually (relatively) small and privately held, and made individualized, partner-driven investment decisions.  Yet as their size has increased, and in many cases the larger funds went out to the public markets, the industry has fundamentally changed.  Now publicly traded, firms like Apollo, Blackstone The Carlyle Group, and others are, as the co-founder of one confessed to me “No longer in the business of making extraordinary, outsized returns on unique investments.  We are now in the asset management business. If we can beat the S&P by 150 basis points and put huge sums to work from institutional investors, we are happy and the investors are happy.“  With the traditional model of a 2% management fee on assets under management (AUM) and 20% capture of the return on investment, the carried interest, who would not be?

Where a billion dollar fund was once considered a large player, there were over 350 by 2018 and even more today.  There has been a veritable explosion in investment in the sector, as uninvested cash, or “dry powder“ at PE firms exceeded $1.5 trillion by the end of 2019.  Blackstone alone, the Wall Street Journal reported, had $150 billion in cash to invest at the end of last year.  Institutional Investor reported in July 2019 that 4000 funds were seeking to raise an additional $980 billion, up from 1385 funds seeking to raise $417 billion just four years earlier.

Yet in the 2010s the number of publicly traded companies stayed roughly the same while global AUM for PE firms and the number of PE-backed companies doubled, according to McKinsey & Co.  It comes down to simple economics as more money is chasing fewer good assets, hence driving up prices, and reducing returns.  S&P reported in November 2019 that the average pro forma EBITDA multiple was 12.9, up over 30% from pre-Financial Crisis pricing.  The massive leverage, low prices, and eye-popping returns of the 1980s are but a memory.  What is a simple fund to do?

Operations Management Software from Integrify

Adding Operating Expertise

Importantly, funds have changed their own internal structures over the last several decades. Almost no funds had seriously tenured operating executives as part of their investment teams in the 1980s, being almost exclusively comprised of “recovering investment bankers.”  The 1990s saw a bit of a change, but now almost every major fund has hired people who have more than an investment banking/finance background and have been senior operating executives who have actually run P&Ls.  In many cases these are actual full partners in the funds, as the Silicon Valley venture capital community was quicker to adopt this model, typically by adding tech CEOs to their rosters, than the Wall Street LBO community.  Many are termed Operating Partners or Management Associates, but whatever the nomenclature, there has been a collective recognition that strictly financial engineering and financing skills are necessary, but not sufficient, to create outsized shareholder returns.

Most of my clients and many of my good friends are private equity professionals.  Without naming names, an informal survey confirms the general thesis that by training they are not prepared to run the businesses that they buy.  Increasingly they recognize these facts, despite being “the smartest person in the room“ on virtually any topic (sic), in the not so distant past.

Where Are We and Where Are We Going

Fast forward to today, the late 2010s and early 2020s. The game has changed significantly, to say the least.  Not surprisingly, many of the factors that led to the tremendous success of the industry in years past have changed dramatically.  There is a changing reality and investment firms have, with varying degrees of success, made adjustments.  For example:

Financial engineering is no longer adequate.

Given the low interest rate environment of recent years, and explosion of alternative lenders such as credit funds, beyond the traditional large banks, a giant fund enjoys little advantage over a smaller one on the availability of financing or borrowing terms.  And, let’s face it, even if KKR or TPG can borrow at 25 basis points lower and with slightly less restrictive covenants than XYZ Capital Partners can, that factor alone is unlikely to be the deciding factor between the success or failure of an investment.

Globalization of the industry

Where venture capital and leveraged buyouts were virtually exclusively a US phenomenon just a few decades ago, today according to various studies, only about 55% of global private equity activity is in North America today.  While Africa and Latin America are somewhat underrepresented, Europe and Asia are booming in this respect and the former may well catch up over time.  It has become, as in so many industries, a much more competitive, truly international playing field.

Ubiquity of information has changed the game

The asymmetry of information that led to smart buyers and uninformed sellers is simply no longer the case.  The incredible proliferation of information and ease of access on a global basis means that sellers, even of relatively small and unsophisticated businesses, have a much better handle on the overall market than in the past.  An investment banker friend and I have a running joke that Old Uncle Burt, selling his cornfield in Iowa, knows that he can command 7.8 to 9.3 times EBITDA these days and will have five buyers lined up!  In short, because of this the market is much more ruthlessly efficient, further evidenced by the dramatic expansion in the number of deals done and in the ever higher multiples paid for them.

The Model Still Works

The increased volatility of public markets, however, continues to make private equity attractive.  What was once termed an alternative investment is certainly now very much in the mainstream for most sophisticated investors.  However, the delta in returns between public markets and private markets have flagged in the last several years.  As Bain & Co. noted in its 2020 Private Equity Report, “10-year public market returns match PE returns for the first time.”

Yet the current crisis, at the same time akin to the ones we seem to have every five or 10 years, and on the other hand of unprecedented scope, has obviously put an enormous dent in the wealth accumulated in the stock market.  The ability to be patient and not have to respond to quarter-by-quarter earnings can allow private equity investors to take a more strategic, long-term view and ride out much of the fickle fluctuations of the financial markets.

This may seem a bit ironic, since most PE funds would love to be in and out of investments in a 3 to 5 year timeframe if possible.  But with the public markets bouncing as violently as they are, private equity will remain a very attractive industry, both for Limited Partners as institutional investors and General Partners, the PE funds, as the custodians and direct investors of those funds.

Stanford Senior Executive Leadership Program | Stanford Online

 

Executive Leadership Matters, Now More Than Ever

Over time, more and more funds have gone to a model of backing individual executives or executive teams in what I call the “Back-able, Bankable Leadership“ model, or BBL.  Both venture and buyout funds have increasingly backed executive leadership that has had prior success and will continue to do so.  The proverbial “Holy Grail“ for investment funds is to find management teams that are proven and have as close to a proprietary idea as possible.  By this I mean either a specific target company(ies) for acquisition or a well-developed investment thesis with demonstrable potential acquisition targets.

How much better to create a situation where you have an organic genesis of an investment, rather than competing in a broad auction scenario against many other funds.  In the latter case, the “winner” of an auction may be successful in acquiring a business, but a loser as an investor, having paid too high a price at the outset.

An old saw in investing circles is that “You are more likely to win by backing an ‘A’ management team with a ‘B’ plan over a ‘B’ management team with an ‘A’ quality plan.“  At no time has this been more true than today, as many firms actually have to reinvent their business models on the fly.  As we face unparalleled turbulence in the markets, especially given the latest crisis, never has leadership, true leadership, been at more of a premium.  Operational excellence, coupled with the genuine ability to inspire, will always be valued.  In short, today it is more critical than ever to actually run businesses better.

Effective executive leadership makes all the difference.  It certainly makes me quite sanguine about the prospects for the executive search industry in partnering with private equity clients to create value.  Successful investors invest in superior management and leadership, especially when competition is greater than ever and times are uncertain, to say the least!

 

Kerry Moynihan is a Partner at Boyden. He has had a distinguished career of more than 30 years in executive search, making a significant impact on client organizations through strategic talent acquisition and development. Working across a range of industries, he specializes in partnering with boards of directors as well as private equity firms and the C-suite executives of their portfolio companies to deliver for investors. He can be reached at kmoynihan@boyden.com.