Gus Carlson is a U.S.-based columnist for The Globe and Mail.
Hang around private-equity types long enough and you will probably hear this mantra: Never fall in love with your business.
It’s a dispassionate Heisman straight-arm marking the valley of destruction in which private equity does some of its best work – taking perfectly healthy companies and eviscerating them in the quest for higher valuations for resale, but often at the expense of product quality.
The perspective is anathema to those of us who were taught early on that for career success you must not only understand “the business” but have an affinity for it, too. At companies such as IBM, simply loving the business wasn’t enough – employees were encouraged to have passion for it.
Sadly, and in some cases now, dangerously, the never-fall-in-love-with-your-business guiding principle that has driven private equity to destroy so many companies has been a steadily creeping cancer in public-company management and governance.
Too often, CEOs of public corporations don’t love their businesses, and in many cases know very little about them. But they know lots about financial engineering, cutting corners to reduce costs, downsizing and outsourcing – anything to deliver the quarter. Increasingly, the balance sheet is becoming a strategy document, cultural manifesto and code of conduct rolled into one.
For proof, look no further than Boeing’s BA-N disgraced CEO Dave Calhoun. An accountant, not an airplane guy, he was brought in from the financial-services sector to solve an operational crisis when the company’s Max 8 jets were falling from the skies and lives were being lost. Not surprising, the crisis got worse under Mr. Calhoun.
But more than enough has been written about Boeing’s CEO. The point is perhaps best made through comparison with one of the world’s best-known and most-revered companies, whose success is based in its leader’s love of the business. In many ways, the benchmark Steve Jobs set with Apple has been lost in many public companies.
If you want to know why having leadership who loves the business should be an increasingly important metric for boards when choosing executive leadership and investors when evaluating a company’s stability, look back to people such as Mr. Jobs. If you had the opportunity to see him speak in person, you know. If not, look at any videos of him in his heyday talking about the evolution of the computer market and the thinking behind the success of his innovations.
In 1992, for example, he spoke off-the-cuff to students at the MIT Sloan School of Management. In just 10 minutes, viewers get such a clear and strong sense that this was a guy who not only understood the business, but cared deeply about it.
And he wasn’t just cheerleading. He talked about the dumb mistakes he made in the arduous process of trial-and-error that drove innovation, the things he thought would come true but didn’t, and things that came true that he never expected to happen.
Moreover, he talked about sitting down with customers in big companies to address the problems they believed his technology had the potential to solve, and then rolling up his sleeves to use that input to make better products.
Whether or not you admire Mr. Jobs or believe he was a better tech innovator than business person, he got it. His was the kind of love and relentless desire to understand the business that is growing increasingly rare in C-suites these days.
I’m not a tech guy, but when I hear Mr. Jobs’s passion, it gives me enormous confidence that his products embody that. When I hear Mr. Calhoun deliver prepackaged talking points about how much Boeing cares about quality and safety, well, not so much,
Of course, it may not matter for a lot of businesses that the bean-counters are in charge. It does matter in companies such as Boeing, where failure to understand the business, especially anticipating the pitfalls and fixing crises when they happen, is a life-and-death liability.
That’s not to say the next CEO of Boeing needs to be able to break down and reassemble the landing gear of a Max 9 jetliner while blindfolded. But he or she should know something of its mechanics and the operational processes that ensure quality, not just how much it costs and through what outsourcing channels its component parts can be manufactured the cheapest.
Think of it this way. If your computer crashed, you can bet Mr. Jobs could have figured out what went wrong and would have eagerly jumped in to tackle the problem. I can’t say with any confidence Mr. Calhoun would be able to do the same if the fuselage door of another Boeing aircraft blew out in mid-air.
Maybe it’s just me, and maybe love is too strong a word. But when I’m hurtling along at 500 knots some 37,000 feet in the air, I’d like to think the person ultimately responsible for the quality of the aircraft I’m in has at least some emotional attachment to the business, not just knowledge of where to find the lowest bidder to make the parts holding the plane together. I don’t think that’s too much to ask.