As lifelong Cleveland Browns fans, the private equity team at CapitalWorks has shared the collective angst of the City regarding the demotion of Brian Hoyer and the fumbled handoff to Johnny Manzel. We have seen this play before – 18 times before – and we all know how it ends. Bernie Kosar has taken some heat for calling it a “Head Ache”, meaning that there continues to be a void in leadership from the owner. Subordinates are caught in the middle as the owner and his general manager strip authority from the coaches. This is what the military affectionately refers to as FUBAR.
What Can the Cleveland Browns Learn from Private Equity?
Private Equity has many of the same management challenges as professional football. As owner you have responsibility for all your portfolio companies, their management teams, their customers and suppliers and their extended communities like lenders, co-investors and advisors. Likewise you are competing with other businesses who relish the thought of taking market share, ruining a pricing advantage, recruiting your best people and putting you out of business. It is a highly competitive environment and, increasingly, an international game.
We actually devoted a 15 minute discussion last Monday to the lessons we have learned from the Browns. Dick Hollington made two observations that apply to success in the private equity environment. First, you have to be committed every day to a culture of excellence for its own sake and an unswerving dedication to, and faith in, your system and process. No Exceptions! Second, you have to have a team with deep character. The traits he admires most are hard work, team play, humility, toughness without being mean or cheap, discipline to control your emotion in the face of adversity or insult and genuine fairness. I commented that I liked Jimmy Jones’ (ex Dallas Coach) assessment at the half time of the Browns – Cinci game that success for Johnny Football in the NFL, unlike high school and college, is more about avoiding the big mistake than it is the big play.
It Is All About Culture, Process and Humility
We have a process. It is boring, disciplined, frustrating, painful and often unsatisfying. We lose most of our skirmishes and devote thousands of hours to transactions that never become portfolio companies. We lose deals on price, fit, flare and relationships. But we have a winning culture and have maintained a good record for over 15 years. We support our QB’s, wide receivers, centers and safeties as long as we possibly can without jeopardizing the overall team. When we change a manager, he is rarely surprised. When we fail, we fail as a team. We rarely pin the blame on anyone other than ourselves as owner. We aspire to be New England, Green Bay, San Francisco and Seattle (hard to say Pittsburgh) with a commitment to the same process every day. Like Midwestern plow horses, we have an endless energy for excellence and achievement content to return to the barn without any narcissistic celebration dances in our end zones. The Browns have a lot to learn from Private Equity.
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