Friendly WSJ article about legendary private equity firm Kohlberg Kravis Roberts. Full disclosure: My employer, Integrated Specialty Coverages, is a KKR portfolio company. My opinions are my own and unrelated to my day job. Not everyone likes the private equity model, but there is no denying KKR has come a long way from the “Barbarians…” days. (Great story BTW. Read the book!)
I have had the pleasure of working for and with many exceptional organizations as an employee and consultant. Two stand out: Progressive Corp and KKR. Both are rightly recognized for their long term financial success, and they share three important contributing attributes.
Both are learning organizations, fueled by relentless, rigorous curiosity – An unremitting drive to expose the root cause of every effect. Neither is content to accept an unexplained outcome or an unplanned initiative, whether financial, operational, organizational, or in the marketplace. There’s a humility in this; it takes courage to say we don’t know the answer, but we’re going to figure it out. As Henry Kravis says, “You have to be the kind of firm where you are not arrogant.” Speaking from experience, these are very challenging, sometimes exhausting work cultures, because there is always one more question to answer. But for someone who loves a puzzle, there is no more satisfying triumph than studying a problem from every angle, finding an actionable root cause, and crafting a solution.
Both Progressive and KKR share the wealth. Progressive was making stock option millionaires when Silicon Valley was still sand. Over the years, they expanded their performance-based Gain Sharing program to include much of the organization. WSJ name-checks CHI Overhead Doors, the poster child for KKR’s employee ownership plan. But it doesn’t come easy … the payoff is always performance-based, dependent on both individual achievement and enterprise financials.
Finally, both have the strength of governance to maintain orderly insider succession. No Roy Family drama in sight, and no untried outsiders disrupting the culture. Progressive successfully passed the reins from Peter to Glenn to Tricia, not to mention dozens of additional key players whose names may or may not make it into the Proxy. KKR is still working through their big transition, but WSJ reports favorably on the early indications.
Lessons for the non-billionaires among us:
1. Question ruthlessly. Don’t accept fuzzy explanations. Find the best action steps.
2. Help position others to succeed. Build a downline. You win when they win.
3. Work yourself out of a job. Prepare successors. Think long.
Don’t call them Barbarians…
