The similarity between ‘Bountygate’ and corrupted corporate thinking
How is the Facebook IPO connected to the National Football League “Bountygate” scandal? While parallels between sports and business are frequently drawn, the connection between these disparate events is more “six degrees of separation” in nature.Even non-sports fans have probably heard about “Bountygate.” The New Orleans Saints 2010 Super Bowl win rejuvenated the Katrina-torn city and made the Saints a national feel-good story. But those good feelings have now been replaced by dismay over the brutal win-at-all-cost nature of football.Football is our most primal sport, where legally attempting to knock opponents out of the game is routine. Still, the audiotape evidence that revealed the extent to which players were rewarded for attempting to harm opposing players was disturbing. Yet my reaction didn’t so much focus on the callous disregard for player safety. Rather, what struck me was how similar the corrupted thinking of the Saints was to what I have witnessed in the business world.Numerous times during my corporate career I saw companies, frantic to make the quarter, make questionable decisions solely to placate investors — and at times to enrich management. These included product being shipped to warehouses and captured as revenues; distribution channels stuffed to the gills; and empty strategic alliances announced to artificially inflate stock prices.What Greg Williams — the coach at the nucleus of the scandal — did is no different than what corporate management does time and time again, nor was it surprising. In business, the threat is not one of physical harm. Instead, investors lose untold dollars, and in some cases, employees lose jobs.Interestingly, the pressure to succeed in sports is actually far greater than in the business world because sports are the ultimate meritocracy. No politics, no schmoozing. Win and you are a hero. Lose and look for another job. In the corporate world, one can personally succeed even if companies don’t. Can you say golden parachute?Public scandalsInvariably, it’s public companies that are subject to corrupting pressures. Going public changes the mindset. Too often sound, long-term strategies are supplanted by the 90-day syndrome and the desire to kowtow to Wall Street.I’ve often thought about how much more efficient the private sector would be if it were able to remain private. Unencumbered by outside pressures, management would be free to make decisions for the right reasons.Face it: Virtually every scandal and bubble that has occurred over the last 20 years has involved a public company. Granted, private companies don’t hold much sex appeal for the media. And Bernie Madoff notwithstanding, I doubt that the level of “misguided thinking” in private companies comes close to rivaling the magnitude of Enron, et al.If only there was a mechanism to finance growth companies that didn’t require an IPO. And that brings us to the connection with Facebook’s IPO. Mark Zuckerberg may have found one. Despite going public, Zuckerberg will maintain complete control. No board of directors can threaten his position. And whether or not Facebook makes its numbers, Wall Street must grin and bear it. Mr. Zuckerberg will not be making decisions for the wrong reasons and has said as much.It’s the perfect scenario: financial resources without corrupting external forces. Perfect — assuming the “benevolent dictator” at the top is the right person. Still, for public companies, abandoning the 90-day syndrome would certainly increase resource efficiencies, and true investors — not short-term traders and speculators – would benefit.Entrepreneur, economist, small business owner, author and professor, Tony Paradiso of Wilton is a marketing and management expert. His website is tonyparadiso.com.