executive life

How the Event, 'A Rare and Exclusive [Conversation] with Henry Kravis of the Firm Kohlberg Kravis Roberts & Co.' Happened

(Wordcount: 2,298) I met Henry Kravis on September 21st, 2004. On November 18th, 2005, he honored me by speaking to a group of students assembled to hear what he had to say. Between that time, I learned three things:

1) Audiences are indeed fickle, if even appreciative, when it comes to content; it's literally what can it do for them - instantly. Given this perspective, the value of content is cyclical, being more or less valuable at different points in time.

2) One of the hardest things to appreciate as an ambitious self-starter is the concept of teamwork. For the first time ever, I felt that things occurred only because a team of 3 committed professionals worked collaboratively, yet individually at their roles to make it all come together. An important lesson indeed for individuals who believe themselves to be capable of accomplishing the most Herculean feats alone.

3) When one thinks of academia, one thinks commitment to community, austerity, grandeur, and professionalism (at least, I used to). But from the moment I stepped foot inside a school as an undergrad, then as a professor, then as an active volunteer and supporter, I have seen nothing but partisanship wrangling, ineffective and unfair labor practices, and a disgusting abuse of student rights in how their courses are put together, their faculty selected, and education provided. This is a generalization, of course, but the establishment is so pervasive, even good educators are often stuck like flies in spiders' webs.

Reading Between the Lines (of The Decline of the Newspaper Medium)

Mr. Kravis and the welcoming party - myself included - were standing "off-stage" chit-chatting about the state of the business world. One of the topics discussed was the sad state of the newspaper business. Due to our client work, I've already presented my solutions at various forums. But Mr. Kravis' perspective was fascinating because it was global and directly affected his wallet since his firm owns lots of publications.

Note here that a discussion like this is practically irrelevant for anyone, including the folks who work in the industry. After all, you read about it every day in the paper, almost as an outside observer peeking into a monkey's cage. But Mr. Kravis wasn't merely addressing current business trends, he was actually revealing to us how he intends to change them! It's one thing to read about the news; here we were given the rare privilege of listening to the man that gets reported on. He is the news!

Anyway, the perspectives he gave made more sense at the conclusion of his lecture, but suffice it to say, they were based on an operators mindset. For example, there's a certain way to run a publisher and there's a certain way to run it to the ground. KKR buys companies that they feel could be run better, turns them around, and sells them for a respectable profit. This is one of the reasons why it may not make sense for them to hire strategy consultants regularly - they don't necessarily want new ideas, just ideas that are guaranteed to work, and they put a premium on execution. But as he was giving his views, which are nothing you haven't already heard - young people are reading less news, it's all about the internet, etc. - I was inclined to disagree. As I was explaining later that evening to a publisher of a local business periodical, young people haven't stopped reading, they've merely stopped reading your publication. There are several things to point out here:

a) For decades, publishers have used a variety of gimmicks to pump up circulation numbers, despite increasing media choices. We now know today that these practices went above and beyond ethical to the point of flat-out lying. A stagnant business model caused this, not fewer readers. Personally, I wouldn't look at it as a "decline", but a plateau. Newspapers won't ever disappear, they've simply got to make room for another medium, like they did once with radio, then TV. When Google News launched, everyone flipped, (and wasted gallons of ink celebrating or lamenting) but frankly, they're merely giving readers the means to do what they've always wanted to do anyway - get just what they want. Newspapers who expect to continue to increase circulation are in denial of the obvious. If TV lost ratings - TV! - you can be sure newspapers will lose circulation.

b) Readers aren't just readers. They're viewers, they're listeners, and they're surfers now, too. In other words, they don't exist in a vacuum. But when publishers are addressing their readers, they're under the impression that they're the only brand of content their readers prefer. How is this rational thinking considering how consumers consume? And how can they justify higher circ numbers in this sort of environment?

c) One of the unspoken truths about the future of all media is that it has become relatively cheap for large non-media organizations to aggregate their own audience and have a direct, measurable relationship with them. So why pay a newspaper (or any media outlet, for that matter) for the privilege?

d) Finally, in an information age, information is available any way we want it any time we want it. Publishers, without actually verbalizing it, have always promoted their products' uniqueness in being able to be enjoyed anytime the consumer wants to enjoy it. This, my friends, is what broadcasters are now calling "time-shifting", and publishers have permitted readers to do this always. Combine this with "pod-casting", "sound-byting", and other abbreviated ways for consumers to get the type of content they want whenever they want it and content becomes something previously unimaginable - valueless sometimes, valuable others. So, if content doesn't maintain the same value to end-users throughout its lifetime (forever), how can publishers justify ongoing rate increases?

Thus, the conclusion, as I see it now and have always advocated, is for publishers to overhaul their business models and dedicate more resources to niche audiences, publishing dozens of micro-publications for micro-audiences, and restructuring the way they sell their advertising accordingly. This creates "controlled collections" of content and delivers it only to the audiences that will give it an ever growing value.

Individual Teamwork

It took me almost 10 whole months to select the people I was ultimately going to work with to pull off this event. Throughout this entire time I had been dropping hints to various administrators and student leaders, all the while gauging Mr. Kravis' preference for the format. The administrators and students who didn't know who Mr. Kravis is didn't pass muster. Those who knew, but were too absorbed by their own agendas were also passed over. I finally settled for an administrator (Ms. Loretta Poole of the Berkeley Center for Entrepreneurial Studies) and a faculty member (Professor Jeffrey Robinson, assistant professor of innovation and entrepreneurship at Stern School of Business) who expressed immediate enthusiasm and maintained it throughout. Although I didn't realize it at the time, the source of their enthusiasm was similar to mine: the amazing opportunity that this would be for students, as opposed to the opportunity this would be for their school or their careers. Now I proceeded to reveal more things about the nature of the event I was cooking up. It was made clear that if I wanted to pull this off, though, the school must get the credit. Naturally, I obliged, because this event had to be free to attend in order to make it financially sound and that meant getting the space for free.

The moment that I acknowledged the support of these individuals was when

a) Prof. Robinson commented on how he'd read every book that mentioned Kravis in preparation for his interviewing Mr. Kravis. Professor Robinson happens to teach 3 courses, has a newborn at home, commutes, is actively involved in research, helps set curriculum policy in his department, and is a key man for his school's annual business plan competition. To find the time to brush up on Kravis was an admirable exertion and something I wouldn't have even thought of asking him to do.

b) Like a miracle, Loretta appeared at the event totting 4 assistants, the Dean (who she kidnapped from a conference he was hosting at another part of the University), name badges for all guests, table cloth for the check-in table, commemorative gift for Mr. Kravis, and water for the speaker (all things I was going to do myself, but she managed superbly, without breaking a sweat). How can you not appreciate an administrator like this?

c) Building staff, from media services to operations, accommodated last minute changes in a snap. The room wasn't exactly a Waldorf-Astoria hall (where I first saw Mr. Kravis speak), but it was brand new and presentable. (The building is only 2 years old, built with a gift from the Kimmel family. Upon learning this, Mr. Kravis says, "Oh, I know the Kimmels!" reminding me exactly who's presence I was in.) Besides building staff, associates and friends steadily presented themselves, ready to get their hands dirty to do something. Fortunately, everything ran so smoothly, there was nothing left to be done, but the gesture was certainly appreciated.

Everyone knew what had to be done and didn't wait to be told to do it. And they did it with pride. To know that there are so many I could count on is a humbling feeling and one I hadn't felt in the prior two years I worked to put these events together.

A Taste of Academia

I don't get aggravated often as head of my firm. I make the rules, and the rules are malleable. Anyone or anything that raises my blood pressure is by choice. I couldn't imagine myself working in any other environment because I know what independence tastes like and I've grown quite fond of it. There is no independence in "Corporate Academia" for students, staff, administrators, and faculty and it's one of the most open secrets in the "business".

As an undergrad, I remember receiving an education that wasn't consistent throughout categories and grade levels. I remember feeling alienated by the size and found my place of belonging outside of school. I remember struggling to achieve or just pass some courses, all along competing with my fellow classmates for jobs I couldn't realistically get, and finally, to realize that it was all a futile experience because I couldn't actually learn in the manner in which I was actually taught.

As a professor, I became deeply involved and attached with my classes. I derived nothing but pleasure in educating and I know they sensed it and genuinely cared about their coursework. I was often told that I connected with students because I was closer to being like them than the professors they usually got. I was even featured in the school paper for a particularly innovative teaching program I introduced. This utter nirvana was crushed when I was dismissed for an as-yet unexplained cause. Frankly, I believe that it had nothing to do with anything I did, but a bloated department that had to get rid of some deadweight. Rather than get rid of the deadweight, though, they got rid of me and some other hard-working, adjuncts. And since the department head was unaccustomed to dismissing anyone, he simply managed my particular case like a bumbling rookie, proof to me like no other that no amount of accreditation makes you more knowledgeable or capable than anyone else.

As an active volunteer at my alma mater, I am constantly floored by the blatant politics, maneuverings, and dealings I encounter at almost every turn: from inquiries on hiring practices, to inquiries on putting events together, to inquiries on proposing new courses. It's too draining to want to continue to volunteer.

But you might ask about how institutions of higher learning are hotbeds of ideas, how their campuses are the great producers of explosive American entrepreneurial spirit. Did you know that Stanford currently owns the rights to the name and some of Google's original technology patents? Why? Because the founders developed it on "their" property! I'm so angry at the implications of this arrangement that I must stop writing…

It's simple: colleges are selfish, pompous dinosaurs who still believe they command the absolute monopoly on the process of learning when all they're really doing is selling product to unwitting students (customers) at extortionary rates. The product, despite what you may think, isn't education, since many complete an undergraduate experience believing they have to go get an MBA to really know anything (and ironically, many who complete an undergraduate experience can't appreciate, or value it enough to survive in today's economy). So, the real product are the instructors.

Dismal, I know, but it's one person's opinion of working all sides of academia.

Finally Over

The event itself felt like it lasted a full afternoon, but it was just one hour. Thirteen months of planning, a week of total focus, and a thousand different angles to be maneuvered, all for one single hour. I was still so nervous and in so much disbelief at this moment finally happening that I actually noticed myself completely blanking out during parts of the interview. But at the end of that hour, there were over 150 students who were incredibly grateful and will spread what they learned, and give the ideas presented at the event value. They will provoke change in Corporate Academia after discovering that they really don't have to pay a pound of flesh to learn something new. And they will provoke change in Corporate America after hearing from the man who has quietly spent the equivalent of 1.1% of our national GDP buying and managing companies (1). (For comparison, Wal-Mart sales are equivalent to 2.4% of the GDP) (2).

Al Berrios is Managing Director of al berrios & co., an innovative strategy consulting firm advising leaders on the impact of human behavior on their strategies and on how to change their organizations to address the behavior. Write to Consumer Strategies Report at editor@alberrios.com.


(1) Note: Data for 2004. Source: Gross Domestic Product and Corporate Profits, the Bureau of Economic Analysis, U.S. Department of Commerce; al berrios & co analysis

(2) Source: Walmartfacts.com, http://www.walmartfacts.com/doyouknow/


(c) 2005. al berrios & company, inc.