During the past week, one business gathering I attended reminded me of how the business food chain is structured and lunch with a senior banking executive gave me some insight on how quickly it can shift shape. That change is both the good and bad news.
An awards dinner honoring NBA great Earvin “Magic” Johnson for his business accomplishments turned into an inspiring evening. A buzzing mix of corporate America and diverse small business owners gathered to network and talk mutual opportunities. Those on the lower rungs of the food chain want to partner with and learn from those at the top. It is also a testament to the fact that giant corporations couldn’t function efficiently without a long list of smaller vendors who can dance the steps that elephants can’t.
As the emcee for the event, I was seated next to Willie Davis who was an early Super Bowl star playing for the legendary Vince Lombardi at Green Bay. He turned the success lessons of the Lombardi experience into ownership of a beer distributorship and a string of radio stations. The scene was the famous Beverly Hills hotel which is as legendary for deal making meetings as for its illicit trysts among the rich and famous. In fact one of the bungalows (#4) served as home for Howard Hughes for a couple of decades.
Magic Johnson spoke eloquently about how hard he had to work to earn a place in the business food chain. He told us how it was easy to get many high level meetings based on his fame as a basketball player but when the conversation got around to business and seed money for investment, he was routinely dismissed as just a jock, a lightweight. In 1994 Johnson finally managed to convince Sony-Loews Theaters to partner with him to place a new movie house in Los Angeles’ Crenshaw district, the commercial hub of our city’s middle class black neighborhood. He was near the bottom of the chain, but that step into another kind of “big league” was the beginning of an amazing run of business creation and growth.
The audience of about four hundred business people broke into spontaneous applause when Earvin told how in the summer of this year he was offered up to two billion dollars in investment capital to purchase businesses where he saw special opportunities. His story gave a sharp insight into why after fifteen years of heavy lifting, Johnson is roaring toward the top the business food chain. You see, he said that would only accept one billion of the offered funds because he didn’t see a deal flow that justified two billion. And regarding the smaller amount he said that he hasn’t yet invested one dollar of it because he feels that there will be some great bargains in the marketplace in 2009. A number of CEOs could learn from this jock.
Over lunch with a senior banking executive a couple of days ago I got a meaningful lesson in how quickly the food chain pecking order can shift. In the crash of 2008 his west coast savings and loan was so badly crippled by the subprime packaged loan fiasco that it was scooped up by an east coast bank. In a shockingly brief period they went from being the biggest in their category to barely existing on life support and then to being absorbed by another company for just pennies on the dollar before the last rites were administered.
Ok, with the recent financial firestorm we now know that free markets don’t do a wonderful job of self-regulation. The result of avarice, greed and a few other foibles is basically a lesson of biblical proportions. But, let’s get back to the food chain and the opportunities created in the wake of traumatic change. America’s corporate elite whether they are run by over accomplished geniuses or someone at the bottom of the gene pool need capable small business owners. Who do you think is creating the temporary signs for the name change of the failed savings and loan? The transportation company that handles the needs of the acquiring white knight is a small business that now has an opportunity to grow to a higher place in the chain.
For those of us wanting to follow in Magic Johnson’s footsteps his advice is the following. “Don’t try to create a demand, simply satisfy an existing but underappreciated demand” and “exceed the expectations of your clients and customers.” Of course it sounds easier than it is in practice but there you have words of practical advice from a person who has lived just about every link in the business food chain and is now smiling from a place near the top.