Joe Paterno, Child Abuse Scandal, and You

by Victor Cheng

If you’ve been following the US news, you’ve most likely heard of a big scandal involving American football coach Joe Paterno and his assistant coach.

There is a VITAL business lesson in all of this that I’ll share with you in a moment.

As the scandal unfolds, it seems one of Paterno’s assistant coaches had abused several 8 year old boys in the Penn State locker rooms over the span of a decade or more.

Several people witnesses these cases over the years, and to make a long story short — nobody did anything about it.

When it was brought to his attention years ago, Paterno “passed the buck”, notified University officials and then promptly looked the other way when nothing happened.

Keep in mind these previous incidents involved the assistant coach admitting he did it to on campus police (which apparently is different than the “real” police)

As the scandal unfolds, the question keeps coming up… How could this have happened?

To understand HOW something like this happened, it’s useful to explain WHAT actually happened — and to do so in a way that be extrapolated to other situations… like running a business.

(As a parent of young children, I can’t figure who I’m more mad at… the abuser… or the people who looked the other way over the span of a decade)

So what REALLY happened here?

In short, the root cause here was in a word CULTURE.

Huh?

One of my mentors, an individual who grew a 30 person company to 30,000 employees in 10 years creating a Fortune 50 company in the process once told me, there are only 3 things you need to worry about as CEO.

1) Strategy – What’s important enough to be worth doing
2) People – Who is going to do it
3) Culture – How people should behave in the absence of explicit instructions

The real problem at Penn State is a culture problem. And ALL culture problems are ALWAYS due to the person at the top. In a business, that’s the CEO/founder. In a University, that’s the University President and/or Head Football Coach.

Here’s why.

As my mentor explained to me, the ONLY person in an organization who can set the tone for the organization’s culture is the #1 person… the person in charge.

You can’t delegate culture.

It doesn’t work.

You can’t have Human Resources come up with the official culture for an organization… because if the CEO doesn’t follow it, everyone else will know it’s meaningless.

More specifically, when you pinpoint the specifics cultural issue, it’s actually quite simple.

Every organization has (or should have) it’s mission. A mission is the organization’s purpose for existence.

In the case of Penn State, the organization’s mission was:

WIN Football Games & Championships… PERIOD.

It is VERY clear this was the mission. Whether this mission was every written down as a statement is irrelevant. By examining the behavior of everyone involved from University leaders to the janitors, to Paterno.

ALL of their behavior is can be explained as being “on mission”… in alignment with their mission.

Now you can debate whether that should have been the mission… but it’s hard to argue that their behaviors were inconsistent with this mission.

BUT, all missions should be constrained by an organization’s VALUES. It’s an organization’s values that defines its culture.

Yes, here’s where we get into MBA jargon words that I normally like to make fun of… concepts like a mission statement or a values statement. (More on this in a second).

A mission might last decades, but one’s values should last for an eternity. It is a sense of what is important… things that you will do or never do despite the mission. It defines WHO you are.. before you decide WHAT to do.

The problem with the culture at Penn State is that the MISSION was clear, but it was unconstrained by any REASONABLE sense of VALUES.

When a Mission isn’t constrained by Values, what you end up with are Enron’s, Bear Sterns, the Catholic Church Scandal (the last one is quite ironic if you ask me).

I suppose you could logically argue that the values at Penn State were = Win at Any Cost. And I suppose if you look at Enron & Bear Sterns’ values…. maximize profit at any cost…. or the Catholic Church… protect your reputation at any cost…

Either the values were to weak to constrain the mission or the values were the wrong ones to begin with.

So how does this relate to you and business?

YOU need to decide both your values and your mission.

Forget the “statement” part of values statement and mission statement… which I think ultimately complicates things. But truly think about what you and your company’s values really are.

Sure thing kind of stuff seems “soft”… it feels optional… unlike focusing on EBITDA margin, or making quota. But, if you don’t define your values and mission, than it becomes surprisingly easily to have an organization drift of course as the months and years go by.

I know this from experience. I had a phase early in my business career where every metric I aimed for I achieved, but I was miserable. I was selling a product I was embarrassed by, to a customer segment that I didn’t respect, and making good margins and sales too boot.

I remember thinking to myself… “How in the world could this have happened?” (Not to dissimilar to the comments being made about Penn State right now…) Though my situation certainly doesn’t compare to Penn State, the underlying causes were the same.

I had NOT defined my values and I didn’t really have a mission. And just in case you’re wondering, X% sales growth and Y% EBITDA margin growth is NOT a mission.

Today after much soul searching, the help of a wonderful executive coach and friend, my values and mission are crystal clear.

When your values and mission are clear, decision making becomes ridiculously easy. It because extremely easy to say NO to every opportunity (of which there are countless) that conflicts with my values or mission.

Here’s my mission and it will quite likely be the one mission I’ll end up devoting my entire life to (yes, you should feel that strongly about a mission):

Helping more people live better lives through better businesses and better business skills

It’s not the most concise of statements (probably a few grammar mistakes too boot) but it very much is THE common thread between all of my decisions — short term, long term, for profit, pro-bono.

Here are a few of my values in no particular order:

  1. Always be improving your self, your skills, your business
  2. Be the best in the world at what you do at every price point you do it at (including the price point “free”)
  3. Only participate in businesses where I have a personal competitive advantage, an exceptional talent, or asset that’s relevant to the business’s success (otherwise it’s too hard to accomplish #2 above)
  4. Treat others MORE than fairly
  5. Life is short, it’s too easy to drop dead suddenly, if it ain’t fun, I ain’t doing it (or at least not for very long)
  6. Always be learning… Always be teaching.
  7. Don’t be afraid to charge what you’re worth, but make darn sure customers get at least 10 times what they paid for (directly linked to #2 and #3 above)
  8. Be proud of what you do (and if you can’t, you should stop doing it)
  9. Leave the world a better place than you entered it…don’t just consume… produce something useful.
  10. Maximum profit is NOT the goal. Maximum profit is the BY-PRODUCT of doing the above… a measuring stick of how useful one is to everyone else.

When your mission is clear and your values even clearer, it becomes very easy to make good decisions. I suspect Joe Paterno and Penn State lost their way somehow in the process. Don’t make the same error for yourself and your business.

What are YOUR values?

What is YOUR company’s mission?

If the answers to those two questions are not CRYSTAL CLEAR, do not be surprised if one day you find yourself asking, “How in the world could I let this happen?”

That’s my thought for the day.

Comments

{ 6 comments… read them below or add one }

Sarah November 10, 2011 at 12:40 PM

Thisi s an excellent article about how powerful “culture” is in any society.

Joe November 15, 2011 at 8:05 PM

Victor,

You should stamp date on your article so I can properly cite your work into any writing or discussion.

Burton Kent March 19, 2012 at 7:46 AM

Love the distillation of strategy, people, culture. The more I think about it, the more I realize this really, really is the 20% (or 5%) of the 80/20 principle.

I also love and relate to the values you expound. Money isn’t really (and shouldn’t be) a real motivator – doing the right thing is.

Bryant Jen April 12, 2012 at 11:43 PM

Thank you for your blog and this website. I have been a constant underachiever in college, because I haven’t been able to pin point what my values are and what kind of career I want. I wandered to your site after getting interviews with a variety of mid tier consulting companies such as Deloitte, Microstrategy, and Cognizant. I made final rounds to all of my interviews, except Deloitte, but have not received a single offer. While this has been incredibly demoralizing, your daily newsletters and this blog, give great insight anda glimpse of what is possible through hard work, regardless of my rocky start. I actually went to my school job site and there was a Merril Lynch finance intern position, very similar to the position you did all those years back. While I previously did not want to work for free, especially my senior year, I am excited at the prospect of building up a competitive consulting resume. My GPA is very bad <3.0, but I think with a few good job experiences, along with hopefully a top graduate school, I can shoot for MBB, and if I fall a bit short of that, I still would have traveled a long way from my unmotivated undergraduate self.

Mr Kaan January 4, 2013 at 2:44 AM

I enjoy reading your posts since they take a real-world event and extract the business lesson from them (even if they are not immediately obvious).

It is interesting to point out that your values or company values don’t have to be constant throughout your life. They can change, and sometimes definitely should change, when you enter new periods of your life.

//Mr Kaan
theyoungcareerist.com

Tadeusz Kuropatwinski March 16, 2014 at 5:54 AM

Hi Victor! Thank you for your article, it is spot on and I also truly believe in culture building and being aware of your values. When I look on all the businesses I admire it was always the case that they were not driven by cash solely, the dream and the mantra of the leaders was always deeper and wider. If the values are walked by the organisation day by day + the people are A players and strategy is sound then even mediocre ideas fly very high. Thx again and greetings from Warsaw, Tadeusz

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