Corporate Performance: It's Only Child's Play

When was the last time you looked at a company and thought, "How do these people even have jobs?" I ask that question a lot (especially of government officials... for another discussion). It's hard to understand how some people made it to adulthood without grasping the basics.

My father taught me a lot about corporate America, even though he wasn't a corporate titan. He was a dentist. But he taught me about respect, compassion, and treating people fairly. And he taught me the importance of listening to ideas and taking the time to assess them, even ones that are contrarian or unpopular.

How many CEOs of publicly traded companies can say the same? My guess is very few -- and that has to change. Soon.

I sometimes think my four-year-old twins know more about corporate accountability than most CEOs. And I suspect my six-year-old daughter knows just as much about sitting on a board of directors as the (presumably older) people who currently do.

My wife and I try to set a path for our kids so they can recognize right from wrong -- the basis of an ethical upbringing. We know, in time, they'll understand the message. But for now, at least, they're still putting all the pieces together.

What surprises me is how much I'm learning from their behavior -- and how often the lessons have meaning for investors and the companies in which they invest. What do I mean?

For starters, you need to be careful what you say to four year-olds. Just like investors, kids have steel traps for memories. They keep a record of every little detail, hold on to it forever, and tend to bring it up, typically in public, at the least opportune times.

You really shouldn't cry over spilled milk. Kids learn to pick their battles. So should investors. Some things aren't worth arguing about, although Sarbanes-Oxley/Reg FD people may claim everything is worth a debate.

But investors aren't the only ones with something to learn. Kids know that sometimes the best thing to do is keep quiet. Or tell the truth. And every kid knows it's never a good idea to say, "I'm sorry" in a way that suggests he doesn't mean it. Those are things we hope management at every public company understands. As I've written before, it's not just what you say, but how you say it (See When Company Secrets Aren't So Secret, Anymore and What Charlie Sheen Can Teach Corporate America.)

Kids, like CEOs, often seek immediate gratification. How many times have you tried to encourage a child to look at the big picture? To hold onto the few dollars he has in his piggy bank so he can get something bigger and better next month? But kids have a hard time focusing on the future. So do many CEOs.

Too many companies focus on the wrong things. Take short-term revenues. Focusing on them can help you generate short-term news blips. But investors are more impressed by what companies do for the long haul. As an investor, I want to be assured a company makes changes to improve its long-term outlook. I want to see investments in talent, technology, innovation. Oftentimes, when I see short-term news, it leaves me uneasy. I tend to think the company isn't looking at its sources of value well enough to create sustainable, long-term growth.

I'm not the first to say it. But I'm increasingly convinced that life is like a kindergarten class, just without time for recess and bathroom breaks. If we're smart, we'll soak up some of the lessons along the way.

What else can we learn from our kids to make us better investors or potential board members? I welcome your thoughts. But I have to go. I hear kids yelling -- and that's never a good sign.