Last weekend we moderated a panel that discussed founding new PE firms/funds in the ever-evolving world of private equity. Surprisingly, new GP’s and LP’s agree, they all want to see unbiased transparency in the market. We concur! Let’s make this market a meritocracy, based on pure unbiased true performance metrics, not some backdoor deal with the sign-off of a services intermediary that could change ratings for the right amount of money.
Since it was HBS, it naturally links to the question of Leadership, something the current Dean has written many books about. Leadership is that funny, elusive concept that everyone wants but not many understand. We know it when we see it but we can never quite articulate it. The conventional thinking is that leadership is about title, money, resources, access, etc. But, its none of the above because neither Mahatma Gandhi nor Nelson Mandela had title, money, nor access, and yet no-one can deny their leadership.
The lessons from leadership apply to standards. One cannot be the standard by artificially pushing through money, resources, access, or any other artifice that a large biased player wishes to use. Such standards are bound to fail. Standards, like leadership, have to emerge based on their pure merit & excellence. Standards must be incorruptible by Bankers who want a better rating for a product, or PE firms who want to raise larger funds. Good standards don’t have to be thrust upon us; they just emerge from transparency & honesty. I realize this is an idealistic, arcane concept, but then so is true leadership.
Therein lies our viewpoint on what is excellence in benchmarking. It must be fully transparent, frame-able, & un-biasedly appropriate. That is the standard for excellence and anyone who wants to be called a benchmark MUST adhere to what is excellent.
So to the question of the day – Should ILPA adopt the Cambridge Benchmark as the standard?
Well—Is it fully transparent? Is it really frame-able? Is it un-biasedly appropriate? ILPA can answer those questions for itself and hopefully, it will maintain its goal to, “help enhance the private equity asset class globally,” by putting out a benchmark that’s truly transparent, frame-able and appropriate – for the benefit of all, transparently and without bias.
Gitanjali M. Swamy, Ph.D., is Chairman and CEO of AARM Corp. Opinions expressed here are entirely her own.