Servant Leadership

The private equity industry can have a reputation for being greedy and sharp-elbowed. It typically operates based upon a fixed-sized pie construct, and the objective of the private equity firm is to get as much pie for itself as possible. There are rarely any nefarious intentions, but private equity principals are typically very smart and very competitive. The consequence is a model where there are usually winners and losers. If I want more, you have to get less; if there is a contract point being debated, someone prevails. At New Harbor, our leadership team contends that there is a better business model that is predicated on putting the needs of others first. It is a model of servant leadership.

What we have learned along the way is that the best relationships are built when we treat others like true partners. In a well-functioning partnership there is a foundation of mutual trust and respect. It is difficult (impossible?) to have a successful partnership if your partner believes that you do not truly care about them, or worse, that you are trying to benefit at their expense. Manipulation leads to distrust, and distrust leads to defensive behaviors, which diminish performance and outcomes.

The opposite is also true. When someone knows that you truly care about their success and welfare, they will give you their best. They will give you the benefit of the doubt. True collaboration happens. In the engine room of true collaboration, great ideas are born, and breakout performance is possible.

New Harbor Capital was founded with one fundamental, core mission: to be a top-performing private equity firm, while also being a great business partner. Instead of a fixed-size-pie model, our model is to carefully diagnose how much pie each person in the partnership wants, and then closely collaborate to engineer a solution where everyone gets all the pie they desire. Everyone can win together. The New Harbor Capital team deeply cares about the success and welfare of the people we do business with. Sometimes, that means that we need to put our short-term interests, needs, and desires in the back seat. This rarely goes unnoticed, and trust is built. Defensive walls are dismantled. Joy increases. People give themselves to the work. Great results happen.

Servant leadership is New Harbor’s secret sauce. If you want to be a great firm, put others first. Obviously, it takes more than just that. To be the best, you also need talent, opportunity, a great strategy, a great business model, and hard work.

Start with your employees. Instead of the old adage “put the customer first,” replace it with “put the employee first.” When your employees know and truly believe that you care about them and are interested in their ideas, they will bring their best every day. Performance of your organization will improve, and great customer (or investor, partner, etc.) service will be the byproduct.

Further, you do not need to be the CEO to be a leader. Even the most junior employee can be a servant leader by coming to the aid of a colleague, always seeing the best in others, and volunteering for the thankless work. This is countercultural. Society teaches us that to get ahead, we need to compete with others to climb to the top. Once there, everyone else in the organization is there to support us. Servant leadership can turn the traditional pyramid upside down. The leader is at the bottom and carries the burden of supporting everyone else in the organization.

In the private equity industry, we ultimately live and die on our reputations. Am I a good partner to the founders that work with me? Do I do what I promise, even when it is hard? Am I loyal? Am I a good seller (meaning that the companies I sell perform well for the next owner)?

Investing in your reputation is playing the long game. Business owners select New Harbor today because of our extensive and referenceable body of work. We walk the talk. Our prior partners stick with us for the long term. They invest in our funds. They can become Executive Advisors. They strongly endorse us when contacted for references. This is all borne out of servant leadership and is the foundation of our success.

Lastly, focusing on the welfare of others enables us to live in harmony with how we were created to live. It feels good! It's fun to get to the top of an arduous climb with a bunch of colleagues that have battled their way up with you and share credit for the summit. Conversely, it's exhausting to constantly worry about whether someone will comply with your demands, or worse, might be trying to take advantage of you. Servant leadership leads to energy, peace, and joy, while selfishness leads to anxiety, frustration, and despair. We often tell people that New Harbor’s primary goal is to be the best servant leaders we can be. Great returns are just a byproduct.

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