In his 1985 best-selling “A Passion for Excellence,” Tom Peters tells the story of General Bill Creech, who led a reorganization of the US military’s airplane maintenance crews. His NCO’s process improvement plan involved assigning personnel to the same planes over extended periods of time, rather than switching them out more quickly. 

When the general asked why this approach made more sense, the officer replied, “General, when’s the last time you washed a rental car?” Peters continues, “None of us washes our rental cars. There’s no ownership. And there’s no ownership if you’re a specialist, no matter how well trained, if you’re responsible only for two square feet of the right wing of a hundred planes. Only whole planes fly.”

The recent First Brands/TriColor kerfuffle brought this anecdote to mind. The failure of these two auto-related, non-private companies with bank-led syndications had been linked inexplicably to increased risk in private markets. As we discussed last month, there’s zero connection between these situations and how private credit operates. Ownership, as Tom Peters made clear in his example of corporate excellence, is a critical element.