“Poretz’s Law of Jerks on the Street” was originally formulated by me in January 1981.  I had started a new position at Flow General, Inc., which was then a NYSE multinational company based in McLean, VA.  The name was derived from a combination of Flow Laboratories, which was the global leader in producing tissue cultures and related products used primarily in biomedicine research, and General Research Corporation (GRC), which was a contractor to the US Government, particularly the Department of Defense.  The main story about the company was that GRC was a cash cow that generated revenue with a very high return on assets (because it doesn’t take a lot of money to fund a government contractor, but the return on sales is low because the government doesn’t pay a high margin), but the Flow Labs part of the company was both a cash consumer and “hot” to The Street because it had won a contract from the NIH to produce human interferon, which in 1981 was not only thought to be a cure for cancer but “the” cure for all cancers.

At any rate, when the company won the NIH contract its value soared, which allowed the company to bring in more money for some acquisitions and growth.  I had joined after the northward spike in share price and two days before the company was told that the Department of Defense would initiate hearings to consider barring the company from receiving any additional contracts due to allegations of conspiracy to commit fraud when it won from the US Army what became the largest contract in its history.

Of course, on that first day when I went to work, I did not know that in two days I would have to issue a news release that would change the direction of the company and drive its stock down dramatically.  I remember the feeling of walking into the company’s own building, shaped like a replica of the Pentagon, complete with its own auditorium, cafeteria, even barber shop.  After struggling for years building a generalist PR firm that went through ups and downs until I successfully exited it, I felt that I had finally “made it.”  Here I was, walking into a great NYSE company, with operations around the world, involved in some of the most exciting and technologically advanced projects in the world, working a few doors down from the CEO, working with a team of people who, well, if the company got this far, they must be great.

That’s when I developed Poretz’s Law of Jerks on the Street, which holds:

Stand on any street (or shopping mall or sporting event, etc.), and watch the mass of humanity walk by.  A certain percent of them will be jerks and a certain percent will be geniuses; a certain percent will be aggressive and a certain percent will be passive; a certain percent honest and a certain percent will be cheaters.  Whatever percent of whatever characteristics exist generally with people on the street is replicated in any other environment, including executive corporate suites.  Success of an enterprise was directly tied to the percent of people within an enterprise that exceeded the population as a whole when it came to the attributes needed for success.

In short, what occurred to me was that to create a successful organization all one had to do was beat Poretz’s Law of Jerks on the Street.  Is intelligence an important part of your organization’s success?  Make certain your organization has less jerks than what generally exists in the population.  Need to be aggressive?  Simple: fill your organization with a greater percent of people who are hustlers.

And Here’s How Poretz’s Law Of Jerks On The Street Relates To The Current Economic Situation And A Recovery

It is clear to me that large groups of organizations not only failed to beat Poretz’s Law of Jerks on the Street, but they succumbed to it, actually going in the wrong direction.  For example: AIG.  Now, in hindsight, it is clear they did stupid things and took foolish risks.  That wasn’t done by an organization that had less jerks than the general public. Truth is that AIG had to be populated by more jerks than the population as a whole.  Take a look at the auto manufacturers.  Banks.  You can make a list – it won’t be difficult.  Clearly, there have been (and still are) many organizations, both in the public and private sectors, that have been populated by a disproportionate number of jerks and people driven and living with the wrong values and standards for measuring success

Want an idea of when success will be on the horizon?  Easy. When watching news, listening to a conference call, or generally observing what is going on, ask yourself:  Is this organization beating Poretz’s Law of Jerks on the Street?  To me, whether he has succeeded or not is yet to be known, but it looks like the President Obama is making a determined effort to surround himself with people that beat Poretz’s Law of Jerks on the Street.  Kudos … so far.  But, when I look around at Congress as a whole, news organizations, our nation’s banks and financial services companies, and a bunch of other important entities, I’m seeing no improvement and in certain instances a decrement in the ability to beat Poretz’s Law of Jerks on the Street.

I’m willing to bet on one thing: the chances of any sort of recovery from the current crisis will be directly related to when we start seeing a much higher percentage of people with the right brains, motivations and standards in leadership positions throughout American enterprises.  Do you see a perceptible change yet?