The Demise of the Keating Partnership 1
Running Head: THE DEMISE OF THE KEATING PARTNERSHIP
The Demise of the Keating Partnership:
Failure to Integrate an Acquired Company
University of St. Thomas
May 9, 2008
The Demise of the Keating Partnership 2
The Demise of the Keating Partnership: Failure to Integrate an Acquired Company
Several years after acquiring Web Tech, the Keating Partnership, a once thriving organization,
collapsed. Two fatal flaws prevented success: inability to integrate Web Tech into the
organization as a whole and the subsequent failure to adapt a suitable bailout solution. In
sociological terms, the case demonstrates Bruce Lincoln’s theory on social borders and the
failure of symbolic discourse ‐ in this case, myth, ritual and slogan ‐ to promote cohesion.
Keating Partnership’s exacting rituals alienated Web Tech, and their pervasive myth prevented
the selection of an appropriate bailout. The result was total failure on every level.
The Demise of the Keating Partnership 3
The Demise of the Keating Partnership: Failure to Integrate an Acquired Company
I can think of no greater tragedy in business than to see a once‐thriving enterprise go out of
business. When a company closes its doors, the economy suffers in obvious and sometimes not so
obvious ways. People lose their jobs; commercial landlords lose their tenants; business equipment
companies lose their customers; nearby restaurants lose their lunch patrons, parking ramps lose their
regulars. But the impact extends beyond economic loss. Workers suffer the loss of their identities and
affiliations; they lose self‐esteem and confidence. Unfortunately, several years ago, I lived through just
such a tragedy.
In this paper, I will present the case of the Keating Partnership, a privately held sales and
promotional marketing agency. I will recount the developments of this firm in four parts. I begin with
the formation of the company followed by an overview of the early years during which the company
grew from a two person shop to an organization of over 200 employees. I then move on to describe the
financial hardship resulting from a poorly‐made acquisition. Finally, I will describe the bailout strategy,
which ultimately drove the company out of business.
Following the description of the facts in the case, I will analyze the situation from two points of
view, using both economic theory and social political theory. I will begin with economic theory and will
deconstruct the case using the theories Karl Marx. Specifically, I use Marx’s conflict theory to analyze the
class struggle between subgroups in this case. I will also show how Marx’s theory of the mental means
of production impacted the decisions made at the Keating Partnership and how these decisions
contributed to the company’s demise.
My case analysis will also include a review of political and sociological theory. Here I use both
Edelman’s construction theory and Bruce Lincoln’s theories on discourse. Using Edelman, I consider
construction theory in three ways. First I will consider leadership as a construction and leaders as
symbols of failure, applying this theory to both the Keating Partnership and the bailout firm. Second, I
will show how the agency used gestures as solutions and third, I will explore how the bailout firm
The Demise of the Keating Partnership 4
viewed the Keating Partnership using Edelman’s theory of problems as benefits. Lastly, I turn to Lincoln
and show how the players at the Keating Partnership used both ritual and slogans as discourse to
promote social integration. This discourse allowed a pervasive myth, the myth of the entrepreneur, to
thrive within the firm, guiding its decisions and influencing the outcome.
Keating Partnership Case Background
The formation of the Keating Partnership
In 1989, a young marketing manager, employed by the Gillette Corporation reunited with an old
colleague. The marketing manager, Mario Patella, experienced disillusionment with his job. He felt
stifled by the rigid structure and strict behavior code at Gillette. Wearing a suit and tie every day, he felt
he was suffocated and complained of boredom. Worst of all, while hard work contributed to the
company’s profits, he shared only indirectly in these gains. He longed for a more equitable distribution.
Patella’s college friend, Patrick Keating experienced just the opposite. Instead of a suit and tie,
he dressed casually. His daily schedule provided much diversity. Employed by a printing company, he
generated new business by tapping into his network of college friends. Keating’s high energy and
charisma served him well. He worked on commission and generated a strong income.
In college, Keating paid his own way. He used his street smarts to his advantage, working odd
jobs and finding ways to earn money. He delighted in telling the story of using his winnings from a
billiards match to pay for his last semester at school. Keating always seemed to be able to make a buck.
The printing company Keating worked for focused on large projects. Keating often turned down
smaller projects. As a result, he decided to start his own company focusing on small‐scale jobs and
asked Patella to join him. Keating prided himself on his entrepreneurial spirit but needed a partner with
a strong business background. Together they formed the Keating Partnership.
The early years at the Keating Partnership
From the beginning, Patella and Keating steeped their company in the entrepreneurial tradition.
They started with little more than two card tables and a shared telephone. But, with Keating’s ambition
and gift for finding opportunities, the company grew. Soon, they acquired enough business to hire
The Demise of the Keating Partnership 5
additional colleagues. Patella refused to use the word employees. Employees, he believed, worked for
corporations. Colleagues worked together as equals.
Within three years, they hired 30 colleagues and formed a small management committee to
guide decisions and growth. Together they expanded the business beyond printing. By 1992, they
added marketing planning to their credentials. Soon after, the firm evolved into an upstart promotional
agency known within the industry as a “hot shop.”
Patella insisted on fostering an informal culture. Except for client meetings, everyone dressed in
blue jeans. On Mondays, they all met to review the week’s priorities. These meetings, known as
“Monday Morning Meetings,” opened with Patella telling jokes as a way to start the week off with a
laugh. On Fridays, colleagues took turns providing breakfast treats for the team. As the firm grew, the
tradition continued, but the company reimbursed colleagues for the expense.
Many companies formulate mission statements to clarify their identities and guide decision‐
making. Still rebelling against the corporate structure, Patella insisted on a non‐mission statement. He
developed a catchphrase that functioned as a motto. “Viability, goodness and excellence.” Viability
meant the company was a for‐profit enterprise where decisions needed to be financial prudent.
Goodness represented ethics, meaning colleagues conducted themselves with integrity. Excellence
referred to the agency’s product.
The company turned out the best work in the industry and eventually received the “Agency of
the Year” award by the Promotional Marketing Trade Association. At the time of the award, the Keating
Partnership had over 200 colleagues organized into three departments. Each department worked
cohesively. Colleague satisfaction was high; the office ran like a well‐oiled machine..
Growth by acquisition
By 1998, the emergence of the internet created a challenge for the Keating Partnership. Clients
wanted to extend their marketing online and sought firms that could also built web sites. The Keating
Partnership faced two choices. They could hire colleagues with these specialized skills and develop the
The Demise of the Keating Partnership 6
capability in house, or they could acquire a company and be productive immediately. True to form,
Keating drove the decision to acquire a company and they entered the market quickly.
The acquired firm, Web Tech, employed six people, all men, and all owners in the firm. The
majority of them emigrated from India. Because of the marketplace demand for firms like this, Web
Tech commanded a very high price. While the Keating Partnership enjoyed enormous success, as a
service company, they had almost no collateral for the acquisition loan. As a result, the bank required
them to back the loan with their personal assets. They mortgaged their homes and the acquisition went
Almost immediately, Web Tech’s people felt alienated. They sat in a separate and quiet room
away from the agency’s din. They reported to a woman department director, which proved problematic.
In India, businessmen rarely reported to women. Lastly, they disliked Monday Morning Meetings. By this
time, the meetings took place in an auditorium style room, complete with sound system. Meetings still
started with jokes, offered now by colleagues who took the stage, microphone in hand. The Web Tech
colleagues resented this comedy club atmosphere, and stopped attending.
The management team looked for solutions to integrate Web Tech. They started by including
the founder on the management team. They also singled out and publicly recognized the work
performed by this group, believing the recognition would produce a feeling of belonging.. Eventually,
they offered vice president titles to the Web Tech colleagues. None of these efforts worked. After their
employment contracts expired, five of the six Web Tech colleagues resigned.
With the collapse of Web Tech, the Keating Partnership could not compete for web site projects.
Growth came to a halt. However, the loan payments continued to come due and because they over‐paid
for Web Tech, the Keating Partnership faced a real problem. Cash flow tightened. The firm made their
loan payments but other bills lapsed. Once, the phone company temporarily discontinued service.
Colleagues lost moral; clients lost confidence. Facing a loan default, Keating and Patella needed an
The Demise of the Keating Partnership 7
The search for bailout solutions
Keating took the lead and presented several options. Each presented opportunities and risks.
But, Keating and Patella wanted to remain in control of the company, so they eliminated most buy out
solutions. They considered taking the firm public via a stock offering. They hired an investment‐banking
firm but soon after, the tragedy of September 11, 2001 hit. The stock market plunged and they
eliminated this option from consideration.
As a last resort, Keating and Patella considered an infusion of venture capital. They met an
investor, Ronald Trump of LaSalle Capital, a classically trained, sophisticated businessman. If they joined
forces with LaSalle, Patella and Keating would continue as company leaders. If they used LaSalle’s
investment dollars wisely and if the agency resumed its trajectory, LaSalle would remain uninvolved. As
a whole, the management committee disliked this option. Fearful of the impatient nature and high
expectations of venture capital, the committee saw a veiled slave‐master relationship.
Trump sensed the committee’s hesitancy. A courtship ensued. First, he sent his private jet for
Patella, Keating and the management team. They flew to Chicago to meet the rest of Trump’s partners,
who appeared less aggressive and more approachable than the management committee expected.
Trump also introduced the Keating colleagues to Bob Castlerock. Three years prior, LaSalle invested in
Castlerock’s agency with stellar results. With LaSalle funds, Castlerock purchased several
complementary boutique agencies. He bundled them together forming a larger firm with a full array of
services. Now able to compete for larger clients, Castlerock’s agency grew substantially. Castlerock
assured everyone that Trump remained hands‐off. So long as Castlerock met his projections, LaSalle
stayed out of the way. He managed his company as he always had, with the added benefit of the
infusion of LaSalle’s capital, which he needed in order to grow.
Patella and Keating felt LaSalle offered the perfect solution. They found Castlerock’s story
compelling. With LaSalle, Patella and Keating would remain at the helm. This option preserved the
company culture, which they worked so hard to establish. Importantly it offered the prospect of
renewed growth. LaSalle wrote up the agreement and they sealed the deal.
The Demise of the Keating Partnership 8
A short honeymoon and then reality
At first, all proceeded as planned. LaSalle retired the agency’s debt. They also made available
several million dollars for investment and encouraged the agency to develop a list of acquisition targets.
Almost immediately, Patella and Keating acquired two firms. Unfortunately, neither proved successful.
Due to their lack of experience, Patella and Keating missed many warning signals; the acquired
companies did not serve unique needs and had unstable client lists.
By the close of the first year, the Keating Partnership missed every financial projection. Trump
became impatient. Tension grew between Trump, a classically trained business man, and Keating, a self‐
made entrepreneur. As colleagues we witnessed this tension and predicted Trump’s next move.
Trump installed a chief financial officer, Bob Beancounter, from his Chicago staff. Immediately,
Beancounter imposed financial restrictions to make the company more profitable. First, he established
a salary to revenue ratio. Because of the Keating Partnership’s long standing generosity, salaries
comprised too large a percentage of the agency’s revenue. Beancounter froze salaries and put a
moratorium on pay raises. Next he established a benchmark for billable hours, striving for 90%. He
circulated monthly reports so that everyone’s billable rate became public knowledge.
Financial restrictions led the way, but soon after, Beancounter curtailed the perks, putting an
end to Monday Morning Meetings and Friday morning breakfasts. Beancounter also worked behind the
scenes to cast doubt on Keating’s leadership. He advised against mistaking entrepreneurial flair for
sound business principles and stressed that real success required a more disciplined approach. Within a
few months, Trump and Beancounter announced Keating’s retirement. While Patella stayed, he found
little satisfaction in continuing on. Finally, Patella approached Trump and negotiated an early buyout.
Trump installed Mark Teeman to replace Patella. Teeman and Trump worked together years
before. By all account’s Teeman’s track record lacked measurable results. But due to the personal
history between the two men, Trump trusted Teeman. Trump’s decision, however, turned out to be a
bad one. Teeman proved to be indecisive and he failed to instill confidence in clients. The agency’s
biggest client left the firm. Soon after, other clients took their business to an agency that now employed
The Demise of the Keating Partnership 9
several former Keating Partnership colleagues. Teeman unsuccessfully pitched several new clients.
Beancounter recommended layoffs and Teeman agreed. The agency shrunk in size, stature and moral.
Over the next six months, Teeman and Trump struggled to keep the agency afloat. In an effort to
build in‐house capabilities, they hired several executives from other agencies. But with the Keating
Partnership’s failing reputation, the talent they attracted proved to be second rate. As a result, this
strategy failed. All the while, client confidence sank; clients and colleagues continued to defect. Not
more than a year after Teeman’s arrival, Trump decided to cut his losses and the Keating Partnership
closed its doors.
I believe the Keating Partnership’s demise could have been avoided. Having provided the back‐
ground and facts of this case, I will now use both economic and political theory to deconstruct the case.
In this section I will review the economic theories proposed by Karl Marx, specifically, I will
explore conflict theory and the relationship between the economic classes formed at both the Keating
Partnership and LaSalle Capital. I will also review Marx’s theory of the mental means of production and
show its bearing on Keating’s bailout decisions.
The Economic Theories of Karl Marx
Karl Marx’s conflict theory
Karl Marx considered domination a form of conflict (Collins, 1985). Specifically, Marx observed
that individuals and whole classes of society continuously exert their self interest over one another.
Because of their wealth and their means, Marx believed the propertied class or the owners of capital
possess an unfair advantage over workers. Workers, on the other hand, possessed no resources except
their labor. With their advantage, property owners exploit workers (Collins). In short, Marx believed
social classes always form along economic lines, and inevitably the dominant economic class always wins
the struggle (Collins).
The Demise of the Keating Partnership 10
In the case of the Keating Partnership, I see three applications of Marx’s conflict theory. First, in
his early career at Gillette, Patella felt alienated by the corporate giant and its hierarchy. From the
Marxist point of view, Gillette exploited Patella. He worked hard but the corporation reaped all the
benefit in the form of profits, which they did not share with their employees. Secondly, and in an ironic
turn of events, by the mid 1990s, Patella and Keating held dominant positions over the employees from
Web Tech. They usurped Web Tech and colonized their workers, extracting from them their
technological expertise. Because of their alienation, the Web Tech workers sat apart from the rest of the
Keating Partnership ultimately rising up and leaving the company altogether. Lastly and in a final twist,
Patella and Keating lost their dominance to LaSalle Capital. With LaSalle’s financial resources and means,
Patella and Keating found themselves in a subordinate role. LaSalle controlled the finances, took away
raises and perks and stripped the agency of its culture. Eventually, LaSalle removed Patella and Keating,
and the agency collapsed. Trump and Teeman remained unscathed, retaining their wealth. They cut
their losses and moved on; Patella and Keating left with bruised egos and a meager settlement, laid‐off
colleagues left with even less. Just as Marx predicted, the dominant class won the struggle.
Karl Marx and the mental means of production
Marx believed that in any struggle, opposing forces use ideology to focus their efforts. These
ideologies reflect the economic interests of the dominant class. Importantly, the dominant class controls
the means of production and dissemination of these ideas (Collins, 1985). For example, typically the
ruling class controls the printing presses, newspapers and books from which society receives its
information (Collins). As a result, the dominant class sets the agenda for society as a whole. The voices
of the lower classes remain unheard.
The case of the Keating Partnership clearly reflects Marx’s theory of the mental means of
production. As the Keating Partnership waivered in the decision to accept venture capital from LaSalle,
Trump staged a remarkable courtship. He sent his private plane and flew the group to his office in
Chicago. The allure and opulence set the stage for what came next. The demeanor of LaSalle’s partners
surprised the Keating contingent and alleviated their fears. Trump then used Castlerock’s personal
The Demise of the Keating Partnership 11
testimony to seal the deal. Castlerock’s experiences reflected Trumps idealistic worldview of how
venture capital works. He presented a controlled and one‐sided view that went unquestioned by the
Keating team. Had Patella or Keating been armed with Marx’s theory, they might have insisted on
speaking with a wide variety of LaSalle’s clients to round out the one‐sided story presented by Trump.
Through the installation of Beancounter, Trump eliminated what was left of the agency’s culture. By
discontinuing Monday Morning Meetings, Trump eliminated the voice of the colleagues. In fact, the
management committee ceased to have influence by this point. As Marx espoused, the dominant class
sets the agenda.
Using Karl Marx’s theories, we see how the exploitation of workers and the mental means of
production influenced the case. I now turn to political and sociological theory to continue my analysis.
Political and Sociological Theory
The theories of both Murray Edelman (1988) and Bruce Lincoln (1989) provide useful tools to
analyze this case. I will begin with an explanation of Murray Edelman’s constructionist theory followed
by my analysis of how this theory and four of its foundational elements apply to the case of the Keating
Partnership. Next, I will turn to Bruce Lincoln’s discourse theory and explore social borders, taxonomy,
ritual and myth.
Murray Edelman’s Constructionist Theory
Murray Edelman (1988) challenged the popular notion that we, as individuals, take in the world
through objective observations and verifiable facts. Edelman considered news accounts to be
constructed spectacles that in turn construct not only our leaders but our worldview as well. Edelman
supported this assertion by stating that if our worldview “depended on factual observations, false
meanings would be discredited in time, and a consensus around valid ones would emerge (p. 3).
According to Edelman, because no such consensus exists, politics reflect the situation and social
conditions of the time, “ideology and material conditions are part of the same transaction” (p. 3).
Edelman’s constructionist theory contains several supporting elements. I will now examine four
of these. First, I will review leadership as a construction, followed by an explanation of gestures as
The Demise of the Keating Partnership 12
solutions. Next, I will explore Edelman’s ideas on the construction of problems as benefits, finishing
with a look at leaders as symbols of failure.
Leadership as a construction
As applied to leadership, Edelman (1988) developed his construction theory along two lines.
First, Edelman asserted that leaders create themselves as personas through the language and actions
they choose. Second, Edelman stated that leaders become symbols of their ideologies, serving as
archetypes. Using their rhetoric, gestures, and historical accounts, leaders invent themselves in a way
that corresponds with their ideology (Edelman).
This case provides an example of leadership as a construction. In the early years, Keating
presented himself as an archetypal entrepreneur. Consider his rhetoric regarding “making the money
show up,” and his story of winning his tuition money in a pool hall. His construction fueled his self
confidence, creativity and unconventional approach. What is more, Keating dressed the part, rejecting
suits and ties. As a sales representative, he refused a conventional desk job. On the whole, Keating
constructed his entrepreneurial persona and reinforced this leadership image continuously with actions
and words. He chose the riskiest solutions at hand. He mortgaged his home to acquire Web Tech and he
chose venture capital over a corporate buyout.
Construction of gestures as solution
In Edelman’s view, leaders sometimes offer gestures to induce order or quiet discontent (1988).
In truth, these gestures rarely solve the problem but rather give the appearance of substantive action.
Leaders stand to benefit from the belief that a problem has been solved; such gestures solidify their
power (Edelman). Moreover, Lladers rely on the publicity of such gestures to pacify subgroups and
reinforce their leadership. Typically these announcements promise more than they deliver (Edelman).
In the case of the Keating Partnership, Patella needed to find a way to reengage the Web Tech
employees. Their alienation presented an ongoing problem, preventing the firm from realizing the full
potential of the acquisition. In a gesture disguised as a solution, Patella offered Web Tech’s founder a
The Demise of the Keating Partnership 13
seat on the management team. The agency relied on the publicity of this move to construct the
appearance of integration. By offering vice president titles to the Web Tech employees, Patella and
Keating intended to exhibit a unity that really only existed on the surface. Had either of them
understood Edelman’s theory, they may not have been surprised by the ultimate collapse of Web Tech.
Edelman noted that when these appeals “do not touch the experiences of their audience, indifference is
to be expected (p.8).
Construction of problems as benefits
Contradictory though it may seem, “a problem to some, is a benefit to others” (Edelman, 1988,
p. 14). When a problem persists, a converse opportunity exists for the party in charge of solving the
problem. For example, “discrimination against women or minorities means favored treatment for men
and for majorities” (Edelman, p.14). In the case of the Keating Partnership, Ronald Trump of LaSalle
Capital had a personal conflict which interfered with righting the agency’s problems. Trump held a
superior view of his own abilities and accomplishments. In order to perpetuate this self image, he
allowed Keating the latitude to seek and finalize acquisition deals, despite Keating’s poor track record
with Web Tech. Trump knew Keating’s weaknesses, but by allowing Keating to make many mistakes,
Trump assured a role for himself. This reinforced his worldview, where the haphazard approach of the
entrepreneur proved inferior to the disciplined approach of a classically trained businessman.
Leaders as symbols of failure
While leaders construct themselves, they also construct their beliefs and definitions of success
and failure (Edelman, 1988).Edelman contended that “beliefs about success and failure are among the
most arbitrary of political constructions and perhaps the least likely to be recognized as so” (p. 43).
Edelman pointed out that in the definition of success or failure, recent events weigh the heaviest. For
example, Patella and Keating succeeded in developing a company that served an unmet need. Together
they grew their young company from the ground up. They succeeded in acquiring a long roster of
noteworthy clients, and employed hundreds of workers. However, by the second year under LaSalle’s
The Demise of the Keating Partnership 14
leadership, Trump forced both men out, constructing them as failures rather than as the leaders who
succeeded in founding a once‐thriving and vibrant agency.
According to Edelman (1988), when leaders fall short of delivering on expectations, they can
become symbols of failure. By contrast, opponents who adeptly shape outcomes often triumph and, in
so doing, present their opponents as symbols of failure. In the case of the Keating Partnership, Trump
skillfully personified the company’s failure in the image of its two founders. They became scapegoats for
Trump’s failed policies. In contrast, Teeman’s track record lacked measurable results. Due to their strong
personal history, Trump chose Teeman without hesitation believing in his capabilities. This move
illustrates Edelman’s theory that beliefs about success and failure are arbitrary but often go
unrecognized as such. Had Trump been more objective about measuring success and failure, he may
have appointed someone other than Teeman to run the agency and the firm may have survived.
Edelman’s constructionist theory provides many avenues for analysis. We see how Keating
constructed and maintained his entrepreneurial persona and we see how Trump used Patella and
Keating as symbols of failure. I now turn to the political and sociological theory of Bruce Lincoln and
explore the use of myth to construct social borders.
Bruce Lincoln and Discourse Theory
In his writings, Bruce Lincoln (1989) identified three modes of discourse ‐ myth, ritual and
classification. Lincoln showed how each creates social formations. By studying Lincoln’s theories, we see
how discourse at times reinforces social stability and at other times affects change. Specifically, Lincoln
asserted that society is formed when people “feel more affinity for, than estrangement from, one
another” (p. 173). When these feelings shift, new formations emerge to reconstruct society. In analyzing
the case of the Keating Partnership, I will apply Lincoln’s theory of social borders, and will review each
form of discourse showing how classification, myth, and ritual shaped the outcome at the agency.
The theory of social borders and classification
Lincoln employed the term “social borders” to describe the condition of estrangement between
groups, which creates imaginary lines that distinguish one group from another (1989). When unifying
The Demise of the Keating Partnership 15
factors take hold, these distinct groups come together to form a larger whole or a society. Conversely,
when strong feelings of estrangement dominate, cleavages form, which often destroy the integration of
the society (Lincoln). Only when leaders find underlying affinities among subgroups and foster their
emergence, can integration remain intact. At times, new discourses challenge the persuasiveness of old
ones and social borders lose their grip. Under these conditions, new formations emerge. All societies
experience continuous fluidity. According to Lincoln, “the formation of any synthesis (intellectual, social,
political, etc.) is not the final step” (p.11).
To add structure to his theory, Lincoln (1989) employed classification and taxonomy. These
systems help organize our understanding of subgroups and show where social borders exist. To
demonstrate Lincoln’s theories, I diagram the taxonomies present in the case of the Keating Partnership
from the point of view of the classically trained businessman (see Figure 1).
From the onset, Keating and Patella belonged to two different subgroups. Patella’s position at
Gillette enrolled him in the corporate world while Keating affiliated himself with self‐made
entrepreneurs. Patella’s feelings of estrangement for Gillette showed when he questioned the
corporation’s hierarchy, its rigid structure and strict dress code. When Patella’s feelings of estrangement
dominated, he defected and joined Keating in the less structured, freer world of the entrepreneur.
Throughout the case, subgroups emerge. The employees from Web Tech form one such group.
This all‐male subgroup formed a cohesive faction. All emigrated from India, all were highly‐trained
software engineers who shared little in common with the other colleagues at the agency. They express
their feelings of estrangement by sitting apart from the others and by refusing to attend Monday
Morning Meetings. I believe the strength of this estrangement bypassed cleavage and resulted in what
Lincoln called schism (1989). These feelings culminated in the resignation of each member of Web Tech,
a defection that ultimately resulted in the demise of the agency.
The Demise of the Keating Partnership 16
Business Taxonomy from the View of Trump
Entrepreneurial (‐) Corporate (+)
(Needs Money) (Has Money)
The Keating Partnership (‐) Gillette (+) LaSalle (+)
(Public Equity) (Private Equity)
Colleagues from the
Colleagues from Web Tech (‐) Original Keating Partnership (‐)
LaSalle Capital provides another example of a subgroup housed within the corporate world.
With Trump as its leader, LaSalle emerged as an elite group of wealthy capitalists. The firm owned a
private jet and employed a staff of accomplished businessmen from the country’s top MBA programs.
They relied on financiers, like Beancounter, and on accounting ratios to guide decision making. Their
disciplined approach stood in marked contrast to Keating’s gut‐level decision making and
Each of these examples provides a look at the social borders drawn between subgroups at the
Keating Partnership, borders which, as Lincoln asserted, are fluid. I now turn to the myth and ritual that
reinforced these borders.
Myth as a form of discourse
Lincoln (1989) defines myth as the “small class of stories that possess both credibility and
authority” (p.24). Authority, used here, means the ability of the story to form or activate social groups.
Such stories evoke sentiments of attachment or estrangement and as a result, they hold the power to
construct, reinforce or break down social borders. Lincoln noted several ways in which myth creates
change. For example, when storytellers elevate narratives of a lesser status, such as historical accounts,
to the status of myth, they do so with the intent of rallying certain social formations.
The Demise of the Keating Partnership 17
In the case of the Keating Partnership, Patrick Keating told the story of the billiards game where
his winnings provided for his last semester’s tuition. Keating invoked this myth at several junctures. First
he used it to recruit Patella in the formation of the Keating Partnership. Later he used it to acquire Web
Tech and finally he used it to allay fears when hunting for a bailout solution. In each case, Keating’s myth
served to rally the skeptics and solidify the coalition of decision makers. In the process, he successful
reinforced the social borders around his entrepreneurism.
Ritual as discourse
Lincoln (1989) drew several parallels between the use of myth and the use of ritual in
constructing social borders. Like myth, ritual calls on symbolism and authority to invoke sentiments of
affinity, which solidify social borders (Lincoln). While myth relies on narrative, ritual uses drama and
gestures. Lincoln credits ritual as “contributing powerfully to the maintenance of society” (p. 53). Lincoln
states that the power of ritual lies in its ability to unify subgroups, allowing them to forget their
estrangements, even if just temporarily. In this way, ritual proves instrumental in facilitating social
Several rituals come forward in the case of the Keating Partnership. Each is used to reinforce the
company’s culture as entrepreneurial rather than corporate. First, the Monday Morning Meetings with
their jokes and party‐like atmosphere symbolized the anti‐corporation. These meetings promoted
unification within the agency, brought people from all departments together and offered them a
common experience with which to identify. Similarly, Friday morning breakfasts represented the
collegial culture at the company reinforcing its entrepreneurial classification. Interestingly, these rituals
occurred weekly, providing near constant fortification of social borders.
In this case, we also see how the elimination or rejection of these rituals affected the company.
Web Tech’s refusal to engage in the Monday Morning Meetings set them apart and created cleavage.
This cleavage proved to be significant and greatly affected the outcome of the case. Keating failed to see
how rigid the agency’s culture had become. Ironically, entrepreneurial cultures often embody fluidity
and openness. This was not so at the Keating Partnership. Web Tech’s rejection of the Monday Morning
The Demise of the Keating Partnership 18
Meetings prevented integration and without Web Tech, the agency failed to offer clients a
comprehensive and competitive web site building practice.
When Beancounter eliminated these rituals, colleagues began to lose their sense of affiliation.
With this loss, colleagues’ loyalty waned. Ultimately, turnover set in. Beancounter and LaSalle under‐
estimated the power of these rituals and failed to see their link to the viability of the company. Instead,
they rejected these rituals as the antics of an entrepreneurial company where entertainment
inappropriately took precedence over a disciplined business approach. Their attempts to break down
the agency’s culture proved short‐sighted. They deemed these rituals to be financial burdens. A
Lincolnist view would have provided a clear link between these rituals and the long term stability of the
company’s social order.
Slogan as discourse
Just as ritual serves to unify subgroups, so too slogans offer a rallying cry meant to evoke
sentiments of affinity (Lincoln, 1989). Slogans possess two kinds of power. At times, they serve to draw
subgroups into solidarity. At other times they serve a revolutionary function, mobilizing latent
subgroups into action (Lincoln). Lincoln asserted that the emergence of a new social order “becomes
possible, even through the agency of slogan” (p. 18).
Two slogans find repeated use in the Keating Partnership. First, Patrick Keating coined a phrase
he often used to reinforce his persona. It effectively positioned him in the minds of his colleagues as the
consummate entrepreneur, a resourceful financier and creative problem solver. Keating “made the
money show up.” He used these words repeatedly at company meetings and holiday parties. This slogan
summed up his entrepreneurial myth harkening back to the narrative of the billiards match and his
success at winning enough money to pay his last semester’s tuition.
More formally, Patella and Keating developed a slogan for the agency, “Viability, goodness and
excellence.” These words appeared on the company’s recruiting materials. Patella opened Monday
Morning Meetings with this phrase and a displayed the slogan in a frame hung in the company lunch
room. As leaders, they deliberately chose the use of slogan as a unifying mechanism. They meant for
The Demise of the Keating Partnership 19
these words to mold behavior, guide decision making and perpetuate the company’s culture. From
Lincoln’s point of view, these words served to reinforce social borders and unify subgroups.
While the application of these theories help us deconstruct the case of the Keating Partnership, I
believe it is just as important to understand the leadership implications drawn from cases like this. By
understanding the past, we gain insight. By understanding how to apply these lessons to the challenges
we currently face, we improve outcomes and avoid the repetition of mistakes. I will now take a closer
look at some of leadership implications stemming from this case.
All organizations face critical junctures or forks in the road, but entrepreneurial companies face
unique challenges. Many entrepreneurial start ups survive and even thrive initially. But all too often,
they face growing pains that can make or break their futures. The case of the Keating Partnership
provides a classic example of this situation. As I reflect on the case, I see three distinct lessons for
leaders who face similar situations.
The first and most critical lesson facing the Keating Partnership centered on acquisition as a
growth strategy. Acquiring a company and successfully integrating that company into an established
culture presents many challenges and requires far more due diligence and thoughtful consideration than
Keating and Patella undertook. They failed to consider social borders when screening acquisition
candidates. Had they prioritized fit and integration potential among their acquisition criteria, the agency
might still be in business today. Instead they looked for companies that possessed the skill sets they
needed, while ignoring the importance of integrating the acquired company along social and cultural
lines. Keating and Patella used this criterion when hiring colleagues but failed to do the same when
screening potential companies to buy. When acquisition provides a legitimate avenue for growth,
leaders need to consider integration and fit just as diligently as they consider all other aspects of the
The second leadership lesson in this case stems from Keating and Patella’s failure to address the
alienation felt by the Web Tech colleagues. When social borders prevent integration, leaders need to
The Demise of the Keating Partnership 20
work with alienated subgroups to find the common ground and to develop meaningful integration
strategies that stand a chance for success. Unfortunately, Keating and Patella viewed the world from
their limited vantage point and failed to consider Web Tech’s worldview. Leaders must challenge
themselves to analyze conflicts through a variety of lenses. The old adage, “walk a mile in another man’s
shoes” applies here. By doing so, leaders stand a better chance of developing valuable insights to help
bridge gaps rather than reinforce divisions.
The third lesson requires leaders to listen to their constituents with the understanding that
input from stakeholders may require a change of course. Keating and Patella failed to sit down and
discuss the situation with Web Tech to solicit their input and enroll them in a solution. Even beyond
Web Tech, Keating and Patella failed to truly consider the counsel of their management committee.
Even when these groups provided valuable feedback, I question whether Keating or Patella possessed
the leadership skills necessary to step out of their mythology and consider making the necessary
changes offered by others. Leaders must suspend judgment when soliciting input from subgroups and
evaluate courses of action that may take them out of their comfort zones. Very often, leadership
As we have seen, the case of the Keating Partnership ended tragically. Born out of an
entrepreneurial myth, the Keating Partnership enjoyed many years of prosperity and social unity. As the
internet boom hit in the mid‐1990s, the market scrambled to meet the demands of the new economy.
The Keating Partnership overpaid for the acquisition of Web Tech, leaving the agency with a debt
burden so large that even the slightest disruption in revenue growth proved fatal. As shown throughout
the case, Keating and Patella made many mistakes; they failed to see many warning signs and made
decisions based on their entrepreneurial self‐image rather than on facts and other business criteria.
In this paper, I analyzed this case through two different lenses, one economic the other political
and sociological. Using Marxist theory I showed the shifts in power over the course of this case and
traced how those shifts aligned themselves with the holders of economic power. I also demonstrated
The Demise of the Keating Partnership 21
how LaSalle used their control over the mental means of production. They persuasively used discourse
to recruit the managers at the Keating Partnership and finalize a deal that ultimately pushed the agency
from a bad situation into a dire one.
From a political point of view, I used Edelman’s theories and demonstrated how the Keating
Partnership disguised gestures as solutions and later how Keating became a symbol for the company’s
failure. In hindsight, Keating’s mythology permeated nearly every decision made at the agency. His
entrepreneurial myth created a strong company culture and developed a society of colleagues untied in
their dedication to this myth. Rituals such as Monday Morning Meetings and the slogan “viability,
goodness and excellence” reinforced Keating’s mythology and perpetuated the discourse.
Using the theories of Bruce Lincoln (1989), I developed a taxonomy to show where social
borders existed in this case. I identified subgroups and analyzed the role each played in the undoing of
the Keating Partnership. Lastly, I identified a series of leadership implications drawing not only on
Lincoln’s theories but Edelman’s as well.
It is a great tragedy to see a once‐thriving enterprise go out of business. Colleagues lost their
jobs and the local economy felt the effect. But the impact extended beyond economic loss. Workers
suffered the loss of their identities and affiliations; some lost their self‐esteem and confidence. Had
Patella or Keating understood the power of mythology or if they had been armed with a basic
understanding of political and economic theory, the outcome may have been different.
The Demise of the Keating Partnership 22
Collins, R. (1985). Three sociological traditions. New York: Oxford University Press.
Edelman, M. (1988). Constructing the political spectacle. Chicago: University of Chicago Press.
Lincoln, B. (1989). Discourse and the construction of society: comparative studies of myth, ritual, and
classification. New York: Oxford University Press.
Muller, J. Z. (1993). Adam Smith in his time and ours (2nd ed.). Princeton, New Jersey: Princeton