Leadership Lessons from Too Big to Fail

I recently read Andrew Sorkin’s great chronicle of the 2008 financial collapse entitled Too Big to Fail. I found the book to be very informative in describing how the leaders of companies such as Bear Stearns, Lehman Brothers, AIG and Merrill Lynch maneuvered through the demise of the financial markets and the failure of their companies. It was a great read.

The challenges that these leaders faced were in many ways unique and cataclysmic. Granted this, as they sought to understand and address their challenges, they were attempting to prioritize and answer four questions:

1. What’s good for our organization?

2. What’s good for specific individuals in our organization?

3. What’s good for our shareholders and external stakeholders?

4. What’s good for me?

I’ve found these to be four fundamental questions leaders must prioritize and answer in almost every context in which they have ongoing leadership. To prioritize and answer them requires good data on current and anticipated position of the organization. It also absolutely requires clarity and commitment related to right values and relevant laws. Moreover, I believe it requires real wisdom, wise advisors and prayer.

As is true in most cataclysmic moments of life, there are few heroes in Too Big to Fail. There are in the book various leaders who have lost perspective and balance, and thereby lost their way. Andrew Sorkin through his book gave to me a great chronicle of a great moment in which great leadership was needed. I was sharpened as I read it.

Excerpts from "Renewing the Wellsprings of Responsibility"

Dr. Nathan Hatch is President of Wake Forest University. In March 2009 he delivered a keynote address to the Council of Independent Colleges entitled Renewing the Wellsprings of Responsibility. Dr. Hatch's comments provide an accurate assessment of the perspective that many students on American campuses have about life, college majors and their future careers. The following are excerpts from Dr. Hatch's address. I agree wholeheartedly with his observations.

There has been something seriously out of whack with Americans’ relationship to work—at least those with college educations who pursue professional and management positions. On the one hand, we are clearly working at a more furious pace. Among the top fifth of earners, long weeks have increased by eighty percent since 1980; and Blackberries and cell phones have further eroded social time, blurring the boundaries between work, home, and leisure. Judith Shelevitz has written about bringing back the Jewish observance of the Sabbath as one way to extricate herself from a society that pegs status to overachievement. How else, she asks, can we shut down the machinery of self-censorship about work, or still the murmur of self reproach about not getting enough done. 1

There is also a second problem with contemporary professional life, beyond the fact that work looms larger in our lives. It is that young people have been defining success and choosing careers with less attention to larger questions of meaning and purpose. The stratospheric salaries in investment banking, in consulting, in the premier law firms, and in specialized sectors of medicine have bedazzled a whole generation of our best students. Yet despite their financial success, there are signs of acute frustration by many young professionals. Often, work does not satisfy or sustain. An astounding seventy-eight percent of new lawyers leave their firm by the end of their fifth year—up from sixty percent in 2000. 2

How do we train leaders, Father Theodore Hesburgh often asked, not just to make a living, but how to live? What can colleges and universities do to form leaders who, to use a poignant example, might have a twinge of conscience about a system that sold mortgages without restraint to persons with little ability to make future payments? “We don’t just need a financial bailout,” Tom Friedman has suggested in his piece “The Great Unraveling,” “we need an ethical bailout.”

Our culture and our students are thirsty for reconnecting issues of meaning and purpose to vocational discernment, but colleges and universities today have a much harder time doing this than in the past. What is heartening is the number of experiments that are seeking to address the issue. To do this effectively on behalf of our students, will mean working against the gravitational forces of the modern academy. To broach the issue of shaping character, to suggest that there are religious and spiritual resources that might be useful in that effort, to delve into student’s beliefs and commitments, and to take on a subject matter that falls outside normal disciplinary boundaries—all make for a complex if not precarious effort.

1 Judith Shulevitz, “Bring Back the Sabbath,” The New York Times, March 2, 2003.

2 http://www.jdblissblog.com/attorney_retention.html. See also Pauline W. Chen, “Medical Student Burnout and the Challenge to Patient Care,” The New York Times, October 31, 2008.

Human “Doers” or Human “Beings”?

From my book, Leadership as a Lifestyle

As often observed, people are much more comfortable with “doing” than they are with “being.” In fact, at times people seem to be human doers rather than human beings! The gnawing belief that “doing” defines one’s value, whereas merely “being” just takes up space hovers over us all. The longing to establish our value based solely upon our accomplishments compels us to attempt life-management approaches that focus primarily on our roles rather than on our purposes.

The aversion to considering our purpose and then using it as a guide for our actions greatly minimizes the positive influence we can have in the lives of others. The depth of our influence with others is not primarily dependent upon the roles we play or positions we hold. The people we have become and the purposes we are fulfilling truly determine the depth of our influence with others. It is my belief that in its essence, leadership is a lifestyle, not a position. Solid, sustained leadership flows primarily out of who we are, not out of what position we hold.

Leadership positions do provide some tools of authority, such as resources and the ability to discipline. Yet in the lean, globally competitive corporations and organizations that dominate our world, the stretched resources and limited control of most managers exerts little sustained influence over constituents.

It is the character, competence, and commitment of a leader that sustains and validates their leadership. These three foundational elements must be aligned with the moral beliefs and principles at the heart of the leader. A leader exerts influence with integrity only to the degree that this alignment is realized. When your character, competence, and commitment are not aligned with your moral beliefs and principles, your influence is compromised.

As we assume the roles of spouse, parent, boss, and citizen, our greatest influence will not result from the title that we hold. Rather, our progress in becoming persons of character, competence, and commitment will determine our influence and effectiveness. No matter the roles you are given to fulfill in life, your success will begin with the person you have become and the life purpose you are fulfilling.

Its All Vision and Talk, Until We Take Action

Barnette Crabtree is President of Sun River Builders and a good friend. Once during a conversation with Barnette I shared with him a new vision that I had for Leadership Edge which is the company I serve as President. Barnette responded by saying, “John, I like visionaries. Then with a smile and a wink he followed with, “But I just LOVE implementers.” His point was well made. Visions are important. However implementation or execution of the vision is even more important.

On October 2nd New York Times columnist David Brooks wrote a provocative column on the questionable impact of Rush Limbaugh, Sean Hannity and Glenn Beck. The following paragraphs summarize Brooks’ argument:

So what is the theme of our history lesson? It is a story of remarkable volume and utter weakness. It is the story of media mavens who claim to represent a hidden majority but who in fact represent a mere niche — even in the Republican Party. It is a story as old as “The Wizard of Oz,” of grand illusions and small men behind the curtain.

The rise of Beck, Hannity, Bill O’Reilly and the rest has correlated almost perfectly with the decline of the G.O.P. But it’s not because the talk jocks have real power. It’s because they have illusory power, because Republicans hear the media mythology and fall for it every time.

It seems that Brooks’ opinion is that the listeners of the right-wing media are not great implementers. They listen to Limbaugh, Hannity, Beck and the like, but they fail to have significant impact implementing the vision that is generated by these media entertainers and commentators.

For close to 20 years I have used The Leadership Challenge by Jim Kouzes and Barry Posner as a guide for my own leadership and that of those that I train. This model teaches that effective leaders challenge the status quo and inspire a shared vision. But it also helps us to see that all of that is for naught if the leader is unable to enable others to take action on implementing the vision. The adage goes, “he who leads, but no one follows, is merely taking a walk.” A real test of leadership is moving people to right action, not just to inspiring visions.

Perhaps history will one day clearly understand the impact that the right-wing media have had on leading its listeners to take right action. Maybe David Brooks will be proven correct in his analysis. Until then I agree with my buddy Barnette. I just LOVE implementers.

Do Leaders Apologize?

Should Leaders Apologize?
What Would We Teach Our Children to Do?

Reporting and commentary concerning recent apologies made by three American public figures has had nonstop coverage in web and print media outlets. First, there was the apology of Congressman Joe Wilson for his outburst in the joint session of the US Congress that challenged President Obama’s honesty. This was followed by Serena Williams apology for her inflammatory remarks to the officials at the US Open tennis tournament. And finally, there has been the apology (I think that is what it was) by Kanye West for insulting Taylor Swift and stealing her opportunity to express her thanks for receiving the Best MTV Video Music award. Each of these offenses and apologies leave many confused as to the motivation and remorse behind them.

A recent conversation with two friends gave me a more substantive and revealing consideration on apologies made by leaders. The three of us were discussing the public “reaming” that one of us had recently endured by his boss in front of those that report to him. This confrontation was angry, laden with profanity, and humiliating. In addition, my friend was not even directly at fault for the problem that sparked the furious diatribe.

By the next day the supervisor was back to his friendly self and interacted with my friend as if nothing bad had happened. As my friend finished telling this story, I commented that the boss would move toward reestablishing his leadership if he were humble and aware enough to offer a sincere apology. The third member of our discussion quickly interjected that in the world of business, leaders don’t apologize. As we absorbed the truth and effect of this last comment, our conversation moved to something less depressing.

So, do leaders apologize? I would say usually not. We can list out many reasons why leaders don’t apologize, but the reasons tend to be various forms of pride or fear. Should leaders apologize? I would say yes. The reasons for leaders making a sincere and humble apology are also many. But the reasons tend to be various forms of honoring right values, honoring one’s faith, and aligning with leadership practices that usually produce long-term success. As I have pondered this conversation and these public apologies in the news, I have thought that there is a more fundamental question that is far more revealing to this topic.

That question is, “What would we teach our children to do?” We teach our children to sincerely and humbly apologize because if they don’t learn to do so, they become brats or bullies. If they never learn humility and respect of others, these children grow up to be congressmen, professional athletes, celebrities, and bosses who are more skillful brats or bullies. When they finally hit one of those moments in life in which they are forced to apologize, the ability to meaningfully do so tends to escape them. As a leader, their pride or fear undermines their ability to retain the followership and full contribution of their constituents. Even a kid knows that the sooner you can get away from a brat or a bully, the better. Too bad so many adults in positions of leadership have forgotten what every kid knows.

The Malaise of Moral Laryngitis

"By doing the right thing first, you avoid destructive and divisive compromises. I think that everyday we're constantly debating whether or not to sell out or to be true. Sometimes we can seek to be both true and popular, but that option is more the exception than the norm. As Peter Drucker said, "You first have to ask what is right, and then ask what is possible--and in that order." Most people only ask what is possible and never deal with the other question. If you ask what is right, then what is possible, you will know what compromises are appropriate."(1)
Stephen Covey

This quote challenges us to remember an essential practice of great leadership. It is the practice of moral examination by which we determine the wisdom and rightness of our actions. Great leadership that builds great people depends upon moral examination as a guiding light, regardless of the time and energy that is required. Determining what is right to do allows us to move forward emboldened with a clear conscience about our actions.

Dr. Stephen Carter, in his book Integrity, puts forward the following three steps as requirements for acting with integrity.

1. Discerning what is right and what is wrong
2. Acting on what you have discerned, even at personal cost
3. Saying openly that you are acting on your understanding of right from wrong (2)

Leaders often find taking these three steps to be a challenge. Moreover, many of today’s leaders deem the third step to be also inappropriate. Dr. Carter, a Professor of Law at Yale University, counters this unfortunate opinion by stating,

“The third step – saying publicly that we are doing what we think is right, even when others disagree – is made particularly difficult by our national desire to conform. Most of us want to fit in, to be accepted, and admitting to (or proudly proclaiming) an unpopular belief is rarely the way to gain acceptance. But if moral dissenters are unwilling to follow the example of the civil rights movement and make a proud public show of their convictions, we as a nation will never have the opportunity to be inspired by their integrity to rethink our own ideas.” (3)

Dr. Carter’s point is illuminating. When leaders are unwilling to express the moral basis for their decisions they give up the great opportunity to challenge their constituents to moral reflection and moral action. By consistently silencing their moral voice, leaders display a common symptom of the malaise that I call moral laryngitis. Moral laryngitis is the unwillingness to speak about one’s moral beliefs or to publicly challenge moral issues. Sadly this cultural sickness is becoming pandemic in the United States.

Recently in a conversation with a recognized specialist on moral philosophy, I was struck by her observation. In speaking about the university students in her classes, she said that she had come to realize that today’s students tend to have only one value and that value is tolerance of all opinions. She went on to say that this left them with a philosophical inability to critique clear examples of immorality.

I believe that what is true of many collegians is also true of many business and professional persons. In their business or professional leadership, there is a bias against addressing moral issues as such, solely out of fear of offending someone’s opinion and thereby being deemed intolerant. The virtue of moral authority has too often been replaced by the weakness of amoral silence. Leadership without a moral base and moral voice is leadership that does not deserve nor inspire loyalty or trust.

In the debacle of the downfall of the Enron Corporation, corporate profit maximization and personal greed drove a good company to self-destruct. It is chiefly the responsibility of all the Senior Officers, Senior Managers and Board Members to monitor the demands of profit maximization and personal greed and to speak clearly and loudly when unethical practices manifest. Furthermore, these same leaders must take action to redirect the company to do what is right, as opposed to what is merely corporately or gainfully expedient. It appears that the sole moral voice in Enron’s senior management was unheeded due to the ignorance, decadence and greed that surrounded it.

Our country is in great need of leaders who will confront corporate moral compromise by declaring “This cannot be.” rather than asking “What’s in it for me?” The malaise of moral laryngitis is highly contagious. Its germ grows most rapidly in cultures that contain high concentrations of moral cowardice or moral abandonment. It can overtake a population in a seemingly unnoticeable fashion. Left unchecked it can be fatal.

(1) Executive Excellence, October 1999, Volume 16, Issue 10, page 3.
(2) Integrity, Stephen L. Carter, Basic Books, 1996, p. 7.
(3) Integrity, pp. 11-12.

Commitment to Give First

As a student of the process of human influence (aka leadership) I have learned through the years that committing to give first expedites and strengthens my influence of others. Often in human relations there is a dance around “who gives first,” “who gives most,” “who gave last.” My general response to these questions, when I am thinking clearly, is “who cares?”

When I enter into new relationships with others, whether it is in a new community or new office, I aim for clarity on three things. The first centers on “Why am I here?” For me, this is always best answered by beginning with my faith and my understanding of calling/vocation. The second question concerns “What do I need, want and hope for?” The third thing I want to get clear on is “What do others need, want and hope for?” Once I get clear on these three areas, I purpose to help fulfill what others need, want and hope for before getting what I need, want and hope for.

I practice this commitment to give first because of a biblical value that I learned years ago. This value can be stated as “putting the success of others above my own.” I practice it because it is right for me to do so. Over the years I have learned that it also expedites and strengthens my influence of others. Others open up to your influence when they understand that your aim is to do what is right, and that part of what you believe to be right is to help others succeed.

With any principle like this, our hearts and minds quickly go to cynicism and exception. Our sharky little hearts cause us to believe that giving first is a fast track to being used, enabling others’ destructive behavior and/or undermining the overall success of an organization. I think that all of these are possible, especially if giving first is not guided and balanced by good judgment and wise perspective. I think that more concerning than the possibility of these occurring is the chokehold on influence and goodwill that a “getting first” approach brings to life. Similarly, a quid pro quo approach to relationships does not lead to broadening, free-flowing influence; it merely leads to measurement and reaction.

Grabbing and grubbing, manipulating and controlling, giving only what is required – these approaches make me a smaller and self-absorbed leader. Committing to give first opens up the opportunity for my leadership to expand as I prove myself to be a resource to those whom I lead.