Attitude, Risk, and Luck

They Are the Most Influential Bosses

Page 1I don’t care what your parents told you. You can’t be anything you want to be. Some people simply cannot play the piano well, no matter how hard they try. Some people will never succeed as investment bankers either.

Even among those people who do play the piano well, very few will get to Carnegie Hall. On the other hand, a substantial number of them could conceivably make a good living at a piano bar. The same holds true in every kind of career. Most businesspeople will never be invited to run General Electric. But that doesn’t mean they can’t become rich and famous at a solar panel startup or old-line fabric house.

Much of life — and work — is about finding the right instrument to play in the right orchestra.

Much of life — and work — is about finding the right instrument to play in the right orchestra. Sounds easy? It’s not.

I must have been in the sixth grade when I figured this out. Like most public school kids of my era, my musical education started with the flutophone, which is basically a baby clarinet without a reed.

Then, in fourth grade, it came time for the kids in my class with any degree of talent or nontalent to join the school band. So we each got an appointment with the head of the music department, Mr. Wetzel.

Mr. Wetzel asked me, “Well, David, what instrument do you want to play?”

Excitedly, I said, “I really want to play the clarinet.” This was the natural next step after the flutophone.

“We don’t have any more clarinets,” he said. “All the clarinets are gone.”

“That’s okay,” I responded cheerfully. “Then I want to play the saxophone.”

He shook his head. “You can’t play the saxophone unless you play the clarinet first.”

I thought: A trumpet is like the clarinet because you blow through it, and it has keys and stuff. Besides, it’s kind of a cool instrument. After all, Louis Armstrong played one. “What about the trumpet?”

No, the trumpets were taken. At the end of the day, I couldn’t even get a stringed instrument like a cello or bass or even a drum. Yes, I had a choice — tuba or trombone — but I had never even seen either one up close before.

I reluctantly chose the trombone. But two years later I asked again for a clarinet. Mr. Wetzel’s answer was, “Well, you can’t have a clarinet because you’ve already been playing the trombone for two years. You’re a sixth grader now, and we have fourth graders who get the clarinets.”

So I played the trombone for six years, hated every moment of it, and learned that life is not fair.

Most careers are a lot like playing in Mr. Wetzel’s band, and I don’t care if that career takes place in a giant corporation or in the priesthood. Most people know they want to play some instrument, but they are not sure that the instrument they’ve been handed is the right one. So they end up in jobs that aren’t necessarily suited to their best skills. They may not even know what their best skills are because they haven’t been developed yet. Possibly the band itself is not very sympathetic to them and has given them no chance to find out where they could really shine.

There are a million reasons why people become trapped in the wrong place with the wrong job, but my point is that most of them do become trapped. They might have picked the wrong major in college or took an entry-level job in the wrong field because that was all that was available at the moment. Maybe they graduated with a fine arts major but succumbed to pressure to join the family business buying wholesale lots of nuts and bolts and have hated their working lives ever since. Maybe they stayed in a city with few opportunities because their spouse didn’t want to leave.

Even incredibly smart people end up merely doing well because they become unwilling to risk any change.

Even incredibly smart people end up merely doing well, but never getting to play in a bigger arena, because their personal lives have locked them into place, and they become unwilling to risk any change.

When I was young and living in New York, for example, I knew a guy who was Jackie Gleason’s personal publicist. He wanted to move into network television. He was brilliant and creative, and I’m sure that he would have been terrific there. However, when I asked him why he didn’t get into television, he shrugged. “The TV networks don’t look in the public relations direction when they’re looking for executives. And I can’t afford the pay cut I’d have to take for an entry-level job.” He was only in his mid-30s, but as far as he was concerned, it was already too late.

Meanwhile, all the people like him, trapped in the wrong jobs, are quickly surpassed by the lucky few who are in the right jobs, those people with a natural aptitude for the profession in which they find themselves.

Having a natural aptitude for an instrument is such an enormous advantage that if you don’t have it, you have to work three times harder than the people who do, even to be credible.

Having a natural aptitude for an instrument is such an enormous advantage that if you don’t have it, you have to work three times harder than the people who do, even to be credible. And you may never be more than mediocre.

The shrewdest thing you can possibly do is to spend your 20s questioning whether you have the right instrument in the right band and feeling your way there. If, however, like most people, you reach midcareer without even having explored a change of instruments — and you find that you are not rising — you don’t have to do what most people do, which is resign themselves to their own frustrated ambitions.

Sure, it may be too late for you to become an astronaut or a ballerina. But I don’t believe that successful careers are necessarily about following a childhood dream. What matters is finding a job for which you are well suited, one that makes you happy. And that is doable.

Without losing or compromising your job, for example, it’s possible to learn about other areas of your own organization, make contributions there, figure out what you like to do, and work your way into a position where you’re the one with the natural aptitude who can play rings around the other musicians.

If your organization is run by a Mr. Wetzel, and God forbid that someone who joined in percussion should ever play the flute, it’s also possible to move to a different kind of organization where they really don’t care where you started as long as you can do something valuable today.

For example, I entered John Hancock in communications. I’d worked in public relations and advertising, and I was using the instrument I’d been handed. But what I really liked was marketing, which is much more sales-, price-, and product-driven. I knew that John Hancock happened to need good marketers, so I seized the opportunity to learn a new instrument and trade in the old one. Soon, I was playing the right instrument in a band that was glad to have me. Eventually, they made me conductor.

To rise, you too may have to broaden your horizons, and you may have to look for an employer who will allow you to broaden them. You’ll also need three things to make the most of the chances you are given: the right attitude, a willingness to take calculated risks, and dumb luck.

Let’s take these deciding factors one at a time.


The Boss Within

It’s incredibly important to get your own head in the game if you intend to rise. If fear or sloth rules your psyche, you’ll never do what you need to do to stand out from the crowd. If you are bossed around by your own greed, arrogance, or childish lack of discipline, you will give people reason to doubt you, and you will undermine yourself.

Let’s talk about a handful of things you need to do to appear to be material for higher management.

First, though it sounds obvious, learn how to present well.Meetings are the stage on which you rise or fall, thrill or flop—so make sure that you know how to express yourself there. Quietly take lessons, if you need to, at your own expense.

Second, study, study, study. Not to master your own art, not to master the art of knowing what everybody else knows, but to master the art of knowing what nobody else has even considered.

Master the art of knowing what nobody else has even considered.

I used to make sure that I had a staff person who spent a lot of time analyzing the company I worked for as a whole, helping me to understand what was really going on in all the areas outside my own. And I would be briefed, three times a week, on their major initiatives.

That way, if something came up in a meeting, I’d be prepared. For example, I once learned that my company was thinking about investing in a joint venture with the Colombian government. So I put in the time required to learn about the political climate in Colombia.

During the meeting at which this idea was presented to the top decision makers, I asked, “What happens to our investment if the guerillas destabilize the government or a civil war breaks out?”

This was a question that needed to be asked, but the people whose job it was to ask it had not thought about it.My bosses suddenly looked at me as if I might be the most valuable person in the room.

By learning as much as you can about the organization as a whole, you are able to show dimension and prove that you belong in a broader role— possibly one that spans the whole organization.

By learning as much as you can about the organization as a whole, you are able to show dimension and prove that you belong in a broader role.

There are other, smaller ways of showing dimension, too. I once had a boss who was dying to go to Wimbledon. This was long before the advent of eBay made buying tickets to anything easy.None of my peers could figure out how to get him there, but I could. Now, was that going to make me the person who went up to the next job? No, but it was not going to hurt, either.

You will have to do many other things that we’ll talk about in subsequent chapters, such as hire well, motivate your employees, and convince your boss to trust you. Ideally, you will bring in truckloads of money for the company or partnership or university and get to a point where people start thinking they cannot afford to lose you.

Most important, you will have to not be stupid. This sounds obvious, but I have seen so many cases of ridiculous stupidity even at the highest levels of organizational life that perhaps it is not so obvious. The first thing people are told when they go into politics is, “Get used to the scrutiny.” This applies just as well to higher management. You are being judged every minute, and small things can tip the balance in your favor or against it.

The first thing people are told when they go into politics is, “get used to the scrutiny.” This applies just as well to higher management.

Let me give you an example. I was once in one of those general stores you find in small Vermont towns that have everything. This store had a little restaurant, made sandwiches to go, and sold coffee mugs, sweat shirts, and canned tomatoes. I went to check out, and near the box of maple-sugar moose candies by the cash register, there was a board with Xeroxes of people’s driver’s licenses and the checks they’d bounced.

And I saw one of my own employees there. It wasn’t a very big check, something around $37.90. He wasn’t a criminal, obviously.

But every time I saw that guy after that—or glanced at his name on a list of possible promotions—I thought, how responsible can he be?

Virtually everybody in business is supposed to have some knowledge of how things work financially, if only to control their own budgets. Fail to pay your child support or have your wages garnished by the IRS, and your chances of being promoted even at the most senior level go out the window.

You can’t allow your own aggressive tendencies to make you irresponsible, either. There are a lot of Type A personalities in senior positions, and they’re very, very competitive in everything they do. I mean, they play croquet competitively.

I can remember an incident from a conference I attended many years ago that was one of the stupider things I’ve ever witnessed. A tennis game was scheduled, mixed doubles, with the CEO’s wife and another executive’s wife playing against two senior managers, one of whom we’ll call Charlie.

You can’t allow your own aggressive tendencies to make you irresponsible.

The two women were decent enough tennis players, but the men were much stronger. What should have been a friendly game turned into a fiercely competitive one. Instead of gauging his serve to the skill of his opponent, the polite thing to do, Charlie was using his best serve on the CEO’s wife, and she simply could not return it.

He was just vicious, to a point where a ball bounced up and ended the game by injuring her eye.

That night, I was at the CEO’s table for dinner.Charlie came by to apologize to the wife,who had more than her usual amount of makeup on. She was quite good about it. She laughed and said, “Oh, don’t worry about it.”

The CEO only said coolly to him, “I hear you have quite the serve, Charlie.” The rest of us at the table knew what that meant. That meant, “Your life in this company is over.”

It takes a lot of discipline to make it to the senior levels of any organization and a tremendous amount of discretion, not just in your professional behavior but also in your personal behavior.

I highly recommend that you keep your personal life private. Take the risk of people not knowing you. Anything you do reveal, trust me, will eventually come back to haunt you.

For example, high on the list of life’s unfairnesses is contracting a serious illness. Even more unfair is the fact that if you contract a serious illness, you have to hide it if you possibly can. I know very few people who’ve ever been promoted after a heart attack. Never mind that bypass surgery is a miracle. A heart attack is a showstopper, particularly if the job you want to be promoted into is considered “stressful.” And it’s a question of odds.

I highly recommend that you keep your personal life private. Take the risk of people not knowing you.

The decision makers, who have choices, tend to think, “Why take a chance on somebody who has had a heart attack? Because if he or she dies within a couple of years, I’ll look stupid.Why should I look stupid?” For precisely the same reason, nobody who admits to being an alcoholic gets to be CEO. You may get big bucks in your career, but you don’t get the big chair. So, if you have a drinking problem, by all means keep it to your off-hours and conceal it.

Conceal it even if you don’t have a problem. My theory is that if somebody sees you with two tumblers of scotch in the same night, it’s problematic. Despite the great popularity of large martinis, you should never have a martini at a company event. Ever. Once you embarrass yourself in public, you will never get rid of that aura of doubt.

The same is true if you distract people with your messy sex life. Let me tell you a story. One day, I came back from lunch and passed by a woman waiting in my foyer. Let’s call her Brenda. She was the secretary of a senior executive who worked for me—we’ll call him Oscar—and she was crying.

I said to my secretary, “What does Brenda want?”

My secretary shrugged. “She says it’s an emergency, and she has to talk to you.”

So Brenda came in and told me that she was sleeping with her boss. Which, by the way, I could have cared less about. The company had no nonfraternization rule. It was highly discouraged, but it was not against the rules.

However, since she was weeping and choking and sobbing to the point that I was scrambling for Kleenex, I had to address the situation.

I was very careful not to pry. I said, “If you are filing a sexual harassment complaint,we’ll call Personnel right now, and they’ll come and interview you. If that’s not the issue, this is just something you and Oscar have to work out.”

She said, “I don’t know what to do. I love him so much.”

And now Brenda’s starting to pour her heart out to me. The affair has been going on for three or four years. She’s so in love. But Oscar is rejecting her because of another woman in the office, who’s an executive, not a secretary.

It turned out that Oscar was not only in the middle of a nasty divorce, but also sleeping with two coworkers at the same time. It was like Big Love, the HBO show about polygamy, except that I didn’t think there was any “living the principle” here. This was more “unprincipled living.”

I didn’t want to seem cold, but the last thing I wanted was to be involved in was this quadrangle. I now know that I have to call the law department to look at the financials to make sure that Oscar is not using company money on either of these women. And I’m not happy about it.

So, after Brenda dried her tears and left, I called Oscar to my office.We were not friends, but I knew him well. He came in, all smiling.

I said, “You are not going to believe what happened to me after lunch today. Brenda came to see me.”

His smile fell.

“I don’t need to know any details, but are you having a relationship with another woman, too?”

He said, “Yes. I’m trying to get rid of Brenda.”

“How is she going to go away? She’s your secretary. She sits twelve feet from you every day. And this other woman marches in and out of your office a dozen times a day.

“Personally,” I said, “I don’t care. But what are you, stupid? This is going to be a mess now.”

So he told me that he would take care of it.

A week went by. I came back to my office from a meeting, and sitting in my foyer is somebody new. The executive Oscar’s been sleeping with. Angry as a hornet.

Oscar had decided that the way to solve this problem was to erase the blackboard. So he dumped both of them.And the executive was now furious with me, convinced that her ouster from Oscar’s affections was my fault.

I didn’t want to punish the women in this case, so I had the lawyers work out transfers for the secretary and the executive. They actually wound up in better jobs. But Oscar? He had gone from somebody who was going places to a mere curiosity.

The truth is that there are always office romances. People spend a lot of time together, it happens. There is no illusion that everybody in the workplace is a saint, and everybody makes mistakes. But there is a big difference between playing with matches and doing what Oscar was doing, which was walking a tightrope over a volcano.

There are always office romances, but there is a big difference between playing with matches and walking a tightrope over a volcano.

And be aware that even the most benign and above-board office romance has consequences.Make sure of your ground before you make any kind of romantic overture to a coworker because you’re changing the dynamic forever, one way or the other. If it turns into a relationship that’s really going, one of you is probably going to have to leave. If it doesn’t, it will be very hard to maintain the same collegial relationship you had in the past.

With every office romance, somebody is going to move on faster than natural laws would dictate. So think about whether it’s worth it.


Is Not a Prerequisite for Power

You have to be discreet in your personal behavior to rise, but you don’t have to be a conformist. Every ambitious person is going to take some knocks. If you try to fit the mold of your organization too much, the rap will be that you are too dull or too dry or too sycophantic. So you might as well be yourself and get points for having the courage of your own style.

Every ambitious person is going to take some knocks, so you might as well be yourself and get points for having the courage of your own style.

Although I was as ambitious as the tip of a blue flame, by the time I reached John Hancock, I did not even try to fit in. I tried to avoid companysponsored social events as much as possible.With some ofmy superiors, this didn’t sit well. They thought I was arrogant, standoffish, not a team player. But it wasn’t about arrogance. It was about the fact that things would be said at dinner that people would regret the next day, and I’d rather not risk either hearing or saying something stupid.

I was also much more direct than many of the people I worked with, and my bosses occasionally gave me trouble about it.

And I certainly did not look the part at John Hancock, an old-line Boston company dating back to 1862.My ancestors came from the Basilicata region of Italy, not the Back Bay.When I started at John Hancock, the uniform was an off-the-rack suit from Brooks Brothers, a blue Oxford shirt, and the same striped tie. I would have felt like I was wearing a costume in those clothes. So I wore Italian suits and bright ties.

When I looked around the Hancock boardroom, there were seven or eight oil paintings of the former CEOs. Most of them looked like our country’s founding fathers, Alexander Hamilton types, with sharp profiles, swept-back hair, and impressive cravats. In no way did I resemble those people. I actually once said that to the CEO when he was giving me a promotion: “I’m very happy for the promotion, but I have no illusions that my picture is ever going to hang on that wall.”

He said, “Don’t be so sure about that.”

The first hint I had that style questions wouldn’t hold me back came from the most unlikely person, a distinguished old Brahmin named Elliot Richardson, who was on the board of John Hancock. Richardson had had an illustrious career in government, serving in cabinet positions under Richard Nixon and Gerald Ford. He’d also shown considerable personal courage during the Watergate scandal, when he was attorney general. Nixon had ordered him to fire Watergate special prosecutor Archibald Cox. Richardson refused, resigning instead.

At John Hancock, we used to have lunch together as a board, and one afternoon Richardson and I both came in late. Everybody else had wandered off, so for the first time, it was just the two of us sitting at the table. Richardson had just gone to his fiftieth reunion at Harvard and said conspiratorially to me, “You know, if a guy was an ass at 21, he’s still an ass at 71.”

I thought that was very funny. Then Richardson went on to say,“Most people don’t know this about me, but one of my ancestors was a quarter Italian,” as if this made the two of us Sicilians in arms.

It was not only amusing, I thought it was quite endearing. It was his way of telling me that as far as he was concerned, I was okay. And for the first time I understood that I could be a contender for the top job at John Hancock.

I’d advise you to be yourself, but also to disarm potential critics where you can by being self-deprecating.

In my case, since I was much more aggressive and direct than my peers and wore ties with so much more wattage, I think it was extraordinarily important for me to maintain a sense of humor. If you’d have taken away my sense of humor, then there would have been no question that I was just an ambitious jerk.

Be yourself, but disarm potential critics where you can by being self-deprecating.

And humor has helped me deflect many an awkward question over the years, including at the press conference in Toronto in 2003 where we announced that John Hancock was merging with the large Canadian insurer Manulife Financial. When a reporter asked me why I was paid more than most Canadian CEOs, there was only one possible answer.

“America is a great county.”

Everybody laughed, and we left it at that.


Slice It, Dice It, and If It Looks Good, Eat It for Breakfast

One of the most significant attitude adjustments you will have to make as you move into higher management is your attitude toward risks. If you have played it safe thus far in your career, understand that you can no longer avoid taking risks—big ones, where the stakes are frighteningly high. On the other hand, if you’ve been a rambler and a gambler, you can no longer afford to be entirely freewheeling, either. Higher management is all about handling risks intelligently and in a calculated fashion.

For example, we’ve recently come out of a period when mortgage lenders were extending credit to virtually anybody, devising subprime loans that allowed many people to get into the housing market way over their heads. Clearly, there was going to be a backlash to that kind of exposure, and nobody should have been surprised when there was a tsunami of foreclosures in 2007.

But the CEOs of some of the world’s most sophisticated financial organizations apparently didn’t see it coming and made big bets on securities based on these subprime mortgages because they generated outsized fees and returns. Charles Prince of Citigroup, E. Stanley O’Neal of Merrill Lynch, James Cayne of Bear Stearns, and Peter Wuffli of UBS all lost those bets, were forced to write down billions in late 2007, and lost their jobs.

Higher management is all about handling risks intelligently and in a calculated fashion.

In other words, these executives took on too much risk, which does more to end careers than anything except taking on too little.

Even if you never have to deal with the kind of quantitative risks that Wall Street uses to make its living, risk is still the name of the game. If you work in a nonprofit, you may someday have to decide whether to accept a big donation from someone who has been indicted or, worse, who gets indicted after you take the gift and spend it. If you manufacture art supplies, you may have to decide whether to move into the children’s craft market. Thousands of jobs may hang on your decision, not to mention the forward movement of your own career.

Let me tell you about a moment when I was unwillingly forced to bet the house.

I’d taken over John Hancock’s retail division in 1991, a huge step up for me. I’d hardly been there six months when I found myself in the midst of a decade-old problem that was about to boil over. For the last 10 or 15 years, a number of salespeople throughout the life insurance industry had been taking advantage of their customers in two ways.

First, some of them were rolling over existing insurance policies with a cash balance into new policies for one purpose only—to generate commissions. In some cases the customers didn’t even know they were being rolled over because the documents were forged.

The second problem was salespeople selling life insurance on the basis of “vanishing premiums.” The idea was that because the customer’s premiums were invested in the stock market, there would be a point at which the premium bills would vanish and the life insurance would be paid for out of investment returns.

This was sold aggressively as a way to have life insurance without having to worry about the cost as you grew older. Our sales presentations virtually guaranteed vanishing premiums. Then the stock market stopped cooperating, and customers began getting bills they’d never expected.And if they didn’t pay, the only thing that would “vanish” was their policies. There was plenty of blame to go around for this stuff. Fortunately, though, it did not fall on me and my team, since we were new. Life insurers had clearly either not put sufficient checks and balances on their salespeople or had ignored the warning signs because the pressure to generate new revenue was so great.

At John Hancock, we worked hard to unravel this mess and make sure that it stopped. By the time the heavy-weight class-action lawyers began circling overhead and suing John Hancock and its competitors for astronomical sums, we were somewhat ahead of the game.

Nonetheless, there was a substantial cadre of lawyers, both Hancock lawyers and the company’s outside lawyers, who wanted us to fight. It was all about minimizing the financial damage. Plus, there was a certain macho appeal to fighting, and litigators like to litigate.

I remember one meeting very distinctly: One guy was saying,“This lawsuit is going to drag out three to four years, and the burden of proof is going to fall on the customers, individual by individual. If we fight, we might be able to settle this down the road for just 20 or 30 cents on the dollar.”

Here was my response: “You are crazy. First of all, we did this. Second, our business stands for, ‘When you die, we take care of your loved ones.’ It does not stand for, ‘When you die after having paid us three times more than you were supposed to, we take care of your loved ones.’ Even if we could settle the class-action suit for 30 cents on a dollar, how much damage would our brand take, and how much would sales drop in the future? Isn’t it better for us to fess up? Didn’t we all learn this in second grade?”

With that speech, I had just taken the biggest risk of my career. And made many, many people unhappy.

“Isn’t it better for us to fess up? Didn’t we all learn this in second grade?” With that speech, i had just taken the biggest risk of my career.

I was inviting umpteen regulators to take a look at us, since we were regulated state by state, and assuring that we would have a lot of contact with class-action lawyers. Listening to blistering inquiries from both groups proved to be extraordinarily unpleasant.

It was also going to cost us some untold amount of money to make things right, hundreds of millions of dollars. First,we had to pay for an enormously expensive system to figure out fair compensation, customer by customer. Then, not only did we have to rebate the premiums that our customers had paid on “vanishing premium” policies, but we also had to give everybody the products we had promised at the price they thought they were buying them at, which was often at a steep loss for us.Not to mention the fact that we had already paid out millions to salespeople in commissions on these policies, many of whom were now gone with the wind.

I made sure that some others were to follow. And none of this made me particularly popular with the remaining salespeople.

Because of my decision to admit our wrongdoing,we also did not know whether or not the company or individuals within it would be open to criminal prosecution.

In short, with this decision, I was volunteering everybody at John Hancock for a long, long period of humiliation—not to mention lower compensation as the company took the financial hit.

Remarkably enough, the CEO and the board supported me. So did a few of my colleagues. Aside from them, the only people pleased with my decision were the division heads in other parts of the company, who were buying drinks for each other, delighted to see a competitor in such an uncomfortable spot.

These are not the kinds of pressures you face lower in an organization when you’re working for one person and your biggest challenge is getting a single project done on time. And nothing you’ve learned earlier in your career can prepare you for it.

These are not the kinds of pressures you face lower in an organization when you’re working for one person and your biggest challenge is getting a single project done on time.

You naturally start to doubt yourself in a situation like this. I wondered, “Am I overreacting? Being too moralistic, a goody two-shoes? If we could settle for 30 cents on the dollar, wouldn’t that be better?”However, it had not been solely a moral decision. It also was a question of costs and benefits: Ultimately, what would hurt us the most?

And it was clear to me that we actually could have put the entire enterprise at risk by fighting,because we would have eventually lost.We then would have had to pay out far more money and would have been far more severely punished by our regulators.We would have hurt our brand, possibly permanently. And the whole process would have been paralytic to the company.

I credit my boss for recognizing the enterprise risk here and allowing me to make my decision. But no real reward followed it.Not once did anybody pat me on the back and say, “That was a really smart thing to do. We’re glad you did it.”

Then some of our competitors decided to fight rather than settle with the class-action lawyers, and they were lit up like Christmas trees.

Prudential, for example, seemed to be battling the inevitable every step of the way. Even after the company agreed to settle, some of the relevant sales documents were carelessly destroyed. There was a reluctance to share documents with customers who had decided not to participate in the class-action settlement. Even those customers who did participate accused the company of foot-dragging, stonewalling, and making the paperwork deliberately confusing.

The fight cost Prudential an astounding sum—according to court estimates, more than $3 billion by May 31, 2000. It also cost the company years of terrible newspaper headlines and a steep decline in the number of life insurance policies people bought from the company,which fell from about one million in 1991 to less than 300,000 in 1997. There was also considerable misery for the top executives there, including being forced to change their plans at Christmas after a judge ordered them to be deposed in the destruction of documents. While Prudential eventually righted itself, it was not before a lot of suffering.

The one risk you must never be wrong about in your career is enterprise risk. It doesn’t appear that often, but there are times when, even in a position below CEO, you can actually put the entire organization in jeopardy. Just ask Andy Fastow, former CFO of Enron, or David Duncan, the partner in charge of the Enron account at the now-defunct accounting firm Arthur Andersen.

The one risk you must never be wrong about in your career is enterprise risk.

The problem with living in the vertical village of an organization is that you can become very provincial.Within that bubble, it’s easy to forget how the outside world might view your actions and the degree to which your organization could be made to pay for them.

Enterprise risk, by the way, doesn’t always take the form of scandal. I recently hired two companies, an air-conditioning company and a plumbing company, for a renovation. The owners worked on many of the same job sites and were in the process of merging.

Now, one would think that such a merger would be relatively easy. Two families, 20 employees each, pipes and water in common. But it is just as hard as a big merger. Questions such as “Who brought the newer trucks into the marriage?” and “Who is going to pay for the new trucks going forward?” are just as fraught with peril as any question in the AOL–Time Warner union.

This little merger also represents an enterprise risk. The two owners are making a potentially business-ending bet that, first, they will get along and, second, they will make more money because they have joined forces. Even smaller risks are career makers or breakers. Every project in the world has a father or mother who decided to take the risk. And organizational memory is very sharp on this point—who decided to take the risk.

Every project in the world has a father or mother who decided to take the risk. And organizational memory is very sharp on this point—who decided to take the risk.

So you must learn to take risks in a calculated way. The worst sin is not to be able to understand the risks you face, either because you are so riskaverse that you say “No” to everything or because you have no risk filter whatsoever.

For example, I once had a senior executive who thought we ought to throw every conceivable product into the marketplace as quickly as possible, to the point where we had way too many products, many of which didn’t function properly or were mispriced. Our salespeople, sensibly enough, were picking through this grab bag and only selling the ones that were well priced. But not necessarily for our profit.Well priced for their commissions. Needless to say, this executive soon lost all credibility with me on the product-development front.

The worst sin is not to be able to understand the risks you face, either because you are so risk-averse that you say “no” to everything or because you have no risk filter whatsoever.

Many people never rise above a certain level because they never see the downside of anything, particularly since it is not their own money at risk. This is a particular danger for people who start out in sales. They have to have such a positive attitude that they often lack any kind of risk DNA. They’ve knocked on a thousand doors and are used to getting a “No” before they get a “Yes.” Therefore, everything to them is just a question of finding someone to say “Yes.”The problem is that you’re squandering your organization’s resources on those yesses, and soon no one values your opinion.

Other managers become reckless in their risk taking simply because the pressure is on them to generate new revenue. I’ve seen university development people, for example, launch capital campaigns prematurely, before lining up big donors. They do it because their competition’s doing it, and they fail miserably because they just haven’t done the proper research.

Just as dangerous as the risk-lovers are those people who never saw a project they didn’t want to kill. Everything’s bad. Every potential product is bad, every proposal for a new computer system is bad, every new idea is bad.

These people often come from the financial side, where they have gotten the impression that things don’t need to be sold in order for money to arrive. They’re terrible for an organization because nothing ever gets done in their area. Their thinking is that if the risk is not taken, there is no downside.

Just as dangerous as the risk-lovers are those people who never saw a project they didn’t want to kill.

Well, they’re wrong. The downside is that no money comes in. Consider Detroit, where there seems to be a lot of these people. The mind-set is, “We’ve made big cars all of our lives.We’re going to continue to make big cars. It’s always served us well. If the public doesn’t like it, too bad.”

So then what happens is that the Japanese start making smaller, more fuel-efficient cars that are also more reliable, and Detroit gives up market share to Japan and begins a downward spiral.What’s really unbelievable is that this same thing has now happened to the American car companies twice in my lifetime.

Playing safe is often the riskiest thing you can do in a career. If you stand still, the odds are overwhelming that the world will leave you behind.

You cannot encourage the people underneath you to play safe, either. You set the tone. If you have a low tolerance for any kind of mistake from the people who work for you, you will only get safe decisions from them.

Be open to new ideas, but do the work to analyze the risk.

The most successful organizations tend to be those where ideas flow freely, but where there are then mechanisms in place to analyze whether or not those ideas make sense. Try to follow the same pattern. Be open to new ideas, but do the work to analyze the risk. Surround yourself with people who can give you good answers as to what the risks really are.

Unfortunately, the more senior you become, the fewer mistakes you’re allowed because bad outcomes become more public. If you bat .300, you’re a star in Major League Baseball, even though you’re wrong 70 percent of the time. Just try getting away with that in corporate life.

And if a risk goes south on you, you need to fess up early. I can remember when I first took over a big department at John Hancock, the Group Department.We were the largest group health and life insurer in the country. I had a bunch of IT people telling me that we had to put a new claims system in place.

Although it was going to cost $120 million, they promised that it would save us many millions every year. It seemed like a reasonable bet, except that the time frame kept moving outward and the price tag kept rising.

I was too young in my business career to understand what was really going on. There were hundreds of people working on this project, and they had gotten so deeply into it and were so delighted to be fully employed that they could no longer see the forest for the trees. The software they were developing was actually going to be obsolete by the time they finished. For all we were spending, we’d wind up behind our competitors.

One of the characters in my world finally saw that this was insanity, and she shared that insight with me.

For over a year, I had been extolling the virtues of this project to my bosses. Now I had to go to them and say, “Look, we’re going to have to write off the $75 million we have into this. And we still don’t have a system that works well because we have to go back to the old system.”

Know when to take your punishment for a bad bet.

I was chastised for letting the project go on longer than it should have, but I was also praised for not delaying any longer.

Know when to take your punishment for a bad bet. If I had waited another year and a half to take mine, it would have been worse. It would have been, “You, too, will be heading toward Siberia on a hay wagon.”


Smarter Than Reaching for the Brass Ring Is Letting It Slap You in the Nose

There is no such thing in this world as a pure meritocracy.Nobody gets to the top without being lucky. Luck happens to the most deserving of people and some of the most undeserving. It seems to me that George W. Bush got pretty lucky in 2000. It could just as easily have gone the other way.

When the New York Times asked Time Warner Chairman Richard Parsons in 2006 how he wound up running the company, he answered modestly, “Only in America. It’s a society where a certain level of energy, grit, competence, and a huge dollop of luck enable somebody to go from the very bottom to the very top, or from the very top to the very bottom.”

Good luck often takes the form of having the right skills at the right moment. Parsons, who is famously diplomatic, took over Time Warner at a moment when the Time Warner people were so bitter about their merger with AOL—and the subsequent decline in the value of their company stock—that civil war threatened. A diplomatic personality was just what was needed.

Good luck often takes the form of having the right skills at the right moment.

I certainly got lucky at John Hancock. The two CEOs before me were actuaries, and two of the finest executives I ever worked with. However, you couldn’t find a personality or background more different from the actuaries than mine. They were numbers people, I was a marketer. But Hancock needed top-line growth, and I was one of the few people inside who had demonstrated the ability to drive top-line growth.

Now, had I planned that there’d be two actuaries ahead of me? No.Had I planned that the company’s biggest need in that era would be top-line growth? No.

And if the opposite had been true—that we had plenty of top-line growth but were having trouble making a profit on it—would I have been picked? Probably not.

Often you get the brass ring not because you reached so deftly for it, but because the brass ring smacked you in the nose. Little things can tip the balance. Somebody remembers a kindness that you paid them seven years ago or remembers something they read about you. And suddenly you’re in.

Luck works the other way, too. Sometimes when you are passed over for a promotion, it ain’t because you weren’t good enough, and it ain’t your fault. It happens in politics all the time. Very capable people are thrown out of office because their party is suddenly unfashionable. In 1994, the people of Washington State got rid of a sitting Speaker of the House, willing to sacrifice Tom Foley’s clout to express their displeasure with the Democrats. The same kind of thing happens in universities and businesses, too. If the last head of the English Department was a Victorianist and fantastically unpopular, and you are a Victorianist, well, guess what? You are probably not going to be named department head.

Luck works the other way, too. Sometimes when you are passed over for a promotion, it ain’t because you weren’t good enough, and it ain’t your fault.

So what can you do if you find yourself passed over for the promotion you should have gotten? Make your own luck.

Try the Ben Franklin Method of Advancement

Fly a Kite with Keys in a Rainstorm

If you are passed over for a promotion, think about trying a new instrument. Get assigned to task forces that cross divisions. Do whatever you can to be exposed to different disciplines. Contribute in new ways.Make sure you do all that you can to prove yourself, and then make it known that you’re available to run a bigger show.

If You Are Passed Over For A Promotion, Think About Trying A New Instrument.

There are a lot of places, however, where you may never get the opportunity to test yourself outside your discipline because the discipline you want to move into already has so many good people.

When I worked for Commercial Credit, I knew there were armies of strong business managers already doing the kind of thing I wanted to do. Because it was an old mutual insurance company that had never had to fight for a stock price, John Hancock was not as rich in great managers. So when I got the chance to go to John Hancock, I leapt.

Even if you are sure that you’ve found the right instrument, make sure that you are playing it in the right place. If your goal, for example, is to be a marketing chief, you would certainly want to be from Nike, one of the world’s great marketing organizations, because you’d learn a tremendous amount there. But I’m not sure how long you would want to actually be there.

Nike has legions of fantastic marketing people. The competition for the top marketing spot is so intense there that your chances of getting the job are slim.

Remember also that by the time you get into your late 30s or so, you have another problem in an organization too rich in people with your skills: There is younger competition coming in underneath you. They are very, very smart. After all, they are Nike marketers.While you’re waiting to move, they might move ahead of you.

Even if you are sure that you’ve found the right instrument, make sure that you are playing it in the right place.

Stay too long at the Nikes of this world, and you may start to look like Rumpelstiltskin. You can spin straw into gold, but nobody knows your name.

So, at a certain point, go some place that really needs marketing talent. Go some place where the top people will brag about snagging you: “We have a guy who was in charge of the East Coast marketing for Nike, and he’s now our national marketing manager.”

That way, you can operate in a bigger landscape and get a chance to do what you always wanted to do.

Stay too long at a place too rich in your skills, and you may start to look like rumpelstiltskin. You can spin straw into gold, but nobody knows your name.

Even for somebody at the level of Bob Nardelli, a change of venue can do wonders. He was ousted as CEO of Home Depot in 2007 in part because he couldn’t get the stock to rise and in part because he was widely considered too impolitic for the head of a public company in today’s world.

But then Chrysler was taken over by Cerberus Capital Management, a private equity firm. And the private equity world doesn’t really care what public company analysts and business reporters think. Political finesse means nothing to them. They’ve got a Chrysler to rebuild and want a topnotch manager. So Bob Nardelli gets a second chance in an orchestra that is probably a better fit.

Not even the most powerful or ambitious person can force lightning to strike. But you can maneuver yourself into a position where it’s more likely to strike. Figure out how to stand tall in an open field as soon as you can.

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