Once you compromise your values by agreeing to bribes or payoffs, it is difficult ever to reestablish your reputation or credibility. Therefore, carefully choose your partners, be they individuals, companies, or nations.
I have a reputation as a tough but straightforward negotiator. I deal hard and intensely—but always from the top of the deck. Because it is perceived that I usually end up on the better side of the bargain, I actually had one CEO refuse to negotiate a merger with me. He was afraid he would be perceived in the industry as having “lost his pants” or that he sold at the wrong time for the wrong price. That said, I have never had anyone refuse to deal with me for lack of trust.
Competition is an integral part of the entrepreneurial spirit and the free market. Cheating and lying are not. If the immoral nature of cheating and lying doesn’t particularly bother you, consider this: They eventually lead to failure.
Remember the old chant: “Winners never cheat; cheaters never win”? And, as kids, we would chide those whom we perceived to be not telling the truth with: Liar, liar, pants on fire. Those childish taunts actually hold true today. Moral shortcuts always have a way of catching up.
In the Shinto religion, there is this teaching: “If you plot and connive to deceive people, you may fool them for a while and profit thereby, but you will without fail be visited by divine punishment.” I hasten to add that temporal judgment also awaits. There is always a payback for indecent behavior.
Consider this parable: On a late-night flight over the ocean, the pilot announces good news and bad news. “The bad news is we have lost radio contact, our radar doesn’t work, and clouds are blocking our view of the stars. The good news is there is a strong tailwind and we are making excellent time.”
There are many professions in which one can find examples of hollow values, but nowhere is it more evident than on Wall Street, where the ruling ethos seems to be the more you deceive the other guy, the more money you make. It was none other than Abraham Lincoln who reminded us: “There is no more difficult place to find an honest man than on Wall Street in New York City.”
I have spent four decades negotiating deals on Wall Street and have found few completely honest individuals. Those who are trustworthy and honorable are rare—but wonderful professionals. Some of my closest friends are found in this small cadre, be they in New York City or Salt Lake City. Those who choose to mislead others are not always engaging in the type of corruption that sends people to prison. It is more a matter of intellectual dishonesty and lack of personal ethics. Compensation has replaced ethics as a governing principle. Wall Street has but two objectives: How much money can I make? And how fast can I make it? The markets and traditional values don’t always mix well.
There are many professions in which one can find examples of hollow values, but nowhere is it more evident than on Wall Street….
Wall Street thinks there is nothing wrong with this sort of behavior because everyone does it, but the lack of a sense of integrity also produces a lack of respect. WorldCom, Tyco, Enron, and other giant companies had leaders who failed to play fair.
Because they cheated, they lost. Accumulation of power and wealth became a driving force to these executives. They forgot the golden rule of integrity: Trust is a greater compliment than affection. With integrity comes respect.
Real winners never sneak to finish lines by clandestine or compromised routes. They do it the old-fashioned way—with talent, hard work, trust, fairness, and honesty. It’s okay to negotiate tough business deals, but conduct your business with both hands on the table and sleeves rolled up.
It’s okay to negotiate tough business deals, but do it with both hands on the table and sleeves rolled up.
Make it a point to never misrepresent or to take unfair advantage of someone. That way, you can count on second and third deals with companies after successfully completing the first one. Have as a goal both sides feeling they achieved their respective objectives.
In 1999, I was in fierce negotiations with Charles Miller Smith, then president and CEO of Imperial Chemical Industries of Great Britain, one of that nation’s largest companies. We wanted to acquire some of ICI’s chemical divisions. It would be the largest deal of my life, a merger that would double the size of Huntsman Corp. It was a complicated transaction with intense pressure on each side. Charles needed to get a good price to reduce some ICI debt; I had a limited amount of capital for the acquisition.
During the extended negotiations, Charles’ wife was suffering from terminal cancer. Toward the end of our negotiations, he became emotionally distracted. When his wife passed away, he was distraught, as one can imagine. We still had not completed our negotiations.
I decided the fine points of the last 20 percent of the deal would stand as they were proposed. I probably could have clawed another $200 million out of the deal, but it would have come at the expense of Charles’ emotional state. The agreement as it stood was good enough. Each side came out a winner, and I made a lifelong friend.
Every family, home, and school classroom has its standards. There is little confusion over boundary lines. Even when one professes not to understand the rules when caught breaking them is an acknowledgment that a transgression has occurred. But what happens when some of these children turn into adults? Why are these home and classroom rules at times ignored? Why is improper behavior rationalized, even justified, when inside we know better? Some sinister force must take over in the late teens in which finding ways to circumvent traditional standards becomes acceptable.
As a teenager, my father would order me to be home by 8 o’clock. He didn’t say “a.m.” or “p.m.” I knew he meant 8 that night. There was no fine print detailing what was meant when he said he did not want “me” driving the family Ford. Although technically, he only said I shouldn’t drive that 1936 Ford coupe, he also was including my friends. (A lawyer might have counseled that, technically, only I was prohibited. Unless my dad specifically stipulated my buddy or class of people in that prohibition, anyone but me was legally allowed to drive. But I knew better.)
As we grow older, our rationale for cutting corners would make a master storyteller green with envy. We blame situations or others. The dog ate the homework that we ignored. We rationalize that immoral behavior is accepted practice. Shifting responsibility away from ourselves has become an art form.
In fact, we employ the same feeble excuses we did as children when we were caught doing something improper, something we knew we shouldn’t be doing. Adults somehow have convinced ourselves we are more convincing. We aren’t. The “everyone does it” line didn’t work as a teenager, and it won’t work now. It’s a total copout and easily trumped. Everybody is not doing it. Even if they were, it still is wrong—and we know it’s wrong.
Then there’s that old, sheepish excuse: “The devil made me do it.” The devil never makes you do anything. Be honest. Improper actions often appear to be easier routes, or require no courage, or are temporarily advantageous.
If only Richard Nixon had admitted mistakes up front and taken responsibility for the improper conduct of his subordinates, something deep down he knew to be wrong, the American public would have forgiven him. With a sense of contrition, he could have created a presidential benchmark.
The devil never makes you do anything. Be honest. Improper actions often appear to be easier routes, or require no courage, or are temporarily advantageous.
Children observe their elders so they know how to act. Employees watch supervisors. Citizens eye political leaders. If these leaders and role models set bad examples, those following frequently follow suit. It’s that simple.
There are no moral shortcuts in the game of business—or in the game of life. There are, basically, three kinds of people: the unsuccessful, the temporarily successful, and those who become and remain successful. The difference, I am convinced, is character.
PEOPLE SEE SUCCESSES THAT MEN
HAVE MADE AND SOMEHOW THEY
APPEAR TO BE EASY
. BUT THAT IS A
WORLD AWAY FROM THE FACTS.
IT IS FAILURE THAT IS EASY. SUCCESS IS
ALWAYS HARD. A MAN CAN FAIL EASILY;
HE CAN SUCCEED ONLY BY PAYING OUT
ALL THAT HE HAS AND IS.
—HENRY FORD
A SHIP IN HARBOR IS SAFE, BUT THAT
IS NOT WHAT SHIPS ARE BUILT FOR.
—WILLIAM SHEDD
Chapter Four
Setting the Example
Risk, responsibility, reliability—the three Rs of leadership.
I have always loved the biblical passage, “Whatsoever a man soweth, that shall he also reap.” It describes leadership responsibility clearly and concisely, the precise spot where the buck stops. The lesson is clear: Careful cultivation pays off. Parents and employers who nurture, praise, and when necessary, discipline fairly, experience happier and more successful lives for themselves and those in their charge.
Nothing new, you say? I agree, but we need periodic reminders of this point to help overcome unforeseen or uncontrollable obstacles that cloud consciences and end results.
In the marketplace, we may do everything in our power to reap plentiful profits, but because of good-faith miscalculations, malevolence, negative markets, or acts of nature, a successful yield escapes us. My youthful years spent working on a potato farm taught me how an early frost or heavy rains can adversely affect the harvest no matter how carefully we tended the crop.
Fumbling by our own hand or someone else’s also can ruin things. In spite of inspired vision, the purest of intentions, exemplary dedication, the greatest skills, and the most ethical of conduct, material success is never guaranteed. What is important is that the person in charge takes responsibility for the outcome, be it good, bad, or ugly. Surround yourself with the best people available and then accept responsibility.
As an officer aboard the U.S.S. Calvert in the South China Sea in 1960, I learned this lesson firsthand. My commanding officer, Captain Richard Collum, was a World War II veteran whom I greatly admired. On one occasion, we were to rendezvous the ships of our squadron with naval ships from seven other nations. The Calvert was carrying the admiral or, in naval parlance, the Flag. Every ship followed the lead of the flagship.
It was 4 a.m. and I was the officer of the deck. As a 23-year-old lieutenant (j.g.), I had much to learn in life, yet I alone had been given the great responsibility of directing the formation of the ships during those early morning hours.
At 4:35 a.m., I ordered the helmsman: “Come right to course 335.” The helmsman shouted back confirmation, as is traditional in the navy: “Coming right to course 355.”
I thought all was well, but I had not clearly heard his erroneous response. He thought I had ordered “355” degrees, rather than “335.” As we made the incorrect turn, the remaining ships followed. We were off course by 20 degrees.
Some of the ships realized the error and returned to the proper course. Others did not. The formation was in dangerous disarray. Avoiding collisions caused a massive entanglement—and it was my fault. Fortunately, no damage was done, except to my self-confidence. I felt a sense of ruination and failure. How could one issue an order to the helmsman, have it reported back in error, and not catch the discrepancy? After all, repeating the order is the flashing red light for alerting one to such misunderstandings.
Learning of the debacle, Captain Collum came running to the bridge in his bathrobe and immediately took over, relieving an embarrassed young lieutenant. I was devastated. The 42 ships in our squadron took several hours to realign. Later, when the seas were calm and order had been restored, the captain called me to his cabin.
“Lt. Huntsman,” he said, “you learned a valuable lesson today.”
“No, sir,” I responded, “I felt a great sense of embarrassment and I let down you and my shipmates.”
“To the contrary, lieutenant, now you never again will permit such an act to occur. You will stay on top of every order you ever give. This will be a life-long learning experience for you. I am the captain of the ship. Everything that happens is my responsibility. You may not have caught the helmsman’s mistake, but I am responsible for it. The Navy would hold a court martial for me if any of the ships had collided during that exercise.”
I learned then and there what it means to be a leader. Even though the commanding officer was asleep, my actions were his actions. I also learned another lesson: By reassuring a young lieutenant that he still had the captain’s confidence, he extended hope for the future.
I would repeat that scenario (the captain’s, not the lieutenant’s) many times as head of Huntsman Corp. Reprove faults in a way that keeps intact self-confidence and commitment to do better. As a CEO, I accepted responsibility for our plants, even though some of them were a half a world away. CEOs are charged by their directors to guarantee the good conduct and safety of employees and the company.
The marketplace has many leaders—certainly in title. Leadership in the true sense of the word, I’m afraid, is not so abundant. The top executives of some leading businesses haven’t the slightest idea of the breadth of stakeholder expectations. That’s the result of “leaders” simply being appointed to the position or who find themselves at the top of a corporate chart, next in line for the top job. Real leadership demands character.
Leadership is found in all walks of society: business, political, parental, organized sports, military, religious, media, intellectual, entertainment, academic, the arts, and so forth. In every instance, leadership cannot exist in a vacuum. By definition, it requires others, those who would be led—and seldom are they a docile group. Humans, by nature, don’t manage well.
Effective, respected leadership is maintained through mutual agreement. Leadership demanded is leadership denied.
Effective, respected leadership is maintained through mutual agreement. Leadership demanded is leadership denied. Leadership is not meant to be dominion over others. Rather, it is the composite of characteristics that earns respect, results, and a continued following.
Leadership demands decisiveness, and that is why it is absolutely critical that leaders know the facts. To ensure that critical information and solid advice reaches them, leaders must surround themselves with capable, strong, competent advisors—and then listen.
Unfortunately, many companies and organizations are led by executives who fear bold, candid, and talented subordinates. They seek only solicitous yes-types. They embrace adulation, not leadership. The great industrialist Henry J. Kaiser had no time for spineless messengers. “Bring me bad news,” he demanded of subordinates. “Good news weakens me.”
It also matters that top leaders have experience. In times of crisis, experience counts. Soldiers in combat situations prefer to follow battle-tested veterans rather than fuzzy-faced lieutenants fresh out of ROTC. It’s no different in other walks of life.
Leaders must show affection and concern for those under their responsibility. Those who would render loyalty to a leader want to know they are appreciated. Whether or not they realize it, executives in leadership roles solely for the four Ps—pay, perks, power, and prestige—essentially are on their way out.
Leadership is about taking risks. If your life is free of failure, you aren’t much of a leader. Take no risks, and you risk more than ever. No pain, no gain. Leaders are called on to enter arenas where success isn’t covered by the warranty, where public failure is a real possibility. It’s a scary scenario.
Leaders are called on to enter arenas where success isn’t covered by the warranty, where public failure is a real possibility.
A 2004 survey found that three in five senior executives at Fortune 1,000 companies have no desire to become a CEO. That’s twice the number compared to the first such survey conducted in 2001. Why? The risks.
The chance of making mistakes increases dramatically with leadership, no matter its nature or level, but never having failed is never having led.
To succeed, we must attempt new things. Succes
s rates were never a consideration as youngsters when we tried our first hesitant steps, when we learned to use a toilet, when it came to correctly aiming the spoon at an open mouth, or when we decided it was time to tie our own shoelaces. As children, we understood fumbling comes with beginnings. Temporary failures never got in the way of those grand, early-life ventures.
Mistakes are not the problem. How one identifies and corrects errors, how one turns failure into a new opportunity, and how one learns from those mistakes, determines the quality and durability of leaders. Nixon’s Watergate wasn’t so much a burglary as it was the failure to recognize mistakes, to take responsibility for them, and to apologize accordingly.
Those who prefer jeering and ridiculing on the sidelines when the players err or stumble just don’t get it: Mistakes and miscues often are transformed into meaningful, successful experiences. Keep in mind the old saying: “Good judgment comes from experience, and experience comes from poor judgment.”
I am reminded of a great observation from President Teddy Roosevelt in which he places the participant and the belittler in perspective:
It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, and comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows the great enthusiasms, the great devotions; who spends himself in a worthy cause, who at best knows in the end the triumph of high achievement, and who at worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who know neither victory nor defeat.
Winners Never Cheat: Even in Difficult Times, New and Expanded Edition Page 4