The Danger of the Four P’s—Pay, Perks, Power and Prestige
The Danger of the Four P’s—Pay, Perks, Power and PrestigeJon Huntsman’s New Book Challenges Corporate Leaders to a Higher Standard of Conduct
The saga of Jon Meade Huntsman is the stuff from which American Dream legends are made: threadbare upbringing in Blackfoot, Idaho, where he learned a work ethic and basic moral values to outstanding Wharton graduate (W’59) to patriarch of what was the nation’s largest family owned and operated business.
At the apex of that often-bumpy journey, he found himself one of America’s wealthiest individuals and among the nation’s top 25 all-time philanthropists.
Until November 2004, he was typically referred to as industrialist Jon M. Huntsman, founder and chairman of the world’s largest privately owned chemical company, Huntsman Corp., with operations in 41 countries and headquarters in Salt Lake City. Since then, he jokes, the press generally describes him as “the father of Utah Governor Jon Huntsman Jr.”
In May, Huntsman also becomes an author.
This winter, Wharton School Publishing (WSP) went to press with Huntsman’s first book, Winners Never Cheat: Everyday Values We Learned as Children (But May Have Forgotten), an accessible prescription for returning traditional principles to the marketplace. It is being hailed as an over-the-counter antibiotic for times when many seem to have drifted from basic values of right and wrong.
The genesis of the 200-page book was another Huntsman work-in-progress. At the end of last summer, Huntsman found himself nearly finished with an autobiography, his fourth attempt to chronicle his life.
Huntsman had submitted several draft chapters to Wharton School Publishing (WSP) for evaluation after it had expressed an interest in publishing the book. In reading excerpts, WSP Editor and Wharton professor Jerry Wind and WSP vice president and editor-in-chief Tim Moore were struck by the number and variety of anecdotes that played on the theme doing well by doing good.
They urged Huntsman to temporarily lay aside the autobiographical effort in order to pen a book they believe will resonate in today’s business arenas and classrooms—and will be applicable for corporate CEOs and top executives as well as mid-managers and supervisors. Huntsman embraced the task with enthusiasm; he was surprised at how easily the words flowed on to paper. (Ironically, this chemical magnate dropped high school chemistry after two weeks. His favorite subjects: English and math.) As the book evolved, it became clear that the messages in Winners Never Cheatare relevant to a wide range of organizations and institutions.
Winners Never Cheat went from conceptual discussion to final proofs in four months, during a time when Huntsman, 67, had just pulled his company from the cusp of disaster to its best performance ever, was in the middle of his son’s campaign for governor, and was arranging to take his company public in February 2005.
“Since the turn of the century, we have seen a total crash of business ethics,” observes Huntsman. “Bastions of American capitalism came tumbling down with lightning speed. I became convinced the timing of this book was as important as the message. Something needed to be said—and quickly—about the importance of winning while playing by the rules.”
Enron and others of its ilk “brought down the economy more than we will ever know. The cheaters caused many companies great pain.”
As Huntsman sees it, the 1980s and 1990s were go-go business years and in the headlong rush to make money many overdosed on greed, forgetting the ethical foundations of their personal lives.
Huntsman expects cynics to argue he is oversimplifying current moral issues in a world that has become so highly competitive, technical, fluid and pressurized. Counters the author: What is so complex or situational about honesty, keeping one’s word, being decent and gracious to others, or giving back some of what we received?
Such basic codes of conduct were taught by parents, relatives, teachers, coaches, scout leaders, clerics and friends during our formative years, regardless of our religious background or economic standing.
“I played a lot of sandlot football, basketball and baseball as a youngster. We never required referees to call fouls, foul balls or out of bounds. We knew. We didn’t need rulebooks to regulate play or official scorers to determine who won. We knew. We stopped play when somebody went down or got hurt because taking advantage of an injured player was poor sportsmanship.”
“We knew better than to cheat or be poor sports back then, he insists, just as we know better today. We were taught not to cheat, not to be rude, not to double-cross people, not to be stingy.” “There is no such thing as a moral agnostic,” Huntsman argues. “An amoral individual is nothing more than a moral person who, for one reason or another, temporarily and quite often creatively disconnects his or her actions from the moral compass. People running on all mental cylinders know right from wrong. Period.”
In his book, Huntsman lays much of the blame for the marketplace’s current moral vacuum on corporate lawyers, investment bankers, Wall Street investors and morally complacent CEOs, people he does not believe are inherently evil but rather trained to place professional standards and short-term gain above personal ethics. To-wit:
- “One’s word being one’s bond has been replaced with one’s word being subject to legal review.”
- “What is considered standard rules of play on Wall Street is a Class A misdemeanor in Peoria.”
- “Whether they realize it or not, executives in leadership roles solely for the four Ps—pay, perks, power and prestige—essentially are on their way out.”
Huntsman is unapologetic about his relatively harsh words. CEOs, lawyers, lenders and major Wall Street players, he argues, must be held to a higher standard because their actions have such tremendous ramifications. He does admit his recent experience taking the company public provided him with many exceptions to his rule. “I dealth with some genuinely decent, committed people,” he says.
Huntsman makes clear his book is not a sermon just for others. He sees it as a personal booster shot, as well. “Because of the pressures we face daily, each of us requires periodic reminders to check for the proper, decent, courageous and generous course.”
Huntsman took his business public primarily to reduce the crushing debt incurred in pulling his company out of the perfect economic storm that began in earnest in 2001 and raged for another three years. There was a compelling secondary reason, as well: It would give wife Karen and him the opportunity to sell stock over the coming years and place the proceeds into the Jon and Karen Huntsman Foundation for continued philanthropic work. In the last 20 years—the family only began keeping track in the mid-1980s—the Huntsmans have given away more than a half a billion dollars to schools, cancer research, charities, libraries, scholarships and the arts. (A little known fact is that Huntsman, an active Mormon, is one of the largest donors to Catholic social services in the Diocese of Salt Lake City.)
Even when the company was bleeding red ink in the most recent downturn, the elder Huntsman secured personal loans to meet his philanthropic obligations. “It’s easy to say, sorry, I can’t meet my pledge payments this year,” he says. “But one has to keep one’s word even when it’s painful.”
Huntsman attended the Wharton School on a chance scholarship, one of those breaks in life that people like Huntsman view as a reason why they must give back once they have it made. That opportunity gave him the training and contacts to launch and nurture a career that took him to the pinnacle of success. He did not forget his alma mater. He provided a $40-million lead gift to build Jon M. Huntsman Hall. In addition, Huntsman, chairman of Wharton’s Board of Overseers, provided an additional $10 million for the Huntsman International Program.
It was at the 2002 dedication of Jon M. Huntsman Hall that Vice President Dick Cheney said of his longtime friend: “In his creative gifts, in his business success, in his great philanthropy, in his human qualities, Jon stands in a class all of his own.”
Huntsman views the Wharton School as the pre-eminent preparation for running global enterprises. It is inside this Wharton experience, he believes, that playing by the rules becomes a core element of training.
This duty to give back is the nucleus of Huntman’s message in Winners Never Cheat. He has contempt for those who measure success by how much they make rather than how much they give away. But the duty to give is not just for the wealthy. Huntsman lets no one off the hook, insisting that philanthropy is not based on economic status.
It’s Not Whether to Execute: It’s How
Making Strategy Work: Leading Effective Execution and Change, Lawrence G. Hrebiniak
It’s even tougher to execute strategy than to design it. And without effective execution, even the best strategies are worthless.
In 2002, when Larry Bossidy made these points in his best-seller Execution, they seemed revelatory. Three years later, the centrality of execution is so obvious it’s nearly a cliché. But there’s a big difference between talking about execution and actually improving it.
In Making Strategy Work, Wharton Professor of Management Lawrence Hrebiniak targets that gap. In place of anecdote and guesswork, he offers a disciplined, research-based process model for fully aligning your organization’s skills, resources, and culture behind the strategies you define.
Strategy formulation and execution are even more interdependent than many managers realize, says Hrebiniak. Moreover, certain strategy flaws have especially serious implications for execution. One example: the failure to integrate enterprise strategy with strategy at the business or division level.
Consider the company that views one division as a mature cash cow, while that division has identified new opportunities for transforming itself back into a “star.” The strategy mismatch leads to wars over resource allocation and performance metrics—and neither the enterprise nor the division executes successfully.
Hrebeniak’s model doesn’t just illuminate the ways corporate strategy should drive business strategy: it encompasses organizational structure, short-term operating objectives, incentives, controls, and more.
Drawing heavily on the recent Wharton Executive Education Survey, Hrebeniak notes that many companies still fail to structure themselves for effective execution. “Design or redesign efforts are handled badly… Integration or coordination of diverse structural units is poor or incomplete. The link to strategy when changing structure is unclear or often simply missing.”
That link is, of course, crucial. Hrebiniak shows how cost leadership, product differentiation, diversification, and growth-oriented strategies each imply different choices about structure. Should you centralize or decentralize? Move towards “process” or “purpose”-based structures? Apply matrix management? While nobody works from a clean slate, his insights will be invaluable in evolving your organization alongside your strategies.
Having discussed how to define operating units, Hrebiniak turns to integrating and coordinating them. One key insight: the types of interdependence that exist amongst your units directly impact your ability to execute.
Consider the case of “reciprocal interdependence,” where each unit or function can “change the rules,” and even veto the actions of others. In such an environment, it’s tough to achieve consensus amongst marketing, engineering, and production. If your strategy is built upon rapid introduction of new products, you’d better pay far greater attention to coordination. Hrebiniak offers detailed solutions—ways to clarify responsibilities and strengthen accountability.
Which brings us to the final element of his model: incentives and controls. Among the topics he covers: making sure you’re incenting the right things, and using performance appraisals to support strategy, not undercut it.
