At first glance, each of the institutions you mentioned should have different obligations for leaders since the museums are cultural institutions while the investment firm is a for-profit enterprise.
The role of the leader in non-profits is primarily a governance role. The obligation of the chairman for instance is to ensure that all the Museum committees are populated by people that have appropriate experience. These people are dealing with key functions that are necessary to keep the museum solvent, on track and completing its mission – inspiring curiosity about our planet and contributing to environmental protection, scientific research, and education.
If you flip over to Madison Dearborn, my obligation there was to make sure I have people in place to do the job our investors expect us to do. So, picking the right people and providing motivation for them (which includes compensation and working environment) to lead to successful investments of our investors’ funds.
So, in reality, wherever you work, choosing the right people is a key to prosperity.
Let’s take Madison Dearborn. We have an associate recruiting program, and every year 6 people go through it. These people don’t have to be smartest people in the world but they should have values we are proud of having in our company.
As good corporate citizens of Chicago, all our partners are involved extensively in charitable events and enterprises. We try to get our associates involved in charity as well.
Leadership is more about setting the tone by example. You can’t expect someone to be ethical and to respect other coworkers without being this kind of person yourself. Being a leader sometimes means being a mentor for your employees who admire your behavior and your method of handling difficult situations.
Leaders also have to make sure there is a strategy everybody in the company understands. Leaders have to create a good environment that motivates employees to get their job done properly. That requires a couple of things – delegating trust and authority to competent people and providing a working environment in which coworkers show mutual respect and trust. As a leader you have lots of other responsibilities like letting people do the jobs they were hired for and making sure that these people can manage and execute effectively.
We quickly realized that in minor league baseball you’re not necessarily competing against other baseball teams, but you’re competing against local businesses – like local art fair or local carnival.
You have to present to your customers value proposition which is attractive. Cold beer, good food, clean park, good parking. So, being a leader in baseball business means understanding these fundamentals.
And again, hiring right people is a key to success.
At Madison Dearborn Partners, we are partners and we make our investment decisions in a group format so we meet every Monday and every deal is discussed. To encourage effective teamwork, we create an environment in which employees understand that playing devil’s advocate and challenging someone’s assumptions is not a personal attack but a good exercise for all the investors in our company. This system also enables us to make sure that everyone as a team player, has an incentive to do the best deal regardless of whose deal it is.
Being willing to face tough decisions and be brutally honest with people making these decisions is an ability that makes leaders. Delivering bad news to good people is hardest thing to do, but as a leader you have to learn to do it.
One of them is Bud Selig, baseball commissioner. He was my partner with the Milwaukee Brewers. We’re close friends. He is extremely ethical and honest. He never shies away from difficult decisions. He did a great job restructuring the baseball economic business model. He also faced up to a drug problem with players and suspended them – for example, famous player Alex Rodriguez. You can argue he had no incentive to suspend star players – it hurts ratings and the game’s image. But it was the right thing to do and sent a message that such behavior wouldn’t be tolerated. I admire Bud for having a set of values and his willingness to take criticism. We all make mistakes, but only true leaders are ready to take criticism which helps us to analyze our mistakes and learn from them.
The hardest mistakes I have ever made were picking wrong people for jobs. It’s really difficult to recognize early that you made an incorrect decision. But when I realized it, I asked myself: ‘What can I learn from it? Why is this person not able to do a job I thought he would be perfect for?’ I know that sometimes I didn’t react as quickly as I should have. It’s human nature to delay decisions that are important until it’s so obvious you should. I don’t like it when I miss a good deal, but I don’t get disturbed when we do a deal that turns out badly as long as it turned out badly because of the reasons we have identified as risks previously. What I really don’t like is when the deal turned out badly for reasons we hadn’t anticipate.
Interview By Liubov Buklemisheva