Not all leaders follow their own advice.
Zac Bissonnette explores that irony in his new book, “Good Advice from Bad People,” which includes some fascinating examples from the business world.
From infamous swindler Bernie Madoff’s investing advice to leadership tips from Lehman Brothers CEO Richard Fuld, we’ve excerpted some of the highlights from Bissonnette’s book.
'When you know what you are talking about, others will follow you, because it's safe to follow you,' Fuld said in his 2006 commencement speech at the University of Colorado Boulder.
Fuld gave this speech as the CEO of Lehman Brothers, a year before his company's stock hit an all-time high. In 2008, Lehman entered the largest bankruptcy in history, after Fuld had led employees, investors, and lenders into dicey mortgages. It turns out he didn't know what he was talking about.
'As an impresario, I encourage and elicit contrarian views and contrasts... Dissent stimulates discussion, prompting others to make more perceptive observations,' Sculley wrote in his 1987 book 'Odyssey: Pepsi to Apple... A Journey of Adventure, Ideas and the Future.'
In May 1985, Sculley joined Apple as its new CEO and quickly discovered that its founder, Steve Jobs, thought he was 'bad for Apple.' Sculley responded to this dissent by complaining to the board of directors and having Jobs stripped of all his management responsibilities. Five months later, Jobs left the company he created.
Apple's board fired Sculley in 1993 after years of disappointing results. Jobs returned to Apple in 1996 and became CEO in 1997. The rebel that Sculley tried squashing, of course, transformed Apple from a has-been into the world's most profitable and innovative company.
'The best chance for the average investor is to put money in an index fund,' said Madoff in a 2013 interview with MarketWatch.
Madoff is the mastermind behind the largest Ponzi scheme in history. He fabricated trading records that showed high, steady, risk-free returns -- the opposite of what came from his risky and unsuccessful trading strategies -- and was able to lure in $US65 billion from some of the world's most sophisticated investors. He was sentenced to 150 years in prison in 2009.
'You will be confronted with questions every day that test your morals. Think carefully, and for your sake do the right thing, not the easy thing,' Kozlowski said in a 2002 commencement speech at Saint Anselm College.
Three weeks after giving that speech, Kozlowski resigned as CEO of Tyco after charges of tax evasion. As CEO, he got the nickname 'Deal a Day Dennis' for the frequent acquisitions that led to consistent growth in revenue, earnings, and stock price. The company later admitted that they were used to artificially inflate earnings.
Kozlowski was also charged with taking over $US50 million in unauthorised bonuses, which he used to fund a gaudy, extravagant lifestyle. In 2005, he was sentenced to eight years in prison.
'The only barriers in your career are self-imposed,' Dunlap wrote in his 1996 book 'Mean Business: How I Save Bad Companies and Make Good Companies Great.'
'Chainsaw Al' personified the ruthlessly effective CEO in the early to mid-90s. He helped turn around a failing Scott Paper by trimming the fat, and when Sunbeam announced it hired him as CEO in 1996, the stock soared 50%.
While it's good advice not to put limits on your dreams, Dunlap didn't respect the limits of the law. In 2002, it was discovered that at least $US60 million of Sunbeam's 1997 profits were fraudulent, and as part of a settlement with the SEC, he agreed never to serve as an officer or director of a public company again.
'Greed is not good ... Every deal is a series of negotiations, and negotiation is not about taking or winning; it's more often about sharing and compromise,' said Pearlman in his 2002 book 'Bands, Brands, & Billions: My Top 10 Rules for Making Any Business Go Platinum.'
In the mid- to late 1990s, Pearlman was the king of the boy bands, having created the Backstreet Boys, *NSYNC, O-Town, and LFO. In 2006, he was exposed for having built his empire on a Ponzi scheme, owing investors $US447 million.
Unlike most Ponzi schemers, he actually had an enormously profitable business but decided to rip off his clients and investors with forged documents and inflated financials.
'You have to be confident as you face the world each day, but you can't be too cocky. Anyone who thinks he's going to win them all is going to wind up a huge loser,' Trump wrote in his 1990 book, 'Trump: Surviving at the Top.'
By the time his book was released, the economy had taken a turn for the worse and his net worth was tanking as he fought bankruptcy for his overleveraged real estate empire, which Bissonnette asserts 'was, of course, a product of his excessive cockiness.'
Trump bounced back from his downfall and reinvented himself as an omnipresent TV personality. Regardless of one's opinion of his business acumen, it's hard to argue that Trump has ever followed his own advice about being humble.
'Leaders must have a strong sense of renewal -- an eagerness to create new opportunities through an entrepreneurial approach,' said Whitmore in a 1986 address to MIT's Sloan School of Management.
When Whitmore took over as CEO of Kodak in 1990, he embraced a culture that was the complete opposite of the entrepreneurial approach he preached. During a meeting with Bill Gates, presumably about finding ways to renew the company as it was losing market share to Polaroid, Whitmore fell asleep. Kodak pushed him out of the company in 1993 for failing to cut costs and boost earnings.
'Put together an open mind with a desire to succeed and you have the basic ingredients for starting a business, no matter how young you are,' Minkow wrote in his 1985 book 'Making It in America.'
In 1986, an 18-year-old Minkow became the youngest CEO of a publicly traded company with his carpet cleaning company ZZZZ Best. Just a year later it turned out that he was just another Ponzi schemer, who had lost $US100 million of investors' money and was sent to jail.
He was released early from prison in 1995, emerging as an evangelical pastor and fraud investigator. But this zeal for justice turned out to be another front, and Minkow went back to prison in 2011 for securities fraud.
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