In this month’s Ivey interview, Winthrop H. Smith, Jr., former Merrill Lynch executive vice-president and chairman of Merrill Lynch International, discusses the history of the storied financial institution, which was worthy of respect before excessive risk-taking forced a fire sale to Bank of America during the global financial crisis. In a fascinating book marking the 100th anniversary of the firm’s founding, Smith details the positive impact that can be gained from leadership partnerships, such as Charlie Merrill’s partnership with Eddie Lynch, not to mention Smith’s father, Winthrop H. Smith, Sr., who played a key role in the introduction of stock market investing to Main Street masses after the Second World War.
Having two strong leaders at the top of an organization isn’t always a good thing. During his years as CEO of Walt Disney Co., for example, Michael Eisner had some seriously rocky partnerships. Indeed, his battles with Jeffrey Katzenberg and Michael Ovitz were a distraction that cost Disney shareholders. But the early years were a different story. With Ovitz’s predecessor Frank Wells at his side, Eisner transformed a struggling entertainment venture into a magical money-making kingdom. Prior to Disney, he also had a great management run partnering with Barry Diller at ABC and Paramount.
Eisner’s positive experiences with partnerships led him to write Working Together: Why Great Partnerships Succeed, which highlights legendary executive teams, ranging from the partnership that exists between Warren Buffett and Charlie Munger to the one forged by movie makers Brian Grazer and Ron Howard. As Eisner sees it, executive teams that act like a well-matched married couple go a long way toward keeping people happy and working at their best. As he told me when I interviewed him for Canadian Business in 2010, with a partnership, even ones just based on equal influence, “you always have a check and balance on ideas that may be too extreme or too conservative. You certainly have it on ethics and protecting yourself against falling for the advice of people who don’t share your interest in keeping the ship on a moral compass.” Smith feels the same way. In fact, he blames the decline and fall of Merrill Lynch on the loss of a collaborative spirit in the CEO’s office.
Both Smith’s book and Eisner’s work on partnership should be required reading at city hall in Toronto, where Mayor Rob Ford is currently campaigning for re-election. As Bill Furlong, Mary Crossan and Gerard Seijts point out in this issue of IBJ, the character flaws that Ford demonstrated last year should never be tolerated in a leader. But to be a good leader, Ford needs to do more than clean up his personal life. Indeed, Toronto’s Mayor needs to learn to work better with others. As things stand, with Ford and Deputy Mayor Norm Kelly fighting about how to deal with debris from the ice storm that blacked out much of the city in December, citizens of Toronto are probably having a hard time imagining that having two strong leaders can ever actually be a good thing.
According to Ford, who had much of his political power transferred to Kelly by vote of council after personal problems related to illegal drugs and alcohol came to light last year, clean-up operations might easily extend into March, or longer if another dump of snow complicates things. Nevertheless, he had no problem attacking Kelly’s suggestion that local officials at least consider calling in the military to help. Indeed, as far as the Mayor is concerned, requesting military help is as ridiculous as Kelly’s desire to declare an emergency during the power outage that left thousands of residents shivering in the dark. Ford is still the only one who can declare an emergency, despite the fact that Kelly was put in charge of managing them when handed many of Ford’s former executive duties.
Like business leaders, politicians have an obligation to go out of their way to work together effectively. Ben Franklin made this point when explaining why he chose not to make public the serious concerns he had with the U.S. Constitution. “The opinions I have had of its errors I sacrifice to the public good,” he wrote, noting that voicing disagreements can undermine confidence in government. “Much of the strength and efficiency of any government, in procuring and securing happiness to the people, depends on opinion, on the general opinion of the goodness of that government, as well as of the wisdom and integrity of its governors,” he added.
Instead of fighting Kelly, Ford should partner with him, even if that means deferring to his former deputy when they disagree. After all, whether he likes it or not, Ford is the one who made it hard for many people to trust him. He then refused to step down while fighting for re-election. And now, by making comments that undermine confidence in Kelly’s ability to manage the city, Torontonians have been forced to question whether or not anyone at all is in charge.
As both Ivey research and Smith’s book on Merrill Lynch make clear, integrity isn’t just a nice-to-have leadership quality. It is often the key to sustained success, not to mention recovering from scandals. But acting with integrity all the time isn’t easy, which is why it can be helpful having a strong partner who can help keep you on your toes.