Forget the movies, TV shows and epic thrillers for just one second, and try to consider who is an untouchable. As the term would imply, a person that is untouchable could be seen as someone who is above the law, someone that cannot be threatened by what everyday people are subject to.
In sports, the untouchables are perceived as the marquee players who dominate their circuit in the regular season and win championships in the playoffs. To owners and management, their impact transcends beyond the field; they generate record ticket sales at stadiums and stratospheric merchandise sales levels in stores, enriching owners.
But owners are not alone: untouchables are perceived as being able to increase profiles and sales for corporate sponsors as well. Fans assume that these stars never get traded, even when they methodically get blamed for the team’s failures.
In business, untouchables take on a different dimension. While they are surely less popular to the general media and overall population, investors and business media, they are the darlings that move stock valuations, market leadership positions and even consumer sentiment.
But beyond the façade, is there really such thing as an untouchable? My answer is yes and no. Read on to see why.
Stars are expendable
When John Reed’s Citicorp merged with Sandy Weill’s Travelers Group in the late 1990s, in the then largest merger ever, many believed that the two leaders would ultimately bow out and make way for the trusted and respected Jamie Dimon, the then number 2 at Travelers and protégé of Weill.
Dimon was widely believed to be a so-called untouchable because he was a star and the likely successor as Chairman of a merged Citigroup, when the 60-plus-year-old would retire.
Power struggles, turf battles and egos ultimately led to Dimon’s dismissal in November 1998. Interestingly, Citigroup stock lost tremendous value immediately (billed by the media as the Dimon effect). Why did the market react this way? This shook Citigroup’s succession and management future — and the market was not aware. But the stock recovered.
I can surely tell you that while employees, consumers and investors were dismayed at Dimon’s firing, he was, at most, “slightly” surprised.
Do they think they’re safe?
Before I pretend to know what an untouchable thinks, allow me to make the following statement: The first thing to consider is that, for all intents and purposes, there is a distinction to be made between individuals who believe that they are untouchable, and those who know they are not but are perceived as such by others.
Dimon was a very smart individual who knew that if his boss, Sandy Weill, would now be co-CEO with Citicorp’s John Reed, it would clutter the landscape and regardless of age and original succession plan, render him redundant. And I use “redundant” with a tremendous amount of respect for Dimon.
Later, when he joined Bank One, it was his operational and financial expertise, as well as the trust he commanded from Wall Street, that improved the dire situation of his new employer, resulting in the share price appreciation of 27% in 12 months.
Are you expendable?
Surely Dimon did not think he was untouchable; he was an employee — albeit a high-level one — of Travelers Group, and he received a paycheck like everyone else. But what about those who found companies, and lead them through thick and thin? Well, if you ask the Saatchi brothers, who created one of the most successful and glamorous advertising agencies ever, they will tell you that if you have any misguided notions of being an untouchable because your name is on the company doors, then you are due for a rude awakening.
While I am not insinuating that the Saatchi brothers felt that they were untouchable, you have to admit that the likelihood of this erroneous belief was much higher in their case than in Dimon’s.
saatchi minus saatchi
The Saatchi brothers (Charles and Maurice) built a powerhouse. One part of their success was fueled by acquisitions; these acquisitions were financed through debt, which burdened the firm to the tune of £666 million in 1990. I was going to convert this to the 1990 US dollar equivalent, but by any standard, this is a lot of dough to owe someone, even if your client roster includes blue chips like Procter & Gamble, Xerox, British Airways, and Philip Morris.
But despite all their empire building, the Saatchi brothers increasingly lost control as board members voiced their concerns over finances. One particular board member was a bloke by the name of David Hero, who owned a tenth of the common stock, ultimately creating a mutiny that would drive the brothers out of the firm in 1994 and 1995 (Maurice left first).
If this is hard to believe, know that it is somewhat similar to what occurred to Steve Jobs at Apple. While Jobs’ name was not on the company doors, Jobs was very much “Apple.”
Were Jobs and the Saatchi brothers untouchable?
Smell the pink slip
I would argue that the most successful businessmen know there is no such thing as an untouchable. These are the men that are so driven and determined that they let their results speak for themselves. They do not believe the myopic fallacy that past performance shall guarantee future success. This is a basic tenet in investing and it applies to human resources management as well. Many overlook this.
Imagine an athlete that signs a $10 million per year contract. He can take a proverbial vacation the next year and he may get away with it, for one year. Sooner or later, he will bear the brunt of his lack of successes.
A smart athlete is one who forgets where his back account is at and plays like an unsigned player in training camp.
This is how businessmen should work. Why?
watch your back
The main reasons are driven from Darwin’s survival of the fittest theory. Whether you are a star or not, there is always someone who is itching to dethrone you. They would, in a heartbeat, pull a coup d’tat and steal your thunder the second you get lazy, apathetic or cocky.
No matter where you are (company), who you are (what level of the organization), how you perform (past vs. future), and what you aspire to be (how hard you work), there will always be someone waiting in the wings. This applies when you succeed, and needless to say, it applies when you crash and burn.
Back in 1998, there was a hedge fund called Long-Term Capital Management that undertook some unconventional trading positions. The masterminds and geniuses of this hedge fund were a bunch of PhDs behind the Black-Scholes derivative pricing model.
The salesman and trader behind the hedge fund that made it all possible was former Salomon bond trader, John Meriwether. Meriwether could do no wrong, until July of 1998. Was he an untouchable?
What does it take?
So you’re patient… not bad. What truly makes someone an untouchable? Simple. When I began to write this feature, my original hypothesis was that there is no such thing as an untouchable. Do I still believe this theory? If you guessed “read on,” then you are catching on.
As a general rule, there is no such thing as an untouchable in business . But I would humbly argue that it is possible for someone to be untouchable in their personal life .
Allow me to revisit the previous examples:
Jamie Dimon left Citigroup with his record intact. After the merger, Citicorp and Travelers Group endured turf battles, defections, and troubled times, and while the merged entity remains a mammoth of a financial empire, the reality is that the full promise of the merger is still that — a promise.
Surely this had little to do with Dimon’s departure, but he could have surely been a champion of change, an unbiased person who would have resolved conflicts and turf battles, and an operational and financial whiz who took a year off to travel, spend time with his family and enjoy the important things in life.
I recall reading that upon hearing of her father’s dismissal, one of Dimon’s daughters asked her daddy if they could afford their apartment. The fact that he was home to answer this question was a triumph in itself.
The Saatchi brothers left the firm, surely not by their choice, and while the agency still operates today, the fact of the matter remains that immediately after their departure, many of the highest profile clients such as British Airways reconsidered whether or not they should remain with an agency that lost its key visionaries. The board felt that it was untouchable, failing to realize that an ad agency is, after all, a people business, and losing the (at least perceived) creative spark plug would harm business.
Moreover, many of the agency’s talent defected to Maurice Saatchi’s new agency anyway, M&C Saatchi. Who is winning this rat race does not matter; what does matter is that the brothers learned a valuable life experience and now have another shot at doing what they do best.
Independent of what John Meriwether is doing now, he was probably smarter (at least in the street-smart sense) than the PhDs he was working with. What he did is truly one for the ages. Meriwether’s bets on the direction of the capital markets were so intricate and seemingly complex (although very basic in essence, below the surface) that he would have to make extremely leveraged (on borrowed money) bets.
Never bet the farm
What does this mean — if you are going to owe money, you might as well owe a bundle? Well, this is what Uncle John did. He owed a ton, and he did not go and borrow from the corner bank. Oh no, that would not be a true hedge after all. Meriwether went out and borrowed from the largest financial institutions and the deepest pockets, knowing very well that if anything adverse happened to him, it would be very, very bad for the entire global market.
Regardless of what Meriwether is doing now, he protected himself by spreading the risk and burden around, effectively making his fund, but not himself, untouchable. But he did manage to do one thing to make himself untouchable: billions were lost, but he himself lost far less.
I probably need not tell you, but Steve Jobs is back at the helm, where he belongs, of Apple. Last I checked, he was getting a one dollar salary, and still laughing all the way to the bank.
But in any case, if you have a down-to-earth personality, care about the important things in life and manage to bounce back, then you are indeed an untouchable in the true sense of the word.
Ash Karbasfrooshan is also the author of Course To Success, available at www.CourseToSuccess.com.
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