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Why
Two Turnarounds Later, I Decided to Run My Own Business
In
1960, I was hired as president of McCann-Erickson's public relations
firm. It was the first time I had ever run a corporation. When I
arrived, I found a very sick operation. It was losing a quarter
of a million dollars a year, which at that period and in the scale
of public relations budgets, was an awful lot of money. In two years,
I turned it around and it became very profitable. I learned a lot
about how to manage. So it was a very valuable education to me.
At this point, I was fired. There were internal political factors,
maneuvering, that, even in retrospect, were beyond my control or
my ability to influence.
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“...when
I turned a profit, my share of the dollars quickly became
very substantial. That didn't make the owner very happy.”
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But
at just that same moment, I learned that one of McCann's clients
was looking for a president. They knew my work from McCann, and
they offered me the job as president. I had no other job offer to
choose from, so I took it. And again it was a very sick corporate
situation. The company was in imminent danger of bankruptcy. I walked
into it knowingly. The company was losing money each day.
The
owners "generously" offered me an attractive profit sharing
plan because there was no profit for me to share. It cost the owner
nothing to offer me a share of what didn't exist. Between 1962 and
1964, I succeeded in turning the company around, returning it to
profitability. Well, when I turned a profit, my share of the dollars
quickly became very substantial. That didn't make the owner very
happy.
In
the end, I decided there would be no future for me working for somebody
else who owned the company. I was a "hired-hand president,"
so I took my profits and left and decided to try to run my own consulting
business. This was more than 40 years ago.
I
considered my past experience. First, it had been in public relations.
Second, it was in management, because I had been running a very
sizeable corporation. And I also liked the idea of consulting. Public
Relations means many things to many people. For example, if I say
to you "public relations" you'd probably think of publicity
or promotion. I never did any of that. My involvement as president
of McCann-Erickson's public relations firm principally consisted
of talking to clients with problems and suggesting solutions, and
I loved it.
What
I didn't know when I began my firm was an answer to the basic question:
could I sustain myself selling advice, or would I have to do operational
work? "Operational work" is a euphemism for publicity
and promotion. For example, would I have to turn to writing brochures
or running publicity campaigns to survive? Implementation was the
very thing I didn't want to do. Finally, I figured that the marketplace
would settle the question for me.
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“All
we did was sell advice...”
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I
opened my doors on December 1, 1964 as Chester Burger & Co.
Inc. My wife was the "& Co., Inc." Twenty years later,
in '84, I sold the firm to one of my partners and I became an employee
of the firm for a four-year transition period until '88. I retired
totally on November 30, 1988. During that 24-year period, our firm
never did any "operational work." We never involved ourselves
in publicity or promotion. Not that there's anything wrong with
publicity and promotion. It's just that that wasn't where my abilities
or interests lay. All we did was sell advice, and we survived just
fine. At the peak, we totaled 22 people, which is not bad if all
you're doing is selling advice.
Clients:
33 Years without a Contract
In
1955, I began as a consultant to the AT&T company. I retired
from active consulting in 1988. So, when I retired, I had been a
consultant to AT&T for 33 years, either personally or through
my company. And as far as I know, that is the longest consultant
relationship the corporation ever had with anybody.
What's
interesting about it was that I never at any time had a written
contract with them. We were never paid a retainer of any kind. I
don't say I wouldn't have liked to have received a monthly check.
I would have loved to have had a steady income, especially in the
early years when we were struggling to survive.
The
chairman or the president would call me and say, "Hey, I have
something I want to talk to you about. Could you come on down?"
And I'd go down to company headquarters at 195 Broadway, and spend
some time with him. We talked about the problem, and after we were
finished, at the end of the month, I'd send a bill for the time
spent, charged at an hourly rate. And it was always paid promptly.
It went on like that for 33 years.
Sometimes
a prospective client would say, "Okay, we want to hire you.
How do you work?" And I'd tell them, "If you have a contract
you want to send me, fine, send it along and I'll sign it."
And they'd say, "Don't you have a standard agreement?"
And I'd reply, "No. We'll write one if you want one, but we
don't need it. If you don't like us, you can fire us, and that's
all there is to it."
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“...you
don't depend on contracts, you depend on the trust of your
client. If he doesn't trust you, you can forget it..”
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I
know that now this probably sounds terribly naive. But it worked
for me. I can recall only two instances over my long career where
a client wasn't happy with our work. In both cases, I remember saying
to them, "If you're not satisfied with what we did, if you
don't feel you received good value, then don't pay the bill. Just
forget about it." In one case, they paid the bill anyway, apparently
because they felt we had given advice in good faith and they trusted
us. And in the other case, as I recall, they paid us less than the
full amount. But whatever it was, I left it up to them. A lot easier
than litigation.
That
reflects an attitude that was basic to my thinking: you don't depend
on contracts, you depend on the trust of your client. If he doesn't
trust you, you can forget it. There's no relationship. And the point
is that you've got to earn and deserve that trust.
Subjective
Reality versus Objective Reality
I
think this is the most important point that I can make. I think
99 1/2% of all consultants give all their attention to what I call
objective reality, meaning how to help the client solve a particular
problem. Some consultants are very good. Some are fair. Some are
no good at all. But most are pretty good. They really do know how
to help. They have particular professional skills to help the client.
In
my experience, where many fail is the subjective part of the relationship.
It's not that they lack the ability to help a client. They do help.
But they pay no attention at all to the personal quality of their
relationship with a client.
Here's
what I mean. Suppose you asked me to criticize your work, and I
began criticizing it. Give me the benefit of the doubt and let's
assume that my criticism was really good, really insightful and
constructive. How are you going to feel? You're going to resent
it like hell. You're going to become defensive. You feel under attack.
So you might tell me that I don't know what I'm talking about. Or
you're going to feel stupid — "Why didn't I think of that?
He must be smarter than I am." And so it's a no-win situation.
So
again, assuming that it was good advice, the client will resent
the fact that I thought of something that he didn't. Also, he's
going to feel dependent upon me because I gave him an answer to
a problem for which he didn't have an answer.
So
there's an ambivalence to the relationship. There's both respect
and appreciation for the help I'm giving him, and simultaneously,
he resents the fact that he had to come to me to get it. I think
this is at the heart of the problems that arise in consulting relationships.
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“You”
was a bad word. It was always “us.”
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So
what's the solution? First and foremost, the answer for me is to
be intensely aware of how the client will feel if I give him the
"right" answer. Secondly, I need to be aware that my client
is absolutely no different from me. He doesn't like to be criticized.
We're all that way.
So
the consultant's dilemma is that on one hand, if I don't tell him
the absolute truth, I have no value. I'm a phony. But, on the other
hand, if I do tell him the truth, I must find a way to let him "save
face." I need to find a way to let him psychologically accept
the criticism I'm giving him, and not become defensive or resistant.
That's where most consultants fail.
The
client might tell me of some bad business or personnel decision
he had made that caused the problem. I have no value to him or his
company unless I tell him truthfully that it was an incorrect decision.
But I've also got to make sure that he doesn't feel embarrassed
or defensive. I want him to accept counsel to change the failed
decision. So I might say to him, "Well, of course it was a
mistake. But look, at the time, you couldn't have foreseen that.
You did the best you could under the circumstances. Looking back
with 20/20 hindsight, we now can see that it was a mistake. Let's
go on from there."
The
moment a client recognizes that I'm not being judgmental, that I'm
not condemning him, that I'm saving that we're all humans and we
all make mistakes, then he will find it acceptable to consider to
what I have to say.
So
whenever my partners and I would enter a client situation, we would
look on two levels at the problem we found. One was the objective
level — what's the best way to help solve the problem? But
we paid almost as much attention to the subjective level. How can
we make psychologically acceptable to the client what we will propose
to him?
Many
people get into management consulting because they themselves have
an inner need or desire to feel superior. After all, if you're a
consultant, you're the person who's expected to know the answer.
I believe that many consultants enter the field for that reason,
unconsciously perhaps. We're all so damn human. We all have these
shortcomings. But if for that reason we become consultants, we'll
need constantly to struggle against the urge to lord it psychologically
over the client, to make him feel stupid so that he can see how
smart we are. This attitude in a relationship can lead only to disaster.
I
always tried to overcome the distance between the corporation and
me as the outside consultant. I would say, "Let's look at this
problem we're facing here. Let's talk about what we can do."
It never was a matter of what 'you' could do. That's the word I
would never use. "You" was a bad word. It was always "us"
working together.
I
Kept Learning So Much
I
had much joy, much pleasure out of my consulting work for 24 years.
I kept learning so much. Let me tell you a story that was particularly
memorable.
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“You
could see the excitement, the intellectual excitement these
men were experiencing, even late in their careers. They couldn't
wait to come to work in the morning. They absolutely loved
their work.”
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I
had been working with AT&T since the '50s. One time in the '70s,
they brought me in to the Bell Laboratories. At that time, Bell
Labs was perhaps the greatest scientific research institution in
the world. Certainly it was one of the greatest. I had never before
had any personal contact with science or scientists. I had no education
in the field of science, and had no interest in it. And all of a
sudden, I'm meeting these great scientists. Two of them were Nobel
Prize winners, Arno Penzias and Bob Wilson, whose work confirmed
the "Big Bang" theory of creation.
These
men probably were in their 50s or 60s at the time. You could see
the excitement, the intellectual excitement these men were experiencing,
even late in their careers. They couldn't wait to come to work in
the morning. They absolutely loved their work.
I
don't mean just those two Nobel Prize winners. I mean all the Bell
Labs scientists were excited by what they were doing. Their enthusiasm
opened to me an interest in science, for the first time in my entire
life, and it has grown ever since. Consulting work really has stretched
me to acquire new interests, and to learn new things. It's a happy
and continual learning process.
Ethics:
Trust is as Trust Does
If
I were stupid enough to think that I could do ill or do wrong and
get away with it for long, well, I'd be very naive and reveal my
inexperience in the ways of the world. As a consultant, you may
sometimes make an honest error of judgment and give a client advice
that turns out to be bad or wrong. You try, in good conscience,
to give the best advice you can. That's the only way to survive.
But
giving the best advice you can at that time and not being right
is a very different thing from deliberately giving poor advice because
you think it is what the client wants to hear. An opportunist will
be seen through quickly. Integrity isn’t a luxury. It's a business
necessity for survival. When the truth begins to be seen, opportunism
will ruin a person. There's no future in giving less than your best
honest advice.
Recently,
in retirement, I had a very interesting experience. I'm officially
a member of an advisory council to the Secretary of the Air Force
Office of Public Affairs. They've been taking me around the country,
letting me see some of their operations and their problems. It's
marvelously interesting. They took me down to Kirkland Air Force
Base in Texas where the Air Force gives basic training to the volunteers.
During
training, the drill sergeant is with these recruits from morning
to night for the first six weeks of their basic training. He has
almost total authority over their lives until they become full members
of the Air Force. While I was down there, a sergeant told me that
sometimes when he calls the men and women out for reveille at 5:00
in the morning, as they are moving into formation, he might notice
one of them scratching his face. He waits until they are all lined
up at attention and then he hollers out, "All right, the man
who scratched his face, fall out." He said they never do. Never
once did anyone ever step forward.
So
then, he points to the recruit who scratched his face. "You,
fall out." And the kid is terrified. "What am I going
to do to him? 'I don't care whether you scratched your face or not.
It makes no difference to me. But I care that you lied. Don't you
ever lie again. The lives of these other men depend on you telling
them the truth and your life depends on them telling you the truth.
Don't you ever lie again."' The sergeant said that's how he
makes his point and the new airmen never forget it.
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“The
contrast between the ethical values in the military and those
of civilian college kids are like night and day.”
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When
I heard this story, in my mind, I contrasted it with the young people
I meet, my grandchildren, youngsters at church, and in our neighborhood.
Many are college-age kids. And the "vibe" that I'm getting
from them is that in college the prevailing culture allows you to
cheat as much as you think you can get away with. The contrast between
the ethical values in the military and those of civilian college
kids are like night and day. Now, I don't meet or talk with an accurate
cross-section of college kids, so this may be inaccurate. But, for
what it is worth, this is what I'm hearing.
Sooner
or later, the lack of ethical standards catches up with you. Lying
or telling half-truths will destroy the future for a management
consultant as well as anybody else. I'm not preaching from the mountain-top
about high-and-mighty ethical standards. I'm talking pragmatic,
down-to-earth reality.
One
gains credibility or trust by deserving it. A profound thought was
expressed in a New York Times interview just before he died, by
Henry L. Stimson, Secretary of War in World War II under President
Franklin Roosevelt. Stimson said, "The principal lesson I have
learned in a long life is that the way to make people trustworthy
is to trust them. And the way to make people untrustworthy is not
to trust them."
If
a client entrusts me with confidential information about a problem
and I fail to respect that confidentiality, I'm through. And deserve
to be.
Ethics;
Client Credibility at AT&T
I
had a long and deep relationship with AT&T, and was an adviser
before and during the breakup. Understandably, the senior management
of the AT&T Company absolutely opposed the breakup. They had
long since decided to contest the Department of Justice's antitrust
ruling. As I recall years later, at the peak, more than 900 lawyers
worked in the AT&T Legal department.
They
were proud of their management. They had a lot of good reasons for
opposing breakup. First, telephone service was very good, the best
in the world. It was inexpensive. It was almost universal; more
than 99% of American homes had telephone service. Innovations were
constant. One million Americans were employed by AT&T, "the
telephone company." It was the largest corporation in the world.
By any reasonable standard, their jobs and careers were among the
most attractive in America.
The
executives and managers, of course, had grown up in the environment
of a regulated monopoly. They happily accepted their public responsibilities
in return for being shielded from competition. It worked well for
everyone. But monopoly was their only mindset. They had never faced
competition. They didn't know how to cope with competitive upstarts
on the fringes of the business. Their engineers were very, very
good, and they took immense pride in the great network they had
designed, upgraded and maintained. In the lobby of their headquarters
building was a statue inscribed "Service to the Nation, In
Peace and War." (The company long since sold the building,
but the statue remains).
But
now, times were changing. The telecommunications industry had become
just too big for one company to run it all. AT&T then was so
all-powerful that when they invented cell phones the FCC held up
approval for a dozen years until the government could figure out
a realistic way to let someone besides AT&T share in the action.
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“Their
senior engineering executives had nightmares about losing
technical control of this vast and wonderful instrument they
had created over a century.”
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The
senior management saw all these changes happening around them, but
simply couldn't accept them as valid reasons for change. Their major
reason for resisting the breakup — and I don't say it was right,
I'm saying it dominated their thinking — was that if you deregulated
the telephone industry and anyone could hook up a telephone to what
they considered "their" telephone network, it was going
to wreck the network technically. It would be harmful to the network.
I am absolutely convinced that in their hearts they believed this
more than anything else, that you just couldn't let everybody hook
up everything to the telephone line without technical disaster.
Their senior engineering executives had nightmares about losing
technical control of this vast and wonderful instrument they had
created over a century.
They
were so insistent on protecting the network against "harm from
interconnection" that they wouldn't permit you to attach an
ordinary simple answering machine — which, incidentally, the
Bell Labs also had invented — to your telephone unless you
first installed what they called "an intermediate protective
device." I wondered about this at the time, but since I was
working for the company, was being paid by the company, and felt
a sense of loyalty to the company, I duly ordered one, just to show
that I was "a good soldier." In due time, they delivered
an "intermediate protective device" to my office.
After
it had been delivered, the installer came to connect it to my line.
He struggled for awhile; it was the first "protective device"
he had ever been asked to install, and finally he said, "I
can't do it. The couplers don't match. The connections are different
sizes." So I said, "Well, would you order the right ones?"
And he said he would try. He ordered them, but they never arrived.
So
in due time, I wrote to the vice president for network engineering,
the right person in the company, a man I knew well. I told him what
had happened and I said, "You're saying you've got to protect
the network from my answering machine. But you don't even manufacture
a coupler that fits. 'Protecting the network from harm' lacks credibility.
Your case doesn't have much weight."
I
didn't get any answer at all. That was very unusual because I knew
personally all these people at a high level. They had always responded
promptly to correspondence. It was most unusual. But this time,
there was no answer. Finally, some time later, I received a letter
from another of the senior officers saying, "Well, the reason
we didn't answer your letter is that we didn't quite know how to
handle it, so I'm sending you an unsigned letter that he prepared
for you." It was an embarrassment. It said nothing substantial.
It was evasive. Well, that began to tell me they really didn't have
much of a case. Perhaps by that time, the engineers hadn't been
able to develop persuasive evidence that answering machines and
the like would "harm the network."
This
incident destroyed for me their credibility on the technical issue.
I didn't discuss ''harms to the network" any further with them.
Instead, I began to explore and develop some of the other issues
that could be sustained by honest research.
What
It Takes: Integrity with a Human Touch
Two
things I look for: number one, absolute integrity. Not a person
who would say to me what he or she thought I wanted to hear. Number
two, someone who had experience in management, not an MBA without
worldly experience. Human relationships often are pretty messy.
How do you handle people with hang-ups that impede their own performance?
Everybody has some such. It's all of us. We all have our hang-ups.
I want somebody who is sensitive to human behavior and whose experience
is derived from pragmatic, practical work, rather than from a theoretical
viewpoint.
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