Management Maxims from HBS Class Day
Jamie Dimon returned to campus at the end of a tumultuous year to share thoughts on careers, leadership, and obligations to society.
Early in this academic year, when the world’s financial system seemed literally on the verge of collapse, Harvard Business School’s Centennial Global Business Summit convened a panel—among many other events—on “Leadership for the Twenty-First Century.” On the October day when the federal government announced plans to inject $250 billion into U.S. banks—some of them unwilling recipients—and as presidential candidates discussed whether to lend and guarantee $25 billion or $50 billion to Detroit automakers, the panelists included James (Jamie) Dimon, M.B.A.’82, chairman and CEO of JPMorgan Chase, and G. Richard Wagoner Jr., M.B.A.’77, chairman and CEO of General Motors.
In an eerie echo of that tumultuous week, Dimon returned to the Business School (HBS) campus on June 3 as its Class Day speaker: two days after General Motors filed for bankruptcy (having previously shed Wagoner as its leader); and one day after JPMorgan sold 142 million shares of common stock, raising $5 billion in new equity, in part to buy its way out of the federal financing imposed on it last autumn.
Dimon has deep ties to the school. He noted that his wife is an alumna, and that their oldest daughter and her fiancé—as of last Sunday—will both enroll in HBS next fall.
And he is a blunt speaker. In the October presentation, explaining that businesses are about solving problems and improving performance, he said the most important management wisdom could be encapsulated by the cartoon slogan, “We suck less.”
In returning to campus, he was asked by the students to address careers, leadership, and business leaders’ obligations to society and to each other. The latter tied in to the new student-initiated movement to swear an “M.B.A. Oath,” discussed below.
Dimon began with a joke, in light of a rival institution’s misfortunes: “I just want to make it absolutely clear I left Citigroup 10 years ago.” As he later made it clear, “left” meant that he had been fired from his job as president there.
Talking about careers, Dimon said that the principal factor in making oneself successful was to pursue lifelong learning—a pursuit that consumed 50 percent or more of his own time, through reading, talking with others, and watching how other people act in different circumstances. As for “building your brand,” as it would be put in HBS-speak, he said, “There is already a book on you,” as teachers, friends, and parents could characterize an individual’s work habits, ethics, and more. Each individual, he said, should “write it the way you want it to be written up”—including quitting when asked to do something improper or unethical. And every individual should be expected to deal with failure, as leaders like Nelson Mandela and Abraham Lincoln repeatedly did. A year after he was fired, Dimon said, he called his former boss to break bread and ask about his own shortcomings—and, he joked, “He acknowledged my mistakes.” That was a part of being true to oneself—which in his case required him to develop his emotional intelligence and to learn to curb his expression of anger.
Leadership, Dimon said, was an honor and a privilege—and brought with it deep responsibility. A leader who makes a mistake, he said, “could hurt a lot of people,” from customers and communities to parents and other family members. The role inherently “is personal,” for the leader and those whose lives his leadership affects. Leadership therefore depends on a wide array of characteristics, including discipline; fortitude—the “fierce resolve” to act in face of pervasive resistance to change; setting standards for performance, integrity, and the drive to “look at the facts in a cold-blooded, honest way all the time,” emphasizing negative factors and risks; openness, so that debates will be not about the quality of information but about its implications and what to do about them; loyalty (in the sense of building a superb organization that gives all its constituents the best possible opportunities and results); commitment to treating everyone equally; getting compensation “right” so that performance, accurately measured, is fairly rewarded; and having real “humility” about the actions of others, in prior times, that enabled one to succeed. Good leaders, he said, “don’t make the decision, but make sure the best decision is made,” by enabling a team to be candid, realistic, and well informed.
As for social obligations, he said, among the seven billion people on Earth, Americans—and by implications his HBS audience—were especially privileged by their accidents of birth and upbringing, and so had a “deep obligation” to serve. Leadership is not about money, or about yourself, he told the students before him; it is “about what you leave behind,” as measured by your service to your family, to humanity, and to your country. For him, passionately working to make JPMorgan Chase excellent supported everything good that employees, customers, and communities could derive from the enterprise.
In a larger sense, although Dimon was confident that America would get through the current economic crisis, and that the nation remained a “shining light,” he was “deeply troubled by the notion that success is a given. It’s not a given,” and so business leaders had to help formulate policies that made America better, and the planet better. He cited the nation’s unwillingness to tax energy, despite three energy crises and the emerging environmental crisis; and he deplored the embarrassment of tolerating an education system that saw half of inner-city school children drop out of high school.
Assessing what one’s obligations were, he said, it was useful to think of one’s own epitaph. Without indulging in reflections on his own tombstone, Dimon said, he would like to be remembered this way: “We’re gonna miss the S.O.B., and the world is a better place for his having been here.”
Dimon has been in the center of the economic maelstrom during the past year. His astonishing (for the format) 28-page letter to shareholders, in the JP Morgan Chase 2008 annual report (itself an astonishing 236 pages long), reads like a novel, as Dimon chronicles the collapse and sale to his company of the Bear Stearns investment bank (“we were buying a house on fire”), Washington Mutual (the largest bank failure in U.S. history), and more. He recounts a “largely unprecedented and virtually inconceivable” year and a strong sense that “The way forward will not be easy. We do not know what the future will bring” amid signs of “continued deterioration of the economy….”
He also offers a multi-factored explanation of the crisis, citing the housing bubble; excessive leverage throughout the system; “structural risks” in the capital markets far beyond the banks themselves; regulatory lapses and errors; policies that stimulated, rather than dampened, frothy growth and lending; and world trade and financial imbalances. Naturally, his prescriptions for the future suggest complex changes in regulation, policy, and management.
Though not the subject of his class day address, those ideas, as laid out in the annual report, do have some relevance on campus. Among the points he made there, in his description of excessive leverage throughout the financial system, this one strikes close to home: “Even pension plans and universities added to their leverage, often in effect, by making large ‘forward commitments’”—by which he presumably meant commitments to future investments and future financing arrangements. The implications for Harvard of both of those commitments are discussed here and here.
Wallet-sized cards on each chair at the Class Day ceremony gave the text of the “M.B.A. Oath.” Following the event, members of the audience departed the lawn in front of Baker Library for the student M.B.A. Oath ceremony—a voluntary commitment for which nearly 400 students signed up (see the official website).
Reflecting the temper of the times, the preamble states as a manager’s purpose serving “the greater good by bringing together people and resources to create value that no single individual can build alone”—value that benefits “society over the long term.” Those who take the oath promise to act with “utmost integrity,” to “safeguard the interests of my shareholders, co-workers, customers, and the society in which we operate,” and to “take responsibility for my actions,” among other stipulations.
Jamie Dimon presumably would approve.