“Don’t define yourself by your business card. You can get a new card.”
Jeffrey Sonnenfeld is Senior Associate Dean for Leadership Studies at Yale University’s School of Management and The Lester Crown Professor of Management Practice, as well as the Founder, President of THE YALE CHIEF EXECUTIVE LEADERSHIP INSTITUTE– the world’s first “CEO College”. Previously, Sonnenfeld spent ten years as a professor at the Harvard Business School. He has been named one of the world’s “ten most influential business school professors” by Business Week and one of the “100 most influential figures in governance” by Directorship. He is also a winner of the Ellis Island Medal of Honor.
There are five qualities that make up an effective leader: personal dynamism, empathy, authenticity, inspirational goals, and boldness. Any CEO’s story involves a great deal of setbacks that required resiliency and determination in moving past. That process involves honestly facing the problem, engaging your network of acquaintances, and ultimately rebuilding yourself into something better. “It's a failure that punctuates success. It's a defining moment… those who make it through are forever changed.”
It is important for a leader to demonstrate the ability to let go of grudges or personal slights. President Biden serves as an example of someone famously known for his willingness to move past temporary disagreements. This lays the groundwork for future compromise and collaboration between opposing sides.
LISTEN AND SUBSCRIBE
SPEAKER
Jeff Sonnenfeld
Senior Associate Dean for Leadership Studies
Yale School of Management
MODERATOR
Anthony Scaramucci
Founder & Managing Partner
SkyBridge
EPISODE TRANSCRIPT
John Darsie: (00:07)
Hello, everyone, and welcome back to SALT Talks. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum and networking platform at the intersection of finance, technology, and public policy. SALT Talks are a digital interview series with leading investors, creators, and thinkers. What we're really trying to do during these SALT Talks is replicate the experience we provide in our global SALT conferences, which is provide a window into the mind of subject matter experts as well as to provide a platform for what we think are big ideas that are shaping the future.
John Darsie: (00:41)
We're very excited today to welcome Jeffrey Sonnenfeld to SALT Talks. Jeffrey is the Senior Associate Dean for Leadership Studies at Yale University School of Management and the Lester Crown Professor of Management Practice as well as the founder and president of the Yale Chief Executive Leadership Institute, which is the world's first CEO college. Previously, Jeff spent 10 years as a professor at Harvard Business School. He's been named one of the world's 10 most influential business school professors by Business Week and one of the 100 most influential figures in governance by Directorship.
John Darsie: (01:18)
Jeff received his AB, MBA and doctorate from Harvard University. He's published 200 scholarly articles and seven books, including bestsellers such as The Hero's Farewell, Leadership and Governance from the Inside Out, and Firing Back: How Great Leaders Rebound From Adversity. He's a commentator for CNBC, a columnist for Chief Executive Magazine. He's frequently cited as a management expert in the Wall Street Journal, Fortune, the New York Times, and other global media. He's the first academian to have rung the opening bell of both the New York Stock Exchange and the Nasdaq stock exchange, which he has done a dozen times.
John Darsie: (01:57)
Just a reminder, if you have any questions for Jeff during today's SALT Talk, you can enter them in the Q&A box at the bottom of your video screen on Zoom. Now I'll turn it over to Anthony Scaramucci to moderate the talk. Anthony is the founder and managing partner of SkyBridge Capital, a global alternative investment firm, also a member of the Yale CEO community. So Anthony, with that, I'll turn it over to you for the interview.
Anthony Scaramucci: (02:18)
Jeff, it's a real pleasure to have you with us, and I'm also thrilled at the way you're dressed. In addition to you and I both being better looking than John Darsie, we are impeccably dressed on a relative basis, and so I'm thrilled about that. I just wanted to make sure I made that point before we get started.
John Darsie: (02:35)
Just don't show your cargo shorts under the camera, Anthony. Then you'll lose all points for being well dressed.
Anthony Scaramucci: (02:41)
Well, actually, they're cargo pants. Okay, see that.
John Darsie: (02:44)
Oh, it's getting cold out, so you got the cargo pants out. Gotcha.
Anthony Scaramucci: (02:46)
I have full length pants on for the first time since March of 2020, but that's a whole other topic.
Jeffrey Sonnenfeld: (02:51)
Just as long as the ties give us a little sense of authority, that's awesome.
Anthony Scaramucci: (02:53)
There you go. That's the whole point. Now, Jeffrey, I ask everybody this question. You've obviously got this amazing resume. You're probably one of the most well-connected people in the business community, and deservedly so, because your forums are second to none. But tell us something about your life in terms of growing up. Where did you grow up? How many siblings did you have? Why did you take this academic... You could've done anything, obviously. You're a polymath, but why did you take this bent?
Jeffrey Sonnenfeld: (03:26)
Well, Anthony, thanks for asking. When John Darsie introduced me and then closed off by suggesting if people have any questions that they can go into chat, I'm glad he didn't say questions or complaints. Because after that fulsome introduction, I think probably a third of the people hate me already. In fact, as John got to the fourth or fifth paragraph, I started to slightly dislike myself as well. I think I probably censure that stuff, so let me begin by apologizing for giving you a little too much about Jeff. But if we're going to talk about childhood, that's fair game. That's open season, and I'm proud of that as you are about your origins, Anthony.
Jeffrey Sonnenfeld: (04:03)
My mom was an immigrant, and she came to the country and was very active as a healthcare planner, a community activist, always failing causes and losing candidates. She was paralyzed as an adult. As a 27-year-old gymnast, she got a particularly crippling form of chronic rheumatoid arthritis, so one or two major surgeries a year throughout her life. But she was a great hero and a great role model.
Jeffrey Sonnenfeld: (04:31)
My dad was a small merchant, men's clothing, but I'm colorblind if you have any complaints about my matches here. But so was he, which was incredible. He also was a volunteer fireman, so that was the background. My brother's an attorney at a great firm, Morgan, Lewis & Bockius, but that's the family team, childhood family.
Anthony Scaramucci: (04:51)
Very cool. I want to ask you about leadership, which is such a vague thing. And for me, I often find that leadership in itself is sort of invisible. It's very hard to describe. Some people have it. Some people don't have it. Is it a learned trait? Is it something people can acquire and learn? Is it something that people are born with? You're one of the leading experts globally on leadership, executive management, et cetera. What does it take? What is it? What do all these people have in common?
Jeffrey Sonnenfeld: (05:26)
Well, as you open up with that disclaimer, can it be taught? I think it's right to ask that. Dizzy Gillespie had once said, the great jazz musician, is that, "If you've got to ask what jazz is, you'll never know. You'll never get it." Some people suggest that there's a mystique about leadership, that if you have to ask, you'll never get it. There are even some great articles in Harvard Business Review, a great class of Abraham Zaleznik, a psychoanalyst, saying, "You're either a manager or a leader. You can't morph from one to the other."
Jeffrey Sonnenfeld: (05:59)
I don't completely agree with that. I think there are some things that you can complement yourself with either in your management team, people around you, or figure out how to leverage your strengths and compensate for areas that aren't so strong. But if you had to think of something other than intelligence and resilience, which I think we'll talk about later, there are five qualities, putting aside those two. One of them is personal dynamism, your ability excite a group. That you can use colorful language and imagery and that it's really evocative.
Jeffrey Sonnenfeld: (06:30)
The second one is empathy, the caring dimension. The first one, by the way, you have to say President Trump's pretty good at it. That second one, not so good. Empathy, it's caring and knowing who's around. It doesn't always take a lot of money for recognition and concern, but to make it real. A third one is authenticity. That's the moral dimension. That people won't walk out on a limb for you if they don't trust you.
Jeffrey Sonnenfeld: (06:54)
A fourth one is inspirational goals. That you stretch people, not to the point where they snap, but they're not happy with the status quo. And the last one is boldness, some kind of courage. Not recklessness, but moving things forward. You put those five together and, believe it or not, by taking a look at research on 500 highly successful top leaders, CEOs across countries, this is surveying the management team and not asking the boss what makes she or he such a great leader, and they come up with those qualities. We can predict about 20% of your financial returns, your accounting returns, about 20% of your market performance, which in my line of work, that's a lot since there's so many other sectoral and economic things happening out there. That on these dispositional qualities, they move the needle a lot.
Jeffrey Sonnenfeld: (07:39)
Although since we're good buddies, there are limits to it. Just between us, it's only good for the first 10 years as a CEO. Then other things kick in.
Anthony Scaramucci: (07:47)
Listen, it's fascinating. I had to give up my board seat at the Business Executives for National Security when I joined the Trump administration, but in conversations with people at the Pentagon and military brass, traveling with the American military, they always emphasize organizational structure. They emphasize chain of command, delegation, having the right level of reports. The Pentagon always says, "You shouldn't have more than six reports," as an example. Then we watched the post-World War II order in corporate America, sort of the Don Draper America where everyone had served in the military and you had that man in the gray flannel suit and that corporate structure.
Anthony Scaramucci: (08:32)
Now you fast forward 80 years, and we have a different dynamic in terms of corporate culture. I was wondering if you could comment on the cultural differences between the post-World War II era, the military, where we are today. How are they similar? How are they different? And where are we going in terms of our leadership models?
Jeffrey Sonnenfeld: (08:53)
Boy, that's really a large question. Because you're right, military has been fantastic for execution. We don't generally go to the military for invention, creativity. We go different places for different things. Chain of command, you're right, they're selling reliability and not creativity. We don't want people to be arguing with the boss, we want this foxhole or that foxhole. You just take it and go. That's the challenge.
Jeffrey Sonnenfeld: (09:21)
Now, I was with a preacher recently who said, "The last time somebody had a dozen direct reports, they crucified him." That sounds a little blasphemous, but often six to seven is a rule of thumb many times in routine execution. But if you just look at the life you've led, Anthony. You've written very good pieces yourself, great books on entrepreneurship and startups. And you know that at the startup, that's just crazy. The model is much more like a hub with spokes coming off of it, and you rotate around. Sometimes you're the financial wizard one day. You're the HR guru the next day, the market wizard another day, and that you're the execution god yet another day. Is that there's a certain fluidity in startups, so stage of life matters. As you also-
Anthony Scaramucci: (10:04)
And Jeff, for 11 days you could be the communications director. It doesn't have to be just one day. But go ahead.
Jeffrey Sonnenfeld: (10:09)
That's funny.
Anthony Scaramucci: (10:11)
I didn't want to lose your train of thought, but I thought I had to interject, that it was an appropriate moment.
Jeffrey Sonnenfeld: (10:14)
It's funny you mention that because is that the fluidity you brought in there with your boss is not expected. In fact, I actually had discussed whether or not he should let Bob Woodward in with the president, and I referred to what Bob Woodward said in one of the books on Clinton, the Clinton White House, the agenda. He said, "It was like watching a soccer team run down the hill, everybody chasing the ball." And Woodward meant it as a criticism, but neither Clinton nor Trump saw that as a criticism. They said, "People like you and he like to be entrepreneurial at the top even of a big bureaucracy." So it depends on life stage.
Jeffrey Sonnenfeld: (10:52)
For a turnaround, it's very different. You need a certain fluidity. Macro or micro. Some people like Jack Welch in his best days, and he wasn't perfect, but he could go very micro and very macro. These uniform rules don't apply. It really matters the stage of life. You're suggesting also by industry, whether or not you are in a fluid new industry. In technology or entertainment or something, it's very different than in a business that is much more a command and control, military-like, a utility or a big commercial bank.
Anthony Scaramucci: (11:26)
Well, we both know Jim Collins, and we know the definition of level five leadership. I won't bore people with that definition, but that's the exemplary leader. One of the things that he says is absent in that case is charisma. Sometimes you don't need charisma to be that level five exemplary leader. I guess my question is about culture, how important it is to organizations. What are the ingredients to culture? Where does charisma come in? Where does charisma not be productive? What are your thoughts there?
Jeffrey Sonnenfeld: (12:03)
Well, that's a good question about culture. Because when I talked about those five elements of great leadership, those actually are five elements of charisma, but it isn't just back slapping flamboyance. That's the personal dynamism. Another quality of charisma is that empathy, that people bond with you and think you care about them. That's a different aspect of charisma. And that authenticity dimension, as Lee Strasberg had once said, the Actors Studio god, is the essence of great acting is authenticity, believability.
Jeffrey Sonnenfeld: (12:34)
Once you can fake that, you've really got it made. But is that those are some qualities, of course, that really matter of charisma. Charisma isn't just flamboyance and cheerleading. There are ways that you can be charismatic and have a charismatic aura about you without being a showman.
Anthony Scaramucci: (12:51)
Teachable. Is charisma teachable?
Jeffrey Sonnenfeld: (12:53)
It can complement yourself. I think there are ways. There is a notion of charisma of an animal spirit is thought to be innate, and some people are born with more or less. But you can compensate for it. You can fortify qualities that take you from being quite the flat wallflower to actually show concern for others. Sometimes you go a little bit beyond, learn how to ask questions, and then listen to the answers. We both know TV anchors that go through a routine, and you can just see, fine, the show's mine. They're not even listening. I'll talk about what I want to talk about, as opposed to somebody who really engages with you like you are right now is that you're having a conversation. That's much more charismatic.
Anthony Scaramucci: (13:37)
Well, yeah. Listen, I think it's super important to be an active listener. Otherwise, how are you going to learn anything? I mean-
Jeffrey Sonnenfeld: (13:43)
I'm sorry, what was that? I missed it. No, just joking.
Anthony Scaramucci: (13:45)
No, no. I got the joke, but I've also been guilty of running over people as well, so far from perfect. But the resilient leadership book that you wrote, Firing Back: How Great Leaders Rebound From Adversity, I got a lot out of that book, actually. It was very resonating for me. I was wondering if you could tell us why you decided to write that book. What triggered that topic of leadership adversity, and why it's so important for people to have the traits of resiliency?
Jeffrey Sonnenfeld: (14:18)
Well, I know, Anthony, for you and for me, this is purely an academic exercise, that we've never had any setbacks in our lives.
Anthony Scaramucci: (14:24)
Nope, not me, especially not me.
Jeffrey Sonnenfeld: (14:26)
No, me neither. But friends of ours have.
Anthony Scaramucci: (14:29)
Yeah, exactly.
Jeffrey Sonnenfeld: (14:30)
What I learned is that everybody-
Anthony Scaramucci: (14:30)
My life has gone up in a perfectly straight line, Jeff.
Jeffrey Sonnenfeld: (14:33)
Perfectly linear.
Anthony Scaramucci: (14:36)
But I'm also the queen of denial, right? I'm also Cleopatra. I've lived in denial, and I think I live pretty good at six-three, 190 pounds. But anyway.
Jeffrey Sonnenfeld: (14:45)
You've always been able to laugh about it at every moment as well as be honest about it, and that's what's so critical is I was finding and it was in the late 1970s. Shouldn't admit that you're this old, but in the late 1970s I started to study CEOs and top corporate leadership, and I kept finding that people were talking to me about these setbacks they had. I thought it was some false humility, and then I realized they all have a Job story or more, like the Book of Job from the Bible with all this adversity. And they're proud of having risen above those life setbacks.
Jeffrey Sonnenfeld: (15:17)
You don't usually find management training programs or leadership courses or books that talk about failure. It's always onward and upward, the Norman Vincent Peale stuff and the winning friends and influencing people. Those approaches don't acknowledge the reality of setbacks. But if you take a look at the work of Joseph Campbell, the great anthropologist, and he wrote a book called Hero of a Thousand Faces looking across cultures and continents and centuries, is every hero went through life stages, whether or not it's Moses or Jesus or whomever. And in those life stages that there were a point where the dragon slayer starts to resemble the dragon themselves. There's a great setback, and it's resilience from that adversity that's so critical. That it's a failure that punctuates success. It's a defining moment.
Jeffrey Sonnenfeld: (16:08)
Now, most people get filtered out through the setback, but those who make it through are forever changed. That's what the research was all about, and I just happen to have a copy of the book right here by shrieking coincidence of Firing Back. One of the lessons in there is you got to face up to it, as you did. You're the first one to make fun of it, to go on the night shows, the TV shows and everything to talk about what you did wrong, how you got snookered and how it wouldn't happen again. But people think they can sweep it under the carpet and bury it.
Jeffrey Sonnenfeld: (16:38)
Take Scarlett O'Hara's advice, tomorrow is another day. No, that's not right. Or all these stress therapists, PhD psychologists that tell you to go out and do yoga and tai chi. That's fine, but you have to face up to the problem. Everybody knows about it. CEO friends of ours who've gone off after they got fired and are waiting for their call back, that doesn't happen.
Jeffrey Sonnenfeld: (16:57)
Second, you don't do it alone. You have to recruit others in. You engaged with a lot of people. Not to make a role model of you, but you really should be as a role model for resilience, is how to get others on board with you. The research on this, on social networks, going back decades. And Mark Granovetter at Stanford did some it originally decades ago is that when you're in a setback, it's these loose ties that you have, people you knew in college or unions or high school or not necessarily family members that give you support on an emotional level. Recruiting others that you know in a secondary way, they give you job leads and opportunity.
Jeffrey Sonnenfeld: (17:31)
A third one is to rebuild, to show you could rebuild. Whatever went wrong is you need to show some exoneration or contrition one way or the other. But when some prince goes marching around in a Nazi outfit and said, "Well, if I offended somebody... " Or he goes off to celebrity rehab, that doesn't do it. You've got to show authentic contrition or prove you did nothing wrong. Like Martha Stewart going off to prison, I don't think she should've. I think she should've screamed to the mountaintops she didn't do anything wrong, but that's a whole nother story.
Jeffrey Sonnenfeld: (18:01)
Then you've got to prove you can still do what made you great. No matter how you feel politically about President Trump, you go down the West Side of New York, you see his name on top of those building, which he doesn't own. But to get the deals done, they still needed to put those brands. And things where somebody can rise from setbacks. His bankruptcies, which you know, it's the R word, restructuring, where we get in trouble. But that resilience from adversity is quite inspiring to show that you can still do what made you great.
Jeffrey Sonnenfeld: (18:31)
Then you look at, say, Jimmy Dunne of Sandler O'Neill, one of the most remarkably resilient leaders I know. Is they lost a third of their workforce in 9/11, and he went to work right away when everybody thought that they were given up for dead. Even CNBC announced that they were closing. He went on CNBC, never done an interview in his life, and said, "Oh, no. We're not. These are my best friends. We're going to bring this back to life. We're going to help the public safety workers who perished trying to save our people, running into buildings that we were running out of." They devoted themselves, put their partners' wealth back in, paid off the families who suffered the losses.
Jeffrey Sonnenfeld: (19:06)
It is a remarkable story of resilience, but they don't define themselves by the past. They always have a tribute to the 65 people they lost and all the rest, and they took care of their benefits and health care and education for the kids. But they define themselves by the future. That's so important to not look backwards, or you become a culture of mourning.
Anthony Scaramucci: (19:26)
It's teachable, professor?
Jeffrey Sonnenfeld: (19:29)
Yeah. It's teachable.
Anthony Scaramucci: (19:31)
That one is definitely teachable, I believe. That's why I want you to expound on that.
Jeffrey Sonnenfeld: (19:35)
As Nietzsche says, "What doesn't kill me makes me stronger." Look at you. Look at all these resilient leaders out there. I think that that's a really critical lesson.
Anthony Scaramucci: (19:45)
Well, what I'm always grateful for to you is you gave me an opportunity to speak after I got fired from the White House at the Yale CEO Summit. That was very nice of you. One of the reactions-
Jeffrey Sonnenfeld: (19:55)
Well, we knew like Steve Jobs or Bernie Marcus at Home Depot, that you were only going to be better from the experience of having been pushed... Or Michael Bloomberg, all these guys got fired. You name it. If they're great, they probably had a major career setback. The way you handled it was a fantastic model for everybody.
Anthony Scaramucci: (20:13)
Well, it's very nice of you. We can keep going. I'm not even going to allow John Darsie to ask any questions if you're going to keep going on like this, so we can keep going. But I was actually going to bring up a point. It's very sweet of you. I appreciate that. It was a very tough period of time for me. Jeff, there's a lot of young people that listen to these podcasts, these SALT Talks. I guess the lesson here is you got to dust yourself off and you got to not take yourself super seriously. Because once you start doing that, then things can get problematic.
Jeffrey Sonnenfeld: (20:41)
Yes. Don't define yourself by your business card. You can get a new card.
Anthony Scaramucci: (20:45)
Yeah, exactly. Also, you got to roll with life. I've always lived by the adage, Jeff, of the legendary Mel Brooks, relax, none of us are getting out of here alive. So if you can frame it from that point of view, it's make you feel better about what's going on when it's not going well. I was going to bring up something. I was speaking at your CEO conference. I believe it was in the Roosevelt Hotel, actually, which is now being closed. I don't know if you're aware of that.
Jeffrey Sonnenfeld: (21:10)
We should buy it. The place is gorgeous. It's prettier than the Waldorf was, the lobby, that is, the public part.
Anthony Scaramucci: (21:16)
Yeah. There's no question, it's a breathtaking hotel, such a great New York history in there, so many different presidential campaigns trafficking through there, et cetera, mayoral, gubernatorial campaigns. But the reason I'm bringing this up is that I was there and absorbing from your CEOs something I'd like you to comment on. Their relationship with the Trump administration, boy, that was super complex to me. I can give my observations, but I'm more interested in having you give your observations.
Anthony Scaramucci: (21:48)
But I will say one thing that I'd like you to react to. The number one thing when I left that presentation was these guys do not want to be tweeted at. They don't want their corporation, publicly traded, in a presidential tweet, and they certainly don't want their names in a presidential tweet. That was going to create some level of stock market fluctuation and possible communication crisis. I'd like you to elaborate on that. Am I right about that or wrong about that? And then describe in your words the relationship that these CEOs that you're so close to have or have had with the Trump administration.
Jeffrey Sonnenfeld: (22:27)
We've got another two hours, right?
Anthony Scaramucci: (22:28)
Yes. No, you take three or four hours.
Jeffrey Sonnenfeld: (22:34)
As you know, I had a personal relationship not just with Joe Biden but continue, at least until this interview, with President Trump, I think. I haven't had an IRS audit, but at least we get to see somebody's returns. Is that I was the first critic of The Apprentice, that even the New York Times was entertained by it. I was writing a weekly column for the Wall Street Journal at the invitation of NBC, which was then headed by Jeff Zucker, as you know. So NBC would send it to me a day in advance, and Wall Street Journal would print it.
Jeffrey Sonnenfeld: (23:10)
Well, Donald Trump, President Trump, didn't like what I was writing. I called the first episode something like a musical chairs game but a Hooters restaurant. You probably haven't noticed this. He doesn't like a lot of criticism when there's humor at his expense. Have you noticed that? Anyhow, it didn't go over well and he wanted to shut down my reviews. I said, "Hey, that's fine. I don't need to do it." But the Wall Street Journal said, "Let's try another week." And the other week I said, "Boy, I said that first week was the worst portrayal I could imagine of business leadership ever on TV, and Mr. Trump asked me to look at the next week to see if I would reconsider." I said, "All right, so I'll reconsider. He was right. I was wrong. I recant what I said last week. This week's episode is worse."
Jeffrey Sonnenfeld: (23:57)
It got nasty. You can imagine the exchanges and the threats. We ultimately wound up getting together, and as you know, when you're with him, he can be so charming. I had all the outtakes in advance. That's a whole nother story. My wife found them charming too. So we wound up becoming friends from then on because he promised to change the show. Instead of putting engaging, young millennials up for this elimination game format is that he would get these fallen celebrities, which was actually my idea, which he now admits. I didn't think of perhaps Meat Loaf and Gary Busey, but still was the idea of having these fallen celebrities go after each other.
Jeffrey Sonnenfeld: (24:39)
I brought him to one of my CEO summits. And the people that filled the White House Advisory Council, many of those same people who didn't know Trump, they said, "If he's coming in here... " Some of them referred to him as a clown. Some people who the press have seen as very close to him in recent years have said, "If he walks in here at the Waldorf, we're walking out." What happened? He walked in, they walked out. So as somebody who was not quite at that level of corporate leader introduced him, and he was mad. "Why'd those guys leave?"
Jeffrey Sonnenfeld: (25:12)
I pointed that out to him in 2017, and he said, "Well, they're all coming by here now." I said, "Yeah, I wonder why that is." Is they were skeptical of him at our CEO summits. Perhaps, two-thirds or so or more are Republican, and yet it was roughly 70% were surprisingly supporting Hillary Clinton. They didn't support his election, though in 2017 they were quite hopeful. They raced with enthusiasm to those White House Business Advisory Councils, had high hopes on regulatory rollbacks, which they saw. This was large business.
Jeffrey Sonnenfeld: (25:39)
Small business liked him a lot more because he was seen as such a maverick. The regulatory rollbacks and the tax relief they thought was great. However, those one-offs you're talking about which we saw happen in the Republican primaries, we saw throughout his life, those one-offs of Pfizer versus Merck or GM versus Ford, Boeing versus Lockheed, the CEOS did not like that. Then as he started picking on these various companies for doing what they had to do to run their business, whether or not it was Harley-Davidson or Amazon or whatever, that he was calling for boycotts against them. They didn't like that.
Jeffrey Sonnenfeld: (26:15)
So it was after Charlottesville, it's the first time in American history we saw the US business community refuse a call to action when they all walked off following Ken Frazier of Merck's model, walked off the business advisory councils. They started to see him differently and they developed a certain confidence through collective action, whether or not it was on immigration issues or this election, where they have a certain confidence that they recognize, like Benjamin Franklin said, "If we don't hang together, we shall surely hang separately."
Anthony Scaramucci: (26:44)
It's phenomenal stuff, and we could go on for several hours. I'm going to ask you one last question because we have great audience engagement, and so I want to let John answer some questions.
Jeffrey Sonnenfeld: (26:52)
You're sure they're not saying really hateful things that I'm not looking at? Okay.
Anthony Scaramucci: (26:56)
Well, no. No, no. See, we're all sensitized to that sort of stuff, but if you look at my Twitter feed, Jeff, you'll feel very good about the comments they make about you. But this is about executive compensation, and Malcolm Gladwell said a few years ago that it was Curt Flood that opened up the spigot for executive compensation. So for those of you that don't know who Curt Flood is, he was the first baseball free agent.
Anthony Scaramucci: (27:24)
Malcolm Gladwell's position was that as baseball players and athletes started making astronomical sums of money, it left the door open for CEOs who were running very large businesses, arguably more important jobs, to make even more astronomical sums of money. It seems like the spread between CEOs and the average workers and the companies that they're leading has gotten quite high. Why, if you will? What's your opinion of that? Do you think that-
Jeffrey Sonnenfeld: (27:54)
Far be it from me to criticize a far more successful author than I am, but Malcolm Gladwell might've referred to Catfish Hunter more successfully. Also, in fact, if he wanted to stay with baseball, refer to Babe Ruth. And when people questioned Babe Ruth's salary opposed to Herbert Hoover's, it was pretty easy for him to say, "Well, who had a better year?"
Jeffrey Sonnenfeld: (28:19)
We do see often somewhat from left-leaning groups but also in the center and some activist investors about CEO excesses in compensation. That since I've been a professor, which is more than just a couple years, unfortunately, is we've seen roughly a thousand percent, 1,000% increase in CEO compensation, and about a 25% to 35% increase in average worker compensation. People are upset about that and for understandable reasons. The average CEO's making now 278%, 280% more than the average worker, and it used to be 30 times when I started doing what I'm doing. So what's going on there?
Jeffrey Sonnenfeld: (29:00)
Well, some of that is ridiculous and some of it's understandable. We've globalized the workforce, and we have different business units. So some of it, it's apples and oranges comparisons as to who some of those average workers are. Comparing the celebrity athlete to an usher that's working in the stadium is that the magnitude of how many people are executives and how many people are non-executive has changed a lot. There are those two sets of issues.
Jeffrey Sonnenfeld: (29:28)
A third one has to do with performance. I, frankly, don't care how much money Bernie Marcus of the Home Depot or somebody like that made for creating something that wasn't there or Bill Gates, whatever. If there's something of personal risk they put into it and they have really been a big builder as a great entrepreneur, as a great business creator, creating lots of jobs, very philanthropic, fantastic. It's the people who are corporate drones, that are Klingons, that are just getting a large salary because they've hired a comp firm to take a look at benchmarking against other firms in their industry and it doesn't correspond with their performance. That's the trouble, and we see very low correspondence between performance and compensation. We see just a lot of financial...
Jeffrey Sonnenfeld: (30:06)
There's some fairly modest compensated executives with soaring corporate performance, and that's the problem. I'm tempted to name names, but I won't. But one of the world's largest transportation companies, one of the world's greatest retailers have fairly modest compensated CEOs with performance that towers over it. There's one big media baron, which I'm so close to not mention, but he's no longer there. But he was recently. Made more than the next two media barons combined, and their performance towered over his. It didn't make any sense. Anyhow, you got me going. I always avoid this question. Whenever CNBC or somebody wants to talk about compensation, it's such a no-win situation. I avoid it, but for you, I stepped into it.
Anthony Scaramucci: (30:50)
Well, no. Listen, I appreciate it. Look, I want people to make money. I'm all about unlimited upside. At some point you and I will have to talk about the right policies to put in place to make the playing field from an equal opportunity-
Jeffrey Sonnenfeld: (31:01)
We need to work on that.
Anthony Scaramucci: (31:02)
Yeah. We've got to make the playing field from an equal opportunity perspective now.
Jeffrey Sonnenfeld: (31:07)
A livable wage has to be addressed too. You're absolutely right.
Anthony Scaramucci: (31:09)
No question.
Jeffrey Sonnenfeld: (31:09)
And there are some cases...
Anthony Scaramucci: (31:11)
I love the fact that we have the Jeff Bezoses and the Bill Gates in our society and the Elon Musk. God bless them, but I also want to help that kid that's growing up in the blue collar family live the arc of the American dream that we would all love to see happen to he or she.
Jeffrey Sonnenfeld: (31:28)
That's right. As aspirational as they think those high salaries are, the wealth has to be shared a lot more. And again, it has to be linked to performance better. It's tied too much to short-term stock incentives and not enough to long-term investment in that enterprise to create more jobs and to build a stronger business in the US.
Anthony Scaramucci: (31:46)
Well, we got to get there, and you're going to be a big part of that, I believe, in our future. I'm going to turn it over to John Darsie. John tie-less Darsie. There's Shoeless Joe Jackson.
John Darsie: (31:56)
I'm a millennial.
Anthony Scaramucci: (31:57)
And there's John tie-less Darsie.
John Darsie: (32:00)
I'm a millennial. I guess I dress down. At least I'm not wearing athleisure or something, right? But Ken Langone, back to your theme of the value of leadership, he's one that has spoken at SALT several times and has talked about... You mentioned Bernie Marcus earlier, but just the unlimited, incalculable value of strong leadership. And he's always a big critic of these criticisms of executive compensation for companies that really knock the ball out of the park.
Jeffrey Sonnenfeld: (32:26)
Well, John, it's tough enough to match wits with Anthony. I'm so happy you didn't put me in the shadows of Ken Langone. He definitely throws quite a fire of energy out there.
John Darsie: (32:37)
Absolutely. He's not shy about expressing his opinions on the topic.
Anthony Scaramucci: (32:41)
He's not slowing down, Jeffrey. He just turned 85, not slowing down.
Jeffrey Sonnenfeld: (32:44)
No. Johnny Carson once said, "Never follow children and animal acts on stage." If he was around today, he would say, never follow Anthony Scaramucci nor Ken Langone on stage.
John Darsie: (32:53)
This is a joke that I should've left for Anthony, but it's apropos that we transition from talking about Ken Langone to talking about grudges. So Ken Langone famously says he doesn't know if he's going to heaven because he has this just deep hatred in his heart for Eliot Spitzer. But it's an exception to a rule that you write about about the power of not holding grudges. Anthony makes a joke about-
Anthony Scaramucci: (33:14)
Not to interrupt, but I love that about Ken because I'm a fellow Italian. You know what Italian Alzheimer's is, Sonnenfeld?
John Darsie: (33:21)
There you go. Perfect lead in.
Jeffrey Sonnenfeld: (33:22)
You never forget a slight, right?
Anthony Scaramucci: (33:24)
Yeah. You never forget the grudges.
Jeffrey Sonnenfeld: (33:26)
Got it.
Anthony Scaramucci: (33:27)
You can't remember what day it is, but you do remember the son of a bitch that tried to hurt you.
Jeffrey Sonnenfeld: (33:31)
Right.
Anthony Scaramucci: (33:32)
Go ahead, Darsie. Go ahead.
John Darsie: (33:33)
But you've written about the importance of not holding grudges, and especially as President-elect Biden comes into office during a time of deep divisions in the country, he's made it clear that he doesn't want to be involved in investigating his predecessor or preying on those divisions that might've been created in the previous administration. Why is it so important for an individual in a leadership position to set an example of not holding grudges, and how does it help organizations move forward effectively?
Jeffrey Sonnenfeld: (34:01)
I wish I could model it as much as I admire it in others. President-elect Biden is one such great example of that, and the selection of Kamala Harris where a lot of Biden's advisors thought that what was done to him was gratuitous in that... I think it was the January debate last year where she took him on in positions that were quite similar to positions she held and caught him by surprise. And he considered her a friend of the family and things, and he just seemed a little bit winded by that. People were angry about it. He got over it. He understood that hey, this is a contest here. People are using what they can use, and he understood why she did what she did. He admits it surprised him.
Jeffrey Sonnenfeld: (34:48)
A lot of the candidates talked about how afterwards if they did really well in a debate, he would congratulate them regardless of how well he did and talk about what they did that was so effective or what he learned from it at any age. That's really fantastic. I was at one event, since we're just among friends here, where Vice President Biden used a joke that didn't go over well. It was kind of a malapropism was in there. Can you imagine a gaff from President-elect Biden now?
John Darsie: (35:13)
No way.
Jeffrey Sonnenfeld: (35:14)
It wasn't perfect, and people were starting to snicker. Who immediately shut it down? It was Elaine Chao and Mitch McConnell said, "Cut that out. That isn't what he meant. You know what he meant." They said, "He's our friend." Mitch McConnell and Joe Biden know that they have that. When there was a stalemate in the Obama years, it wasn't taking it to Harry Reid or Chuck Schumer or through Mitch McConnell to work things out. It was Joe Biden or President Obama. Joe Biden would parachute in there in the sequester stalemates and things like that. He has a way of getting to people in a very natural basis. He's not a mud thrower.
Jeffrey Sonnenfeld: (35:52)
This frustrated some of us through the primaries because that's just not his nature. I don't know that he's quite Quaker like. He has some temper, but he restrains it. That dignity I think is a great model to not have the negativity guide us into the future. I think among many great qualities that I think we'll see in President-elect Biden's leadership style, it's going to be that forgiving, positive style to find out where there is common ground and move forward from there. He doesn't see compromise as a bad word, and we don't have to look across the aisle. We could look within the Democratic Party.
Jeffrey Sonnenfeld: (36:29)
I had a great political historian today, a guy named David Mayhew. In an earlier class today I wanted to talk about the divides in each party. And he said, "They're not so great. We're exaggerating it because the media would like to do that for drama, but in fact, to negotiate between the people who call themselves progressives, which are really democratic socialists, and the people who are classic progressives, which are the middle of the road people, is not a divide that's any greater than we had the Yellow Dog Democrats or the Dixiecrats or whatever else, that these parties have had complex coalitions always."
John Darsie: (37:08)
Focusing again on that using politics as a context to talk about an issue, I want to talk about transitions. It's another topic that you've written academic papers about, about the importance of smooth transitions and transfers of power within corporations. Obviously, we're in the midst of a sort of messy transfer of power right now from President Trump, who's still contesting the results of the election, to President-elect Biden.
John Darsie: (37:32)
Biden's transition team is having to circumvent the normal official processes for transitions, but people have warned on both sides of the aisle about the dangers to national security, especially in the middle of a pandemic, not sharing information about vaccines and Operation Warp Speed and that type of stuff. Using our current backdrop as context, how can organizations effectively manage executive transitions, and why is that so important for continuity within an organization?
Jeffrey Sonnenfeld: (38:01)
Well, there's a lesson here. Of course, it's a lesson of bad sportsmanship we see and to challenge the rules if they don't work out your way. That's a problem. I think as CEOs have rallied in distress. Thursday night of November 5th when President Trump overreached in a news hour broadcast at a press conference from the White House Briefing Room to suggest I hereby assert powers that he didn't have, that alarmed a number of CEOs, so we pulled together 30 of them. Between 7:00 p.m. that Thursday night and Friday morning, I got a group together of 30 Fortune 100 CEOs that were that worried, thinking we need to figure out how to confirm that this was an efficient, fair and safe election, as his own cybersecurity and election security experts have confirmed that there is no evidence of any fraud out there and to celebrate the winners, as they did immediately.
Jeffrey Sonnenfeld: (38:59)
They set the trail. As these CEOs called for the business associations to do that, the Business Roundtable did that, it seemed, within minutes of when Pennsylvania was declared the very next day. They came out with an excellent statement that was the virtual almost perhaps verbatim model that not only other trade associations used, but also heads of state around the world. You can actually take a look at it, and President Bush. It's almost the exact statement. That conferral of legitimacy was very important from an independent, nonpartisan bodies like that.
Jeffrey Sonnenfeld: (39:29)
I wrote a book about this in terms of the corporate model. Just happened to have this here too and an earlier book called The Hero's Farewell. That doesn't mean that every CEO, every head of state is not necessarily heroic in terms of noble things they do. But in their minds, they see themselves that there is one person in the world truly indispensable, and they know who that is. The monarchs have a real problem leaving office, whether or not it's Sumner Redstone or taking a look at Armand Hammer for anybody who remembers him from Occidental Petroleum or other examples where people, they don't tend to want to leave until there's a palace revolt or they die in office. It's a feet-first exit. That's to some extent what we have right now as a monarch.
Jeffrey Sonnenfeld: (40:09)
There's a different sort called generals, like I don't know, Steve Jobs or others. Howard Schultz did this of Starbucks. They leave and something happens that necessitates a triumphant return to power. As generals, they're often called out of mothballed retirement. A third group, ambassadors, have a wise, tranquil passing of the baton. That's what often the corporate world has looked for. Intel used to do this really well and others. In fact, we've seen this at IBM recently. We've seen it at Pepsi recently. We've seen it at a number of places, at Disney, a fantastic tech successor from within.
Jeffrey Sonnenfeld: (40:42)
The final group is a governor, somebody bound by a term of office, goes and does something else. But there are different types of transitions. The hardest one is the monarch. They tend to be big disruptors as a leader, and when they leave, it's quite disruptive.
John Darsie: (40:58)
We have a question. It may be apropos to the difficulty that monarchs or very powerful people have giving power away. There's a book called The Psychopath Test that contends that a large percentage of CEOs are somehow on a psychopath spectrum. Do you think that's an accurate assessment that people in positions of tremendous power develop certain cognitive disorders, if you will? And what other books do you recommend on understanding leadership?
Jeffrey Sonnenfeld: (41:27)
Well, there's this great book called The Hero's Farewell that just fell on my floor here somehow that I would argue picks up on that point very well. Since it's just us talking and there are no CEOs ever going to see this-
John Darsie: (41:41)
Of course. We're not accusing all members of your community of being psychopaths, of course.
Jeffrey Sonnenfeld: (41:47)
No. But here's what Freud said. Sigmund Freud said, "Society is changed by its discontents," people who are just not happy with the way the world is. Robert Motherwell, the great painter, used to talk about the anguish of creativity is that he talked about artists like himself who would sneak into a gallery at night to touch up a painting on the wall. The beauty of creativity is the act is never quite done. There's also a restlessness in them, so it doesn't make them always the easiest people to live with. But the world is different and hopefully better because of them. But they want to be seen in life as net producers and not net consumers, so they're always on the go. There's no halfway switch about them.
Jeffrey Sonnenfeld: (42:28)
We're lucky to have people that do that. They bring a lot to society that way, but it's a challenge to deal with creative geniuses and big builders. How do you deal with that drive to leave a lasting legacy, because they're not going to live forever. The great psychoanalyst, Otto Rank, talked about in Art and Artist, the book, on how artists and top mythic leaders are more like each other than they are other people in society. It's just because they're fueled by a dream of creation. And when somebody discards that dream, they're shattered. It's called a heroic mission, if you will. It's a quest for immortality.
Jeffrey Sonnenfeld: (43:02)
A separate dimension, though, that makes these leaders different is you can get fused with the job. I think that's some of what we're wrestling with with President Trump is when your name becomes hyphenated with a job, it's a heroic identity. Nobody ever called Alexander the III of Macedonia Alexander the Great until he made up this false lineage to Odysseus and Achilles. He and his mom made it up, but he started to believe it. That's some of what were seeing right now in the White House. You start to believe your own myth making. It gets hard to separate those identities. So the heroic identity and that heroic mission are two things that make leaders really different but really difficult. Anyhow, sorry you asked, aren't you?
John Darsie: (43:42)
No. It's a fantastic answer, and we obviously recommend your books, of course, which are tour de forces on leadership across a variety of different subject matters related to leadership. I want to ask you one more question from our audience, and it's about corporations in this era of heightened social and political justice type of initiatives have started wielding, it seems like, a little bit more power. You have someone like BlackRock, the largest asset manager in the world, that's focusing on ESG sustainability initiatives and starting to be a little bit more heavy handed in what they ask of companies that they're invested in.
John Darsie: (44:19)
You see corporate CEOs pulling out of advertising deals related to content that doesn't meet their standards. How has corporate activism evolved over the last, say, 100 years, 50 years? And how do you think it will continue to grow, and do you think it will continue to grow into the future?
Jeffrey Sonnenfeld: (44:36)
I love closing on that question. There's a circularity to it. 50 years ago the Business Roundtable was created to do that, but you wouldn't know that from recent discourse because it was a year ago, almost a year and two months ago, the Business Roundtable came out with a statement of redefining capitalism more broadly. But that was why they were founded is that Great Generation, as Tom Brokaw called them, the Great Generation. But these people were great builders, great diplomats, great corporate leaders, great scholars, whatever they did, great soldiers. The Second World War generation saw themselves with these sweeping duties, sweeping responsibilities. They were very important.
Jeffrey Sonnenfeld: (45:15)
The Cuyahoga River was on fire in Ohio 50 years ago. The Tennessee Valley of Drums, of discarded waste, toxic waste, was discovered. The Love Canal problem was happening right outside of Niagara Falls of Hooker Chemical Division of Occidental Petroleum. Irving Shapiro, the CEO of DuPont, one of the founders of Business Roundtable, said, "We can't fight this. We need to be a part of the solution." He helped create the Superfund cleanup.
Jeffrey Sonnenfeld: (45:43)
Tom Phillips of Raytheon said, "We're upset with our competitors in the aerospace and defense industry paying bribes to other countries." It was coming out at the time. "We need to even the playing field because we fight fairly, and we think you can be a defense company and not be a dirty company. There's a way to do it." They fought in favor of the Foreign Corrupt Practices Act, which is remarkable.
Jeffrey Sonnenfeld: (46:04)
The whole term corporate social responsibility, which predated ESG, was coined by Reginald Jones, Jack Welch's predecessor at GE. Affirmative action, IBM and AT&T, well, it was the diversity and inclusion concept at the time, more quota driven, but it was pioneered by those companies. Now, they weren't the norm. They broke away from then a more reactionary Business Roundtable and National Association of Manufacturers, but these were 200 companies that said, "We want to be progressive and what progressive really meant."
Jeffrey Sonnenfeld: (46:35)
In fact, the progressive movement always was a very centrist and positive movement. They were the ones who were trying to clean up workplace safety, trying to not have labor battles become violent in the workplace, trying to deal with immigration, with settlement houses and building roads and dams. That's who progressives were historically. That's who business leaders were, but we lost our way. I remember testifying before the SEC at the time of Sarbanes-Oxley that all these trade groups were taking such a hostile view toward needed reform. So they got legislation that was imperfect because they wouldn't help it.
Jeffrey Sonnenfeld: (47:07)
Similarly, it happened with Obamacare. Jeff Kindler, if he was here to defend himself, the CEO of Pfizer, found very little support from the business community to help him make better legislation. So he had to do what he could with what it was. They had become reactionary and obstructionist. They found their voice. Jamie Dimon made things a little bit better and Doug McMillon. It's just off the charts, great things at the Business Roundtable and Ken Frasier, Mary Barra, Alex Gorsky.
Jeffrey Sonnenfeld: (47:31)
You start to look through these CEOs, Bob Iger, whether or not they're members of these associations or not, Bob Iger and Ken Frasier, or not, is that they see that the role of a business leader is a pillar of public trust. Richard Edelman's great data shows that 92% of the public wants to see a business leader as a major source of trust engaged in social issues. Even Morning Consult's data similarly finds almost 80% of the general population says that they're much more proud of their employer if they do engage in these issues, but they have to pick and choose. They're not politicians. They can't get involved in every issue. But when something really matters, they've had a big impact. Sorry you asked that question, too. I happened to like it.
John Darsie: (48:13)
No. I'm very grateful I asked that question. It's a tremendous response. And Jeff, we're so grateful for your time. I like to tell people maybe they haven't heard of, "Whenever there's something important going on in the world, whenever people are trying to solve a big problem, we always bump into you." Jeff is always in the room where it happens, as Lin-Manuel Miranda wrote of Vice President Burr.
Jeffrey Sonnenfeld: (48:37)
It wasn't always my fault though. It wasn't always my fault when it happened.
John Darsie: (48:40)
No, it wasn't always your fault, but you're there to clean up the mess. You have bipartisan influence. You're not a partisan person. You call the shots like they are and people respect you for it. So it's a pleasure to have you on. We've talked about having you hopefully moderate some of these SALT Talks for us and grill some of your corporate members of the Yale CEO community. So we're very much looking forward to that. Anthony, you have any final words for Jeff before we let him go?
Anthony Scaramucci: (49:03)
No. Listen, I appreciate your friendship, Jeff, particularly after I got fired. And for those of you that need a resilience lesson, if you get fired from the White House, you're rolled in broken glass on Pennsylvania Avenue, then salted, and then put through the sewer pipe in The Shawshank Redemption and then lit up on late night comedy, call Jeff Sonnenfeld, okay. He'll cheer you up. That's my message.
Jeffrey Sonnenfeld: (49:28)
Oh. Well, thank you, Anthony. I think that you are an inspiring example of character, and that's what really matters regardless of what the situation is. As Thomas More said as an advisor to King Henry the VIII, "Character is as fragile as having a liquid cupped in your hands. Once you separate the fingers, it's forever gone." No matter what's going on in your life, you've never lost your character, and that's something really to admire.
Anthony Scaramucci: (49:50)
That's very sweet of you. Well, I look forward to seeing you non-virtually at some point, Jeff, and thank you. And we'll get you out to one of our live events, which I can't wait for.
Jeffrey Sonnenfeld: (50:01)
I look forward to it. Thank you.
Anthony Scaramucci: (50:01)
God bless you. Happy Thanksgiving. Well, I'll talk to you before Thanksgiving.
Jeffrey Sonnenfeld: (50:04)
Thanks. I'm honored. Thank you.