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Best Business Books 2004: Leadership

Few people join the Cabinet with more preparation or relevant experience than did Paul O’Neill. Ron Suskind’s The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O’Neill (Simon & Schuster, 2004) examines the 2001–02 period during which O’Neill served as the secretary of the treasury under President Bush. A rising star in the Ford administration, O’Neill served in the Office of Management and Budget, where he not only learned firsthand how the White House runs, but became close to two redoubtable public figures, Alan Greenspan and Dick Cheney.

After leaving government in 1977, O’Neill went to International Paper as a senior executive and then was recruited from his position on the board of directors of Alcoa to be its chairman and CEO. There, he famously changed the organizational model and challenged his managers to make Alcoa more than “a compliance company” by setting the environmental standards for the aluminum industry. Because of his government experience and well-earned reputation at Alcoa, he was an obvious choice to be treasury secretary, although he had a reputation for being outspoken and was not entirely in line with the president-elect’s positions.

Suskind describes O’Neill’s reluctance to take the position — a reluctance that was overcome by what he saw as a golden opportunity to act boldly to keep the economy growing and to solve the Social Security mess. In what amounts to a prenup meeting, former colleagues Greenspan and O’Neill engage in a fascinating discussion, carried out in a shorthand bred of years of working together, in which they conclude that tax cuts with triggers (cuts conditional on the health of the budget) are the best way to stimulate growth and, furthermore, open the possibility of reforming Social Security.

Despite feeling there might be difficult political battles ahead, O’Neill decides to take the job. Indeed, early in his tenure he begins to express concern about the substance of the administration’s economic and tax policies. He is an analyst through and through, focusing on key numbers and metrics and then building strategies around the assembled facts. He believes the public is entitled to truth and transparency, and he advocates using “Brandeis briefs,” a process by which policy is made by confronting opposing arguments. Indeed, his M.O. is to “trust process and the ends take care of themselves.”

Ah, as Jon Stewart would say, that might not be the way decisions are currently made on Pennsylvania Avenue. O’Neill starts to worry about his relationships with others in the administration, including the veep, who seems not particularly interested in his old buddy’s analyses, and the president, whose management style is to be “detached” from the process and substance of policy making. As the administration becomes increasingly focused on unseating Saddam Hussein, O’Neill feels his influence wane. At about this time, he senses that ideology is ruling over process, and that therefore his facts and analyses don’t count. Finally, he complains to Suskind that the president expected him to be loyal but hadn’t earned his loyalty.

As we know, O’Neill was forced out by the administration. A lesson to be drawn from his experience: It is a common failure of leaders to overestimate their ability to change the minds of peers and bosses, or even to influence their modes of decision making.

This is a particular problem for numbers guys, as the first person to sit in the secretary’s chair at Treasury also discovered. Ron Chernow’s Alexander Hamilton (Penguin Press, 2004) is the historical biography that business executives should turn to if they wish to learn what leadership is really about. Unique among the historians who write about politics in early America, Chernow has a profound knowledge of management and finance, and this fine book offers business readers a detailed analysis of how a “numbers man” with the greatest leadership potential of his era derailed his own career. Hamilton was quite possibly the United States’ finest civil servant, but he never achieved his goal of the presidency. The unraveling of his career is an object lesson in how not to lead.

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