"Lean Against The Wind!"

John C. Whitehead (HBS ’47) recounted his life of leadership, and the lessons he learned along the way, to a packed Spangler Auditorium at a keynote event organized by the Social Enterprise Club and co-sponsored by the Finance Club and Real Estate Club on March 2.

Mr. Whitehead had a unique perspective on leadership, given his experience at the highest levels in the private sector (Co-Chairman of Goldman Sachs for 37 years), public government (former U.S. Deputy Secretary of State) and in the non-profit world (current Chairman of the Lower Manhattan Development Corporation).

Unaware where his fascinating career would take him at the onset, Whitehead told students “You have 50 years ahead of you! When I started, I thought every step was significant. Your first job will not define your career. There are 50 years to try to do something.”

He further explained, “Each of you will develop your own leadership style.

It’s already there in you!”

Whitehead continued with several recommendations for effective leadership. “Your leadership style has to address the problems you face… Sometimes you need strong, quick action. Other times, you need to sit back, listen, and take your time.”

Whitehead gave the examples of President Theodore Roosevelt, General McArthur, Chrysler CEO Lee Iaccoca and General Electric CEO Jack Welch, as leaders who were successful with a more aggressive style. In contrast, he pointed to Johnson and Johnson CEO Jim Burke and Secretary of State Colin Powell as leaders who have excelled with a softer, slower approach.

From his own life, Whitehead illustrated a successful use of the quick, aggressive mode by describing a dramatic World War II experience, in which, at the age of 22, he led an amphibious D-Day attack on the beaches of Normandy. Facing underwater Nazi obstacles to his group’s landing, he instinctively ordered a change of course that defied battle orders and managed to circumvent the barrier.

On the other hand, as Chairman of the Brookings Institution, he saw that it was more effective to step back, listen, and then take deliberate action.

“If you don’t know what to do, don’t take action. Listen!” he exhorted.

Whitehead also shared some wisdom on the subject of resolving conflict. “When you think you have a confrontation with someone, if you put yourself in the shoes of the other person, you can often find a way to get what you want and what they want.”

Whitehead’s last piece of advice: “Lean against the wind. When things are good, be negative, grow slow, be cautious. When things are bad, be positive.”

“In the last few years, investment banks could have really benefited from leaning against the wind,” he observed.

Using the diversity of his background, Whitehead also drew several comparisons between the for-profit and non-profit sectors. He reached the conclusion that, “It is much harder to run a non-profit than a for-profit…harder to run the Red Cross than General Motors.”

Whitehead explained that in the for-profit sector, the key metric of success is profitability, while in the non-profit sector, one has to measure performance against mission, a much more challenging prospect.

In the for-profit sector, one works almost exclusively with employees, who are paid and who have an incentive to follow directives. Managing a team is much more difficult in the not-profit sectors, where one must also work with volunteers.

Finally, he argued that in the for-profit world, one can turn to a well-organized financial services industry for capital needs. In the not-profit world, the capital markets are virtually nonexistent, and one cannot turn to an investment bank to help raise financing.

Yet, Whitehead maintained that these challenges create enormous opportunities for HBS graduates who can contribute their management expertise. According to Whitehead, the not-profit world is in desperate need of managerial talent and is therefore a quicker avenue for an HBS graduate to rise through the ranks and achieve managerial responsibility.

As the founding financial sponsor of the HBS Social Enterprise Initiative, Whitehead has backed this conviction with cash.

“What you are learning here is applicable to all fields of life,” Whitehead told the students. “My life demonstrates that.”

When asked about the best way to sequence a career that includes both for-profit and not-profit roles, Whitehead remarked, “I’d like to see it both ways. I got stuck 37 years in for-profit. I wish I had experience with federal government before becoming Deputy Secretary of State. I also wished I had non-profit experience before I left Goldman.”

He also recognized the challenges: “Sometimes you can go back and forth, but that may make it hard to build a career in business.”

Whitehead was very pleased, though, that more and more students are entering social enterprise right out of HBS. “In year one of the Social Enterprise Initiative we had a single person going to non-profit out of HBS.

In year 10, we had 40 people.”

He ended the session talking about his current role as Chairman of the Lower Manhattan Development Corporation. Responding to a question about the selection process for the architectural rebuilding plans for the World Trade Center Site, Whitehead explained, “There definitely was controversy. We used experts, not public sentiment, to decide, but the process has always been open. People have become more accepting over time.”

Subsequently, Whitehead criticized the federal budgeting process for allocating homeland security funds to states, which he believes shortchanges prime targets such as New York. “Resources should be allocated by risk, not by population alone.”

Overall, he is excited by the work and looks forward to the beginning of the reconstruction.