Sandra Navidi - SuperHubs - How the Financial Elite and Their Networks Rule our World

Dimon stands out even among superhubs. A profile in Vanity Fair described him as charismatic and handsome,2 and noted bank critic and former FDIC chief Sheila Bair characterized him in her book Bull by the Horns as the smartest executive in the room with towering height as well as leadership ability.3 A New York Times article headlined “America’s Least-Hated Banker”4 pointed out that many of his counterparts did not survive the crisis, such as James Cayne of Bear Stearns, John Thain and Stanley O’Neal of Merrill Lynch, Chuck Prince of Citigroup, and Richard Fuld of Lehman Brothers, among others. By his own account, he has emerged from the financial crisis “battered and bruised but still standing and fighting.”5 Under Dimon, JPMorgan became one of the biggest financial institutions in the world with $2.4 trillion in assets and a quarter of a million employees.

Dimon, like most other financial top executives, has a type A personality. Throughout his life, he has had a tendency to be irreverent and to speak up to authority. In high school, he once left the classroom in protest after a history teacher commented on an African American student acting out with a racially inappropriate remark. He also earned the respect of his classmates at Harvard Business School when he challenged an intimidating professor on a case study, only for the professor to concede that Dimon was right. Neither did Dimon shy away from antagonizing his superiors. He refused to back down in a power struggle with his almighty mentor Sandy Weill, which eventually culminated in Weill’s firing of Dimon.

Dimon even got into a physical scuffle with one of his top lieutenants at a black tie dinner when the latter supposedly snubbed a colleague’s wife.6 And he has no problem snapping at his peers in front of fellow CEOs: When Tim Geithner and Dimon cohosted a conference call to discuss JPMorgan’s takeover of Bear Stearns, Vikram Pandit, the CEO of Citigroup, delivered a barrage of highly technical questions, which prompted an annoyed Dimon to bark, “Stop being such a jerk.” He added snippily that Citigroup should be grateful that JPMorgan came to the rescue.7 Such a public snub of a fellow CEO was unheard of and prompted jaws on Wall Street to drop.

A few months thereafter at a Harvard MBA graduation speech on leadership, Dimon advised graduates to skip anger, because “it is a bad thing that always backfires, hurts people, and then you have to apologize.” Ignoring his own advice, a couple of years later he managed to offend Mark Carney, then the governor of the Central Bank of Canada, during the Annual Meetings of the IMF by implying that Carney was anti-American. The bank CEOs in attendance were baffled by Dimon’s attack and worried that his confrontational style would hurt their interests. Dimon later apologized for his tirade. Carney accepted his apology, which was lucky for Dimon because Carney subsequently became even more powerful as governor of the Bank of England and chairman of the Financial Stability Board. In interviews, Dimon can get belligerent as well, especially when arguing against financial reform and in favor of higher remuneration.

Neither does Dimon have any qualms to openly fight for his power. After JPMorgan suffered its record $6 billion “London Whale” trading loss in 2012, investors opposed Dimon’s dual role as CEO and chairman, arguing that his overseeing himself obviously hadn’t worked so well. Amongst much media attention, Dimon threatened to resign if forced out of his chairman role and in the end prevailed against his critics.

As Wall Street’s unofficial ambassador in Washington, Dimon also became the leader of the pack among big bank CEOs. He impressed the bureaucratic establishment with his business acumen and charm, quickly becoming the Beltway’s darling. For a long time, he was even considered to be President Obama’s favorite banker. The president repeatedly praised Dimon publicly, and the presidential cufflinks Dimon wore during his testimony at the Senate Banking Committee in connection with the London Whale loss were rumored to have been a present from the president himself.

EQ: CONNECTING EMOTIONALLY

One of the most indispensable skills leaders must possess is emotional intelligence. Finance is a Darwinian environment, where only the strongest survive. Most firms render similar services without any intellectual property to protect, and in general all top-level managers are smart, educated, and hard working. Therefore, executives who possess emotional intelligence—self-awareness and the ability to understand and relate to others—have a decisive competitive advantage. Evolved leaders run institutions more smoothly and successfully because they are more comfortable facing their shortcomings, their limitations, and criticism from others. Their ability to see issues from other people’s perspectives helps them align subordinates and deal with customers. In a globalized world, empathy, which is part of emotional intelligence, is of particular importance because it facilitates cross-cultural dialogue. Even if people from different backgrounds speak the modern-day lingua franca, English, they must stay attuned to cultural subtleties and sensitivities, which otherwise can be a minefield.

The good news for someone not blessed with a particularly high degree of emotional intelligence is that it can be learned and that it increases with maturity. The higher executives rise, the greater the demands on their leadership skills, which also entail social skills to attract and retain talent. In Jamie Dimon’s opinion, emotional intelligence is more important than IQ when it comes to success, because social skills make all the difference.8 As an added benefit, emotional intelligence provides job security. According to a recent study, the jobs of chief executives, particularly in finance, are safe from automation due to the importance of personal human relationships in that sector, which cannot be formed by soulless robots.9

MASTER CLOSERS: STEVE SCHWARZMAN

Successful executives possess extraordinary communication and sales skills. In order to generate revenues in a low-growth environment, they must attract prospects and be able to close deals. Selling ideas and products requires social and persuasion skills. Since finance is abstract and intangible, and its performance only materializes in the future, it is vital for executives to build trust and create convincing narratives for transactions. Only people who manage their own money—such as family office hedge funders like George Soros, Stan Druckenmiller, and Steve Cohen—are free from such pressures and constraints.

Having a premium brand is an invaluable competitive advantage; it facilitates sales and can be a precondition for obtaining access to desirable client segments. Accordingly, most superstar CEOs are “brand masters,” marketing billion-dollar companies as well as their own personal brands, which in many cases are synonymous with the firms they represent. Dimon has established his own brand to stand for leadership, strength, and a fortress-like balance sheet.

Today the perception of performance has become even more important than performance itself. In contrast to the nineties, most careers today fail due to adverse perception regarding performance or personalities. Therefore, executives must actively manage perception through communication.10 Reputation, or the perception of others, results from integrity, performance, and consistency. Once a reputation of integrity is ruined, it is difficult—if not impossible—to rebuild. As Warren Buffett cautioned, “It takes twenty years to build a reputation, and five minutes to ruin it.”11 In other words, your present reputation determines your future success. Warren Buffett’s uniquely stellar reputation stands for integrity, investing excellence, and stability. It is so valuable that it commands a premium in and of itself, and businesses associated with him appear automatically endorsed. Indeed, Buffett plans to license the Berkshire Hathaway name to estate agencies to turn his good reputation into a consumer brand.12