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

The Alchemy of Chemistry: Charm Offensive

Truly effective leaders in finance not only possess technical skill and emotional intelligence but also other intangible qualities such as charisma and charm.14 With their open attitude, charismatic people attract people and opportunities, giving them a distinct advantage when networking. They combine substance with personality and have the ability to focus on someone with undivided and genuine attention, which makes others feel special. They project a strong presence, draw attention to themselves, and enrapture audiences. With their self-confidence and ability to charm, they manage to persuade and align people, furthering their own objectives. Most people at the top have a great sense of humor—an expression of social intelligence that is supremely helpful in disarming and bonding with people. Their often self-deprecating quick wit bridges differences in culture, status, and interests.

George Soros is masterful in firing off unexpectedly dry tidbits. When reminded of something he’d rather avoid, he’d reply, “I do not remember the past; I only remember the future,” and when asked about his work habits, he says, “When I have to, I work furiously because I am furious that I have to work.” And Nouriel Roubini tirelessly cracks one economics joke after the next, such as, “The difference between capitalism and communism is that in capitalism, man exploits man, and in communism it’s just the opposite;” “In capitalism, what is mine is mine, and in socialism, what is yours is mine;” and “God created economists to make weathermen look good.”

The Lords of Networks and Their Creations

Many of the most successful networkers take the initiative to build big and bold networks. For instance, Steve Schwarzman initiated the Schwarzman Scholars program, which provides scholarships for international students at Tsinghua University in Beijing to help develop their professional networks. Schwarzman has stated that “his protégés would have access to some of the most influential people in the Chinese power structure” and many Davosians—such as Lawrence “Larry” Summers; Harvard historian Niall Ferguson; and Jack Ma, chairman of the Alibaba Group—are involved.15 Paul Tudor Jones has created a vast and tight network of the world’s richest financiers with his enormously successful Robin Hood Foundation. Klaus Schwab has developed the ultimate superhub network with his World Economic Forum. George Soros, who has started many think tanks and charities, knows that the best strategy to achieve access and influence within a network is to initiate its creation.

In China, where personal relationships known as guanxi are traditionally more important than in the West, many international financial firms have embarked on the popular strategy of hiring “princelings”, the children of the “Yuan” percent. Buying directly into the networks of the Asian governing and corporate elite is a convenient shortcut to obtaining access to business opportunities. However, this practice isn’t without pitfalls. Hiring in exchange for business violates U.S. anti-bribery laws, and many major banks have been implicated in this practice.

Negative Notions on Networking

Over lunch at the Four Seasons restaurant in New York, a French family office principal lauded my networking skills, for he abhorred the very concept of networking and seemed mystified by the enthusiasm with which Americans embraced it. Although he recognized its importance, he didn’t want to be bothered with it himself.

Many people have an innate resistance to networking. They are uncomfortable with the concept of transactional relationships because they equate it to using people or, even worse, manipulating them. To them, forming bonds strategically on the basis of potential benefits seems disingenuous, artificial, or even unethical. Favors with strings attached are seen as offensive. According to a study from the University of Toronto, professional networking can create feelings of moral impurity and physical dirtiness. People included in the study felt conflicted when they were motivated by a selfish rather than an altruistic concern. However, those already in power are more comfortable with networking, which reinforces and advances their positions, thereby fortifying existing power structures.16

Others are uncomfortable with the act of networking itself, finding it awkward to work the room, approach people, or engage in small talk. Some executives, especially if they have strong technical skills and did not have to rely much on interpersonal skills, see networking as an undignified exercise at best and torture at worst—a nuisance that comes at the expense of spending time with family and friends. Introverts often have a harder time networking because it takes more effort for them to proactively connect with others. They are less prone to self-promotion and view making superficial connections as shallow and a waste of time.

Since the purpose of networking is to cooperate and exchange information, resources, and access for mutual benefit, by definition it must be reciprocal. In his book Give and Take, Adam M. Grant examines how the motivation, ability, and opportunity of successful people affects reciprocity. He distinguishes between three kinds of people: “takers,” who take more than they give; “givers,” who give more than they get; and “matchers,” who maintain a balance between giving and getting. According to Grant, research demonstrates that givers rank both among the best and worst performers, whereas takers and matchers range in the middle. Givers tirelessly build deep networks and give to others without expecting anything in return. Givers who rank among the worst performers are too good-natured and get taken advantage of. Successful givers continuously work to create win-win situations for all, but also know when and how to set boundaries. Due to the goodwill built throughout their lives, they have access to support and resources whenever called for. Interestingly, when givers give, it spreads and cascades. People who only take are punished with negative reputational information, especially if they unfairly exploit others.17 Kindness and generosity are rewarded, if not concurrently with the act of giving then as network capital deposited in the social capital bank.

At the end of the day every human being longs for deep and genuine connections. In today’s world, we are all dependent on one another, and creating connections is not about deliberately taking advantage of people, but rather creating opportunities for all. If executed properly, it is mutually beneficial. Self-interested and predatory people repel others and will not get far. Only balanced relationships with real give and take will be sustainable and stand the test of time.

Think Tanks: Network Motherboards

Think tanks are more influential in the financial system than I had initially realized. The term sounds abstract and esoteric, but within think tanks there are real people with real power and real money actively exerting influence. They are seamlessly interlinked with the business, financial, and—perhaps most importantly—political establishment and, therefore, have all-encompassing access. These nonprofit organizations also bring together experts who conduct research, generate ideas, and advocate interests.

Nearly all top financial executives are engaged in think tanks. The Brookings Institution is considered the most influential one, counting the heads of Carlyle and Deutsche Bank as trustees. Another influential think tank is the Council on Foreign Relations, whose board of directors includes former U.S. treasury secretary Robert Rubin, Larry Fink of BlackRock, and Steve Schwarzman of Blackstone. The ones I am personally most familiar with are the Group of Thirty, the Bretton Woods Committee, and the Institute of New Economic Thinking (INET). The Group of Thirty18 focuses on economic issues, and its board includes the heads of the ECB, the Bank of England, BlackRock, and UBS. The Bretton Woods Committee19 examines international economic cooperation and counts Larry Summers, George Soros, Klaus Schwab, and many central bank governors on its board. Both the Group of Thirty and the Bretton Woods Committee congregate during the meetings of the IMF, therefore taking advantage of all the power players being in one place.