Advanced Consulting: Earning Trust at the Highest Level

PROLOGUEIt’s 1998. I’ve gone  to work for Delta Consulting, a New York–based consulting  firm started  twenty-five years previously by David Nadler, a former Columbia  Business  School professor. The  firm specializes in consulting  to CEOs. Even though I have been  consulting  for over twenty years, I have recently completed six full weeks of orientation to learn to do consulting  the way people do at Delta consulting. This is a description of a fairly typical first meeting  between Delta and a client, in which I had the opportunity to observe David Nadler  (a wonderful mentor and friend  to me, now deceased)  work his art. The names  of the firm and client have been  changed  but the rest is as it happened that day.  8  a.m.— t h e  h e l ip ort  at  12 t h a n d  30t h on   t h e  H u dson. As the  Sikorsky A-76 descends over the  water, the  calm water of the river at first erupts  into  a fury of waves and  spray, and  then  actually seems to form  a depression as it absorbs  the  weight of the  powerful craft that  hovers above it. A second  later,  as the helicopter settles on the tarmac,  the river returns to normal, no worse for wear.John Healey, the corporate pilot who guides the helicopter with thetail number PM101 that identifies  the aircraft to air traffic controllers on  its frequent journeys  between  Hartford and  New York,  explains that  he earned his pilot’s license  before  his driver’s license,  by work- ing for flying time  instead  of pay at the  local airport. After that,  it was the military, where he learned to fly these  strange  birds without wings. Since then, he’s never paid a cent to fly. As a pilot who still has to pay to rent  an airplane, I envy him.“Are you Dr. Nadler?”  he asks. “No, I’m Bill Pasmore,” I tell him. He  doesn’t  seem  impressed; to John,  I might  as well have been  an- other piece of baggage. “Well, is Dr. Nadler  joining us this morning?” “Yes, he’ll be along  shortly.” On cue, David arrives, and  soon we are lifting off over the Hudson, straight  up past the 38th floor of 1177 6th Avenue, where our office is located.  Hartford is 48 minutes upstream.The  reason  for  this  magic  carpet  ride  needs  some  explanation. This  story,  like  others,   has  a  beginning. It  seems  that  this  fellow named George  Smith  runs  a company  located  in upstate New York that  keeps  the  local Wegman’s  grocery  in business  and,  by the  way, Delta Consulting, too. George,  who has worked closely with David for many years, experienced an interesting transition a few years earlier, becoming the first non-family member to run  the company.  The last family member who served as CEO before  George  was another client of David’s and took David’s advice about  how to retire  with style and grace.  As a result,  the  company  didn’t  miss a beat  as the  reins  were handed over to George.  There were other CEOs in the  news at the time who could  have used David’s help  with succession  planning but failed to ask for it. Some of them didn’t fare as well. Succession can be wonderful, or it can be hell.George  finds time  to sit on  the  board of People’s  Mutual,  one  of the largest mutual life insurance companies, which in 1998 had about$60 billion in assets and another $130 billion under management. The company  is large enough to own several other companies that would be large  in their  own right—such as the  Stratus  Fund,  which offers  People’s  Mutual  the  opportunity to get into  the  401K asset manage- ment  business;  John  Cline  & Company,  which serves individual and institutional investors; Malther  Realties, which manages  real estate equities; Pinetree Capital Management, which provides investment advisory services to the insurance industry; and Nova Leveraged  Cap- ital  Corporation, a commercial finance  company.  People’s  Mutual also owns PM101. They can afford it.Sam Tyler has been  CEO of People’s Mutual for nine  years. Under his  uncannily  insightful leadership,  the  company   has  done   well, doubling in  size while making  bold  moves into  new products  that its largest  competitors still haven’t  matched. There is no  doubt that Sam deserves  to go out  a hero  and  that  is precisely  what he  would like to do.  He’s not  having  as much  fun  as he  used  to; some  of his close friends  have died;  others  are playing golf and  reaping the  just rewards of a life of hard  work and honest living. Sam is about  as down to Earth, honest in his self-appraisal, and open  in his confusion about how to do this thing  right  as anyone  you will meet.  He started  out as an insurance agent (he must have been a good one) and rose through the ranks. Now, at age sixty-one, he’s decided that he doesn’t  need  to ride the horse  until sixty-five or beyond.  In fact, he’d like to hang  up the spurs at sixty-three. He mentioned this to the board, and George picked  up on his inner turmoil. There’s  a problem, you see; Sam has no  clear  heir  apparent. He feels as though he has failed  to prepare someone properly but,  at the  same time—like  a guy shopping for a new car—he  has made  up his mind  to make a trade  and he wants to close the deal. Now.George pulls Sam aside after the board meeting and mentions that he’s had  a little experience with succession  himself,  from  the  other side. No, he doesn’t  have the answers for Sam, but he knows someone he  thinks  could  help.  George  calls David to ask a favor. Then Sam calls David. Then David calls me. We’ll meet at the helipad early next Wednesday  morning. In the  meantime, I read  the  background that our research group has prepared on the company  and  the materials Sam sent along.Have I ever consulted in the insurance industry  before? No. That’s OK. David knows the  lingo,  and  I’ll pick it up along  the  way. Have I ever done  a CEO succession project? No. That’s OK. David knows the process. I’ll pick it up along the way. Why am I here? Precisely because this is what I need  to learn. There are certainly others  more qualified, more  experienced in this particular work and industry.  David has an eye on the future;  the sooner he gets me up to speed,  the better it is for my billings—and the firm’s. I don’t  mind  tagging along.Incidentally, David is looking  forward  to this. It’s a “try to stump the  band” challenge for him.  It’s one  thing  to work with the  same clients,  year after  year. You get to know them  and  they get to know you. If you have done  good work, they appreciate having you around. You’re allowed to offer your advice and  they’re allowed not to take it every time  you give it—you’re  friends  and  will continue to be. The work won’t disappear tomorrow with one misstep.This situation is different. Each CEO is different. Prior to the first meeting, we don’t  know what Sam is like. He mentions a few things over the  phone, agrees  to fly us up in the  helicopter, and  meet  with us for three hours  to see if there is any point  in talking further. David finds the  challenge of not  knowing  what Sam will ask and  what an- swers he will give invigorating. It’s a make-or-break encounter. Any- thing  could  happen. Sam might  not  like the  way we look. He might be the  type of guy who needs  advice, wants advice, but  can’t  bring himself to take it. It could be that he hates consultants and is only see- ing us to humor one of his board members. We might  say something or do something that  turns  him off. If he doesn’t  like us, there are a lot of other consultants in the  world. So we’re going  to be on  trial. Suddenly,  I feel like one  of the  mannequins in the  window of Saks Fifth Avenue. On display with nothing to say.  In reality, I know that the spotlight isn’t on me. David is the lead on this one. Somehow, I have confidence that Sam won’t stump the band. I’ll contribute what I can, focus on developing a good relationship with Sam, and try to learn as much  as possible about  his business and ours.David has the  foresight  and  confidence to anticipate that  things could  go well. He tells Sam before  the  visit that  he will be bringing along  a colleague because  he  really  doesn’t  have  time  to  work on another long-term engagement. Sam probably  figures  that  this is a gimmick that all consulting firms use to double their  billings. Never- theless, he consents. After all, he’s anxious  to buy that car. Now. The helicopter seats six. Bring the whole gang.After pointing out landmarks and  offering  last-minute advice (let me  take  the  lead,  but  don’t  be  afraid  to  jump  in) David spots  the company  from the air. It looks like a college campus.  We touch  down at the helipad, which is just at the back of the employee  parking lot. We are immediately met by a stretch  limo that takes us the two blocks to the front  door.  I could get used to this.We are  shown  into  Sam’s office (David later  notes  that  it’s about twice the size of the Delta cafe) and sit down with Sam on some comfortable couches.  Very civilized, relaxed, low key. “Should I start by talking  a little about  the  company?”  Sam asks. Of course.  (Try to imagine  a CEO not talking about  his company  the first time he or she meets you.)Sam  tells  us  the  history,  and—like   People’s  Mutual’s  Standard and  Poor’s ratings—it’s  impressive.  Acquisitions,  mergers, solid per- formance when others  stumbled in real estate and  the stock market, getting  out  of the  group health business  at its peak,  just before  the bottom dropped out.  If I ever take  to gambling on  the  ponies,  I’m having Sam do the handicapping for me. Then we get around to the real  reason  we are  there and  we hear  the  story about  George.  Out- wardly, David is listening  intently.  Inside,  he’s smiling.  He’s already got this one figured  out.Sam pulls  out  bios on  the  top  internal candidates and  wants to get right to selection. It’s clear that he doesn’t  know how Delta works. David straightens him out. “Sam, before  we start discussing the indi- viduals, could you say a bit more about  where the company  is headed? We usually find it useful to have some idea of the strategy and context that  the  person will have to operate in. Then, we’ll have more  of a basis for determining what qualifications might  be required for the job. Let me begin  by stating  what I think  you have said about  this.” David reels off a summary  of the key challenges facing the business, dropping in appropriate usage  of insurance terms  that  I don’t  un- derstand but that make Sam feel like David has been  sitting in on his board meetings.I notice  that  while we are there because  Sam wants to talk about succession,  David has already  begun to drop  hints  about  other help he needs  from Delta. People’s Mutual looks on paper and operates in fact as a set of disconnected businesses.  Each business that  has been acquired is still a stands-alone operation, hanging like an ornament from  a branch of the  parent company  tree.  The  company  isn’t tak- ing advantage of its opportunities to achieve real synergy through cross-selling its products. Sam explained to us that if you buy one product from People’s  Mutual,  like life insurance, there’s  about  a 20 percent chance that  you will do  business  with the  company  for the long term.  If you buy two or even three products, like life insurance and  a 401K or mutual fund,  there’s  a good  chance that  you will stay with People’s Mutual for life, and that you will put more  and more  of your money in their  safe. Cross-selling is a good thing.