December, 1999 - Volume 4, Number 3
Moore's Full-Court Press
Robbie Shell, Deputy Editor, Knowledge@Wharton
During a 1996 New York Knicks game, spectator Darla Moore caught a wild
pass from mid court. Instead of throwing it back to the ref, she tried
to make the basket herself.
It's one of the few times she has missed her mark.
Darla Moore - president of the private investment firm Rainwater Inc.
- was recently named to Fortune's 1999 list of the 50 most powerful women.
Appearing at Wharton on December 7 as part of the Zweig Executive Speaker
Series, Moore shared perspectives on leadership and success in work environments
that ranged at times from unsupportive to hostile. She spoke, for example,
about the importance of "being willing to pick your fights within the
corporate environment" and, having picked them, "to fight to the death."
She reminded her audience "to never take any attack personally in the
business environment because if you do you will be rendered ineffective
... it is irremediable to break into tears in a public forum." She spoke
also of the role of mentors and of the importance of "being a decision
maker... the ability to make a decision, even if it's a wrong one, can't
Moore had attended business school at George Washington University and
then joined 30 other MBAs in the training program at Chemical Bank (now
Chase). "It was the early '80s, a time when the sun was rising on the
LBO business," Moore notes. "All the action in the financial arena, everything
interesting and powerful, was there. And I thought to myself, 'This is
the place I have to be. Because I can be somebody.'"
As it turned out, Moore never got the chance. "There wasn't
a snowball's chance in hell that a female from the rural deep south
would be invited or embraced by that LBO environment. Historically no
major players in the LBO business were women."
A mentor advised Moore to consider the bankruptcy area, which, Moore
says, "was open because it was viewed as a graveyard, a place where
you were sent because you couldn't play in the mainstream
The idea was to work with companies that got into financial trouble. At
the time there were very few of them, and no one was doing anything remotely
like making [any money on it]."
"I worked in the trenches with these financially distressed companies
while the LBO establishment continued to churn out ever bigger, ever more
expensive mergers and acquisitions. These people had no concept that there
would ever be an economic downturn." Of course there was, and "America
blew up, largely as a result of greed, a total lack of perspective
and the over-leveraging of the corporate environment. I had watched all
this going on and thought, Keep financing this, boys, because you
are just creating business for me,'" Moore says.
By the early 1990s, Moore had become the highest-paid woman in banking
and an extremely tough negotiator. "All of a sudden, this product
I had created was the product du jour'. Nobody in the country
had any kind of infrastructure or knowledge that could address this, other
than what I had developed over a several-year period. I was the only person
with the expertise, and our area was the only one making any money. It
had become a powerful profit center within the bank."
The single best area to learn about business is in a financially distressed
environment, adds Moore, "because there are no rules. It's only
what works. You are operating in a limited time frame, which forces you
to make decisions. You find out very quickly what it takes to run a company."
In 1993, Moore became president of Rainwater Inc. "At Rainwater,
we do things differently than other investment companies," Moore
says. "We are not public stock pickers. We are not market pickers
. We identify companies and assets and then go out and select
"In the early days we will be fairly active in a business or an
investment, but we are interested bystanders. We will not run anything,
unless something bad happens." As it did with Columbia/HCA, where
Moore eventually fired CEO Rick Scott after the health-care company became
the target of a federal criminal investigation.
One of the biggest lessons she learned from being in the investment and
bankruptcy environments, Moore says, is that "the success or failure
of the business doesn't necessarily have to do only with the numbers,
but rather with the personalities and character of the people who run
it. People get so impressed with what they have accomplished that they
can no longer see themselves in the context of reality. This is what happened
Moore is also well known for her decision to remove corporate raider
T. Boone Pickens from Mesa, his oil and gas company which by the early
1990s was overextended and facing a possible takeover. Moore put $260
million into Mesa to buy a preferred stock position that gave Rainwater
Inc. control of the company. Originally the plan had been to let Pickens
stay in place, but when "I went out into the market to refinance
Mesa's debt, I found that no one on Wall Street would touch this
because of Pickens." The CEO had to go. "So what came to be
viewed as me [removing] Scott and Pickens had nothing to do with me personally,"
Moore says, acknowledging, however, that the perception of her "allegedly
taking these two out" led to a 1997 Fortune cover story. "It
had to do with the markets. Always remember, markets take people out.
That's one of the glories of capitalism."
Transform Thoughts Into Results
Jeffrey Pfeffer and Robert Sutton of Stanford University argue that
managers often know what to do, but they just don't do it. In their new
book, they press managers to break through the "knowledge-doing gap,"
to transform awareness of best practice into a record of best performance.
The barriers to closing the gap are several. First, some managers equate
agreeing to implement an innovative work idea with actually innovating.
One manufacturer the authors observed, for instance, decided to become
a project-based organization to foster product innovation, but woefully
little happened on the heel of the decision to make it happen. In another
case, a securities firm treated its mission statement as the complete
embodiment of its core values, so complete in fact that the values were
nowhere else evident within the firm.
Pfeffer and Sutton identify devices that companies from SAS to Starbucks
have used to close this gap. Among the solutions: all managers high and
low do the company's work besides managing its people, the former ensuring
that every manager is savvy about what will work and what's not working.
A second gap is when memories of past successes and failures define future
possibilities, as in: If something has not worked before, it surely can
work no better now. One solution: radical decentralization, ensuring that
the periphery is unburdened by the center's history.
A third barrier is fear of failure, leading managers to stay with tried-and-true
methods even when they see better ways to run the railroad. Solution:
praise delivery of bad news to bosses.
A fourth gap is performance measures that mislead, and a fifth is when
collegiality among managers is paralyzed by cutthroat competition between
Closing the gap, conclude Pfeffer and Sutton, requires effective leadership
if ideas are to become anything more than just that: "Leaders of companies
that experience smaller gaps between what they know and what they do understand
that their most important task is not necessarily to make strategic decisions
or, for that matter, many decisions at all. Their task is to help build
systems of practice that produce a more reliable transformation of knowledge
Source: Jeffrey Pfeffer and Robert I. Sutton, The Knowing-Doing
Gap: How Smart Companies Turn Knowledge Into Action (Boston: Harvard
Business School Press, 2000).
Cargill in Latin
Cargill is one of the world's largest privately-held companies, with
annual revenues exceeding $50 billion and employment of more than 80,000.
Headquartered near Minneapolis, it is restructuring itself in 1999-2000
to place more authority and responsibility in the hands of managers who
run its many agricultural, food, industrial, and financial businesses
around the world.
To prepare its managers in Latin America for the new leadership required,
Cargill gathered 130 top people and spouses from 11 Latin countries together
for a four-day program in Rio de Janeiro. The organizers designed the
October, 1999, event around the company's new "strategic intent" of becoming
the "premier provider of innovative customer solutions in food and agriculture."
The planners knew that past platforms would not work well for this agenda.
Instead of a succession of lecturing executives with powerpoint presentations,
they crafted the program to convey the restructuring message that "this
was not business as usual." When participants arrived, Cargill's Latin
director greeted them with a dozen samba dancers.
To drive home the vital messages, participant groups enacted the main
points. Cargill is cultivating deeper knowledge of its customers, and
one group staged an encounter between a weary manager of McDonalds, one
of Cargill largest customers, and an informed Cargill account manager.
The company is pressing for innovation and change, and here participants
confronted the "ghost of Cargill's past," a lingering spirit that despised
risk. Cargill is fostering collaboration, and for this a team of "five
musketeers" dramatized how its Central America managers had rallied in
the aftermath of the devastating hurricane in Honduras.
To bring out the firm's new strategic intent, a master of ceremonies
played Larry King -complete with wig, glasses, and suspenders - and in
Larry King fashion provocatively interviewed Cargill's CEO, Warren R.
Staley, about the company's direction.
Finally, to reaffirm firm's focus on "leading change together," managers
and spouses divided into competitive teams that performed song and dance
for Cargill's own version of a Carnivale celebration, the legendary festival
Information on Cargill is available at http://www.cargill.com/,
and information on its leadership development programs is available from
its organizers, Rae Lesmeister, Manager of Worldwide Learning at firstname.lastname@example.org
and Barbara Luke, Learning Manager, at email@example.com.
Learning about Leadership and Change
Wharton Executive Education provides customized programs that include
a focus on leadership and change. Building leadership and leading change
are among the subjects developed during one- to two-week programs that
have been offered during the past two years for managers of the following
American Institute for Chartered Property Casualty Underwriters
CGU (British insurance company)
Laporte Specialty Chemical Company
Morgan Stanley Dean Witter
Securities Industry Association
Toyota Motor Corporation
Information on customizing programs is available at http://www.wharton.upenn.edu/execed/eecat/custom.html
and from Scott Koerwer, director of custom programs, at firstname.lastname@example.org
Timothy A. Koogle, The founder and chief executive of Yahoo!, argues that
having a small board of directors is an asset when the company works in
the world of the Internet. "When you're starting a business from scratch,"
he says, "speed is everything. Keeping the board small and concentrated
really helps. You don't have to manage the interrelationships between
Source: Jennifer Reingold, "Dot.Com Boards Are Flouting the Rules:
They're Small and Packed with Insiders," Business Week, December
20, 1999, pp. 130-134.