Chapter Four
Setting the Example

Risk, responsibility, reliability—the three Rs of leadership.

I have always loved the biblical passage, “Whatsoever a man soweth, that shall he also reap.” It describes leadership responsibility clearly and concisely, the precise spot where the buck stops. The lesson is clear: Careful cultivation pays off. Parents and employers who nurture, praise, and when necessary, discipline fairly, experience happier and more successful lives for themselves and those in their charge.

Nothing new, you say? I agree, but we need periodic reminders of this point to help overcome unforeseen or uncontrollable obstacles that cloud consciences and end results.

In the marketplace, we may do everything in our power to reap plentiful profits, but because of good-faith miscalculations, malevolence, negative markets, or acts of nature, a successful yield escapes us. My youthful years spent working on a potato farm taught me how an early frost or heavy rains can adversely affect the harvest no matter how carefully we tended the crop.

Fumbling by our own hand or someone else’s also can ruin things. In spite of inspired vision, the purest of intentions, exemplary dedication, the greatest skills, and the most ethical of conduct, material success is never guaranteed. What is important is that the person in charge takes responsibility for the outcome, be it good, bad, or ugly. Surround yourself with the best people available and then accept responsibility.

As an officer aboard the U.S.S. Calvert in the South China Sea in 1960, I learned this lesson firsthand. My commanding officer, Captain Richard Collum, was a World War II veteran whom I greatly admired. On one occasion, we were to rendezvous the ships of our squadron with naval ships from seven other nations. The Calvert was carrying the admiral or, in naval parlance, the Flag. Every ship followed the lead of the flagship.

It was 4 a.m. and I was the officer of the deck. As a 23-year-old lieutenant (j.g.), I had much to learn in life, yet I alone had been given the great responsibility of directing the formation of the ships during those early morning hours.

At 4:35 a.m., I ordered the helmsman: “Come right to course 335.” The helmsman shouted back confirmation, as is traditional in the navy: “Coming right to course 355.”

I thought all was well, but I had not clearly heard his erroneous response. He thought I had ordered “355” degrees, rather than “335.” As we made the incorrect turn, the remaining ships followed. We were off course by 20 degrees.

Some of the ships realized the error and returned to the proper course. Others did not. The formation was in dangerous disarray. Avoiding collisions caused a massive entanglement—and it was my fault. Fortunately, no damage was done, except to my self-confidence. I felt a sense of ruination and failure. How could one issue an order to the helmsman, have it reported back in error, and not catch the discrepancy? After all, repeating the order is the flashing red light for alerting one to such misunderstandings.

Learning of the debacle, Captain Collum came running to the bridge in his bathrobe and immediately took over, relieving an embarrassed young lieutenant. I was devastated. The 42 ships in our squadron took several hours to realign. Later, when the seas were calm and order had been restored, the captain called me to his cabin.

“Lt. Huntsman,” he said, “you learned a valuable lesson today.”

“No, sir,” I responded, “I felt a great sense of embarrassment and I let down you and my shipmates.”

“To the contrary, lieutenant, now you never again will permit such an act to occur. You will stay on top of every order you ever give. This will be a life-long learning experience for you. I am the captain of the ship. Everything that happens is my responsibility. You may not have caught the helmsman’s mistake, but I am responsible for it. The Navy would hold a court martial for me if any of the ships had collided during that exercise.”

I learned then and there what it means to be a leader. Even though the commanding officer was asleep, my actions were his actions. I also learned another lesson: By reassuring a young lieutenant that he still had the captain’s confidence, he extended hope for the future.

I would repeat that scenario (the captain’s, not the lieutenant’s) many times as head of Huntsman Corp. Reprove faults in a way that keeps intact self-confidence and commitment to do better. As a CEO, I accepted responsibility for our plants, even though some of them were a half a world away. CEOs are charged by their directors to guarantee the good conduct and safety of employees and the company.

The marketplace has many leaders—certainly in title. Leadership in the true sense of the word, I’m afraid, is not so abundant. The top executives of some leading businesses haven’t the slightest idea of the breadth of stakeholder expectations. That’s the result of “leaders” simply being appointed to the position or who find themselves at the top of a corporate chart, next in line for the top job. Real leadership demands character.

Leadership is found in all walks of society: business, political, parental, organized sports, military, religious, media, intellectual, entertainment, academic, the arts, and so forth. In every instance, leadership cannot exist in a vacuum. By definition, it requires others, those who would be led—and seldom are they a docile group. Humans, by nature, don’t manage well.

Effective, respected leadership is maintained through mutual agreement. Leadership demanded is leadership denied. Leadership is not meant to be dominion over others. Rather, it is the composite of characteristics that earns respect, results, and a continued following.

Leadership demands decisiveness, and that is why it is absolutely critical that leaders know the facts. To ensure that critical information and solid advice reaches them, leaders must surround themselves with capable, strong, competent advisors—and then listen.

Unfortunately, many companies and organizations are led by executives who fear bold, candid, and talented subordinates. They seek only solicitous yes-types. They embrace adulation, not leadership. The great industrialist Henry J. Kaiser had no time for spineless messengers. “Bring me bad news,” he demanded of subordinates. “Good news weakens me.”

It also matters that top leaders have experience. In times of crisis, experience counts. Soldiers in combat situations prefer to follow battle-tested veterans rather than fuzzy-faced lieutenants fresh out of ROTC. It’s no different in other walks of life.

Leaders must show affection and concern for those under their responsibility. Those who would render loyalty to a leader want to know they are appreciated. Whether or not they realize it, executives in leadership roles solely for the four Ps—pay, perks, power, and prestige—essentially are on their way out.

Leadership is about taking risks. If your life is free of failure, you aren’t much of a leader. Take no risks, and you risk more than ever. No pain, no gain. Leaders are called on to enter arenas where success isn’t covered by the warranty, where public failure is a real possibility. It’s a scary scenario.

A 2004 survey found that three in five senior executives at Fortune 1,000 companies have no desire to become a CEO. That’s twice the number compared to the first such survey conducted in 2001. Why? The risks.

The chance of making mistakes increases dramatically with leadership, no matter its nature or level, but never having failed is never having led.

To succeed, we must attempt new things. Success rates were never a consideration as youngsters when we tried our first hesitant steps, when we learned to use a toilet, when it came to correctly aiming the spoon at an open mouth, or when we decided it was time to tie our own shoelaces. As children, we understood fumbling comes with beginnings. Temporary failures never got in the way of those grand, early-life ventures.

Mistakes are not the problem. How one identifies and corrects errors, how one turns failure into a new opportunity, and how one learns from those mistakes, determines the quality and durability of leaders. Nixon’s Watergate wasn’t so much a burglary as it was the failure to recognize mistakes, to take responsibility for them, and to apologize accordingly.

Those who prefer jeering and ridiculing on the sidelines when the players err or stumble just don’t get it: Mistakes and miscues often are transformed into meaningful, successful experiences. Keep in mind the old saying: “Good judgment comes from experience, and experience comes from poor judgment.”

I am reminded of a great observation from President Teddy Roosevelt in which he places the participant and the belittler in perspective:

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, and comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows the great enthusiasms, the great devotions; who spends himself in a worthy cause, who at best knows in the end the triumph of high achievement, and who at worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who know neither victory nor defeat.

True leaders ought not to worry greatly about occasional mistakes, but they must vigilantly guard against those things that will make them feel ashamed.

That said, though, repeating the same mistake too many times makes one a partner to the error. Strong leaders accept responsibility for problems and deal with them swiftly and fairly. If the problem is your responsibility, so is the solution.

Risk was a favorite topic around the dinner table as my children were advancing through their elementary and high school years. It prompted a couple of my sons a few years later to immediately jump into the commodities market and lose their shirts. They misinterpreted my advice (although I admit to doing the same thing in my younger years). Leaders clearly have to take measured risks.

Leaders can come in different forms and flavors, but core elements rarely vary: talent, integrity, courage, vision, commitment, empathy, humility, and confidence. The greater these attributes, the stronger the leadership.

Many business executives seek only breathtaking compensation and perks. Legions of politicians desire only to remain in office and lead with their own self-interests in mind. There are religious leaders who bathe in reverential treatment. And we all are familiar with celebrities who are addicted to adoring fans. None of that is leadership. Successful leaders maintain their positions through respect earned the old-fashioned way.

On the wall of my office, there hangs a plaque on which are inscribed the words of legendary CBS newscaster Edward R. Murrow: “Difficulty is the one excuse that history never accepts.”

I made sure my children understood what that meant. Life is difficult and success even more so, but anything worth doing must be challenging. Engaging in activities devoid of difficulty, lounging in risk-free zones, is life without great meaning. Children are perceptive. They learn as much from observation as from participation, so parental leaders especially need to practice what they preach.

In 2001, our company was on the verge of bankruptcy. Our high-yield bonds were trading at 25 cents on the dollar. Our financial and legal teams had brought in bankruptcy specialists from Los Angeles and New York. In their united opinion, bankruptcy was inevitable.

For me, bankruptcy was not an option. It was our name on the front door. Family character was at stake. Virtually all of the 87 lenders we dealt with at the time believed we would crash. Cash was tight. We were in a recession. Our industry was overproducing. Profit margins were dropping. Exports shrunk. Energy costs were spiraling out of control.

In the middle of that perfect storm, we were hit by a rogue wave, the 9/11 catastrophe.

I reminded myself in the midst of this turmoil how grateful I was that I had been chosen to lead the company at this time because I was convinced I could guide our company through this unprecedented siege. This company would not be seized by corporate lawyers, bankers, and highly paid consultants with all the answers. Not on my watch. Not one of them could truly comprehend my notions of character and integrity.

We initiated cost-cutting programs on all levels and at all geographic locations, negotiated an equity position for bondholders, and refinanced our debt with those 87 lenders. We raised additional capital to help pay down that debt. Piece by piece, we put the complex financial mosaic back together. It would have been much easier to have chosen bankruptcy, but two and a half years later, Huntsman Corp. emerged stronger than ever. Wall Street was amazed.

A crisis creates the opportunity to dip deep into the reservoirs of our very being, to rise to levels of confidence, strength, and resolve that otherwise we didn’t think we possessed. Through adversity, we come face to face with who we really are and what really counts.

There is a great “can do” spirit in each of us, ready to be set free. We all have reserves to tap in times of danger. In a crisis, a person’s mind can be brilliant and highly creative. In a crisis, true character is revealed.

Leaders are selected to take the extra steps, to display moral courage, to reach above and beyond, and to make it to the end zone. For, at the end of the day, leaders have to score or it doesn’t count.

In today’s what’s-in-it-for-me environment, humility is vital for good leadership. One must be teachable and recognize the value of others in bringing about positive solutions.

A few years ago, I met with my old friend Jeroen van der Veer, chief executive of Royal Dutch/Shell Group, at his office at The Hague. Jeroen was president of Shell Chemical Company in Houston during the early 1990s. It was clear to me then that he was on his way upward to the most senior position in the world’s largest company. We became trusted friends.

I asked him his thoughts on leadership. “The one common value that most leaders lack today, whether in business, politics, or religion,” he replied, “is humility.” He cited several cases where high-profile individuals fell from exalted positions because they refused to be teachable and humble.

“They knew all the answers and refused to listen to wise and prudent counsel of others. Their prime focus should be to create other leaders, a vision for the long term and a certain modesty about their own capabilities.”

Additionally, leaders need to be candid with those they purport to lead. Sharing good news is easy. When it comes to the more troublesome negative news, be candid and take responsibility. Don’t withhold unpleasant possibilities; don’t pass off bad news to subordinates to deliver. Level with employees about problems in a timely fashion.

When I was in the ninth grade, I secured a job assembling wagons and tricycles at a Payless Drugstore. On Christmas Eve, the store manager presented me with a box of cherry chocolates—and laid me off. I was stunned. The manager never indicated the position was temporary. It left such an awful impression on me that I vowed I would always be upfront with employees when it came to the possibility of layoffs.

Leadership must be genuine, energetic, and engaged. I have served as a director on five major New York Stock Exchange boards in the past 25 years. During that time, I have met few men and women who I felt were really providing help to the companies involved. Too many times, directors regularly make foolish, Wall Street-driven decisions, harmful to the long-term health of the company, because of today’s addiction to short-term gains.

You would think that most corporate directors know better. After all, they are supposed to be bright, successful individuals. Unfortunately, many of today’s boards are little more than social clubs that do a poor job of protecting the long-term interests of stockholders.

Most corporate directors lack expertise in the industry of the company they are directing. Management easily manipulates such directors because the latter’s chief concerns are fees, retirement benefits, and the prestige of being on a corporate board. Typically, they have only a small portion of their net worth invested in the company. They loathe being at odds with the CEO, chairman, or other directors.

Stockholders would be outraged if they knew the lack of focus, expertise, connectivity, and good judgment exhibited by a sizable number of corporate directors. Although these directors occasionally fire the CEO in a huff when a deal doesn’t work out or an ethical gaffe is exposed, they would better meet their obligations if they stopped CEOs from making bad deals or unethical decisions in the first place.

Always cheer for the individual director who breaks ranks to propose a novel route, who offers a different perspective, who raises ethical concerns, or who focuses on the long-term well-being of stockholders.

I have great respect for many CEOs in today’s business world. They are dedicated, gifted, and honest men and women. They appreciate why they were chosen to lead their respective companies. They accept their duties: keep business healthy; deliver a fair profit in the most professional, socially responsible way possible; display moral backbone; and are forthcoming.

When the ship finds itself in trouble, as my earlier story related, all eyes turn to the captain. Subordinates may have been the ones who erred, but it is the captain who must take responsibility for the mistake and for steering the ship out of trouble. And, be assured, it takes more effort correcting a mistake than to make it.

Leadership is a privilege. Those who receive the mantle must also know they can expect an accounting of their stewardships.

It is not uncommon for people to forego higher salaries to join an organization with strong, ethical leadership. Most individuals desire leadership they can admire and respect. They want to be in sync with that brand of leader, and will often parallel their own lives after that person, whether in a corporate, religious, political, parental, teaching, or other setting.

A good example of this is Mitt Romney, former governor of Massachusetts, who returned integrity to the scandal-ridden 2002 Winter Olympics. That classic show of leadership was infectious all the way through the Olympic organization to the thousands of volunteers. As a result, those Games came off as the most successful and problem-free in recent Olympics history.

Conversely, because leaders are watched and emulated, their engagement in unethical or illegal conduct can have a devastating effect on others.

Courage may be the single most important factor in identifying leadership. Individuals may know well what is right and what is wrong but fail to act decisively because they lack the courage their values require.

Leaders—whether inside families, corporations, organizations, or politics—must be prepared to stand against the crowd when their moral values are challenged. They must ignore criticism and taunts if pursuing a right and just route. Leadership is supposed to be daunting. Courage is an absolute requisite. Without it, noted Winston Churchill, other virtues lose their meaning. “Courage is the first of the human qualities because it is a quality which guarantees all the others.”

Some economists argue that business leaders have but a single responsibility: to employ every legal means to increase corporate profits. Commercial enterprise, such economists reason, is amoral by nature. Compete openly and freely in any way you wish so long as you do not engage in deception and fraud (rule-book violations).

Embracing a credo of that nature, without proper emphasis on morality, is an invitation for executives to rationalize ethical corner-cutting and a potential blueprint for impressionable business-school students when they are turned loose on the marketplace. Humility, decency, and social leadership become irrelevant under that sort of a scenario.

The gospel according to these economists implies that if somehow one finds a loophole in a law prohibiting shortcuts across the infield, one does not have to remain on the same oval track with the other racers. One is allowed—no, obligated—to maximize results under the broadest interpretation of the official rules of conduct, however bent, loop-holed, or indecent it may be.

I don’t totally blame the moral briar patch in which we seem to find ourselves on that line of thought. In fact, I agree with these economists to this extent: Business itself can’t have ethics any more than a building can have ethics; only humans can possess ethical standards. Where I differ is the implication that professional morals distract business executives from their fiduciary obligations.

In a technical sense, business itself may well be amoral, but its leadership must be dictated by moral decisions. It takes great courage to follow the moral compass in the face of marketplace pressures, but no challenge alters this fact: Regardless of who is holding the compass, or how they are holding it, or what time of day it happens to be, north is always north, and south is always south.

Following one’s moral compass is for neither the faint of heart nor the cold of feet. Leaders worthy of the name understand and accept that they are chosen every bit as much for their values and courage as for their administrative skills, marketing savvy, and visionary outlook.