By Ken Marlin
From The Marine Corps Way to Win on Wall Street: 11 Key Principles from the Battlefield to the Boardroom
Early in my days as a Marine Corps officer, we had a series of leadership lessons, each of which began with a film showing some situation that led to an unresolved crisis and ended with the phrase “What now, Lieutenant?” The phrase became a bit of an inside joke when confronted with a challenging situation—even when I was no longer a lieutenant. I think of the phrase still when I’m confronted with a complex situation that requires clear, calm, quick resolution – with limited information. You can’t vacillate; you can’t form a committee. If there is time, you can get input from others. But at some point, you must decide. That way of thinking informs the way Marine officers carry out their daily routines. It’s ingrained. And it makes me nuts when business leaders can’t make decisions – or won’t.
Learning how to make hard calls
When I was fresh out of the Marines and working in the corporate world, I observed a series of managers, who would seemingly go to any length to avoid making hard calls. I remember one smart, hard-working and extremely analytical executive who wouldn’t take a stand on how to deal with a manager reporting to him who clearly was not competent. He knew what the various options were. He just couldn’t pick one.
In that case, he brought the issue to HR for a conference and then to more senior managers. He wouldn’t even make a clear recommendation. It made me crazy. There was another more senior manager—he reported directly to the chairman—waffling endlessly over a fairly straightforward recommendation (not even a decision) on whether D&B should hire a senior marketing executive. Like the other manager, he wanted a committee to decide.
I now advise CEOs and boards on what to do next in order to achieve their strategic goals. In that context, I have seen good managers and bad ones. Many can be decisive; while others prevaricate endlessly. It’s the difference between what some people call managing and Marines call leading.
Fixnetix and the New York Stock Exchange (NYSE)
A few years ago, I was advising the New York Stock Exchange (NYSE) as they investigated buying a fast-growing European technology business called Fixnetix. I liked the sector in which Fixnetix operated and the services they offered— running portions of the back office for securities trading firms. Also, I could see how that the two companies’ products complemented each other. This could be a straight merger of like businesses—taking out a competitor and achieving substantial cost synergies. Strategically it felt like a no-brainer. But I didn’t like the asking price, it was way too high.
Our principal client on the deal was Stanley Young, CEO of NYSE Technologies, the group that was responsible for a wide range of technology then owned by the NYSE and used by many big securities traders. Stanley is a smart, outgoing Englishman, and he got along well with Fixnetix’s CEO, Hugh Hughes. Stanley also is no confrontation avoider. He coveted Fixnetix’s product line and customer base, and Hugh was ready to sell.
Clients retain me to give them my considered advice. While I cannot force them to accept that advice, they can’t stop me from giving it—unvarnished. I told Stanley of my concerns and recommended that he not buy Fixnetix at this price. Largely, he agreed but he and Hugh wanted a deal and Hugh’s financial backers would not support one at a lower price.
Suggesting the ultimate compromise
Someone (not me) then suggested a compromise: What if NYSE were to buy only 25% of Fixnetix? Stanley liked the idea. By buying a minority stake, he reasoned, NYSE would have access to the fast-growing business that they wanted to enter, without committing to the high price. If everything worked out, NYSE could buy more of the firm later.
Hugh liked the idea too. The minority deal would provide him with much-needed cash and the imprimatur of the NYSE—and he could continue to operate Fixnetix independently. Just about everyone involved liked the idea—except for me.
As with other good CEOs Stanley was willing to take a stand. I respect that. In his view, the price for 25 percent might seem high now, but if the company did perform, it would later seem like a bargain. And if he was wrong, the NYSE could afford the mistake. “What now, Lieutenant?”
I had made clear that I didn’t agree. I had taken my stands—twice. But now it was time to execute. Buying a piece of Fixnetix was not illegal, immoral, or unethical, and the client was the commanding officer. So after voicing my views, I saluted and worked hard to get my client the best deal we could—at the best price and with best protections possible. That’s my job, and we got it done. That too is the Marine Corps way.
KEN MARLIN is a Marine-turned-corporate executive. Between 1970 and 1981, he rose from the enlisted ranks to become a Marine captain and infantry commander. He’s spent his thirty-plus years on Wall Street applying Marine Corps principles to business. The founder and managing partner of the award-winning investment bank Marlin & Associates, he is a member of the Market Data Hall of Fame, twice named one of Institutional Investor’s “Tech 50.”
Tags: Ken Marlin, military strategy, Wall Street