From Predators to Icons

From Predators to Icons J&sfra '0 ! 1 From Predators to Icons Exposing the Myth of the Business Hero MICHEL VILLETTE AND CATHERINE VUILLERMOT Translated from the French by George Holoch Foreword by John R. Kimberly ILR Press An Imprint of Cornell University Press Ithaca and London Originally published under the title Portrait de Vhomme d'affaires en predateur, by Michel Villette and Catherine Vuiller mot. © Editions LA DECOUVERTE, Paris, France, 2005. Ouvrage publie avec le concours du Ministere francais de la Culture-Centre national du livre. (This work is published with the help of the French Ministry of Culture, National Center of the Book.) English translation copyright © 2009 by Cornell University All rights reserved. Except for brief quotations in a review, this book, or parts thereof, must not be reproduced in any form with out permission in writing from the publisher. For information, address Cornell University Press, Sage House, 512 East State Street, Ithaca, New York 14850. First published 2009 by Cornell University Press First printing, Cornell Paperbacks, 2009 Printed in the United States of America Library of Congress Cataloging-in-Publication Data Villette, Michel. [Portrait de rhomme d'affaires en predateur. English] From predators to icons : exposing the myth of the business hero / Michel Villette and Catherine Vuillermot; translated from the French by George Holoch; foreword by John R. Kimberly. p. cm. Includes bibliographical references. ISBN 978-0-8014-4700-6 (cloth : alk. paper) — ISBN 978-0-8014-7566-5 (pbk.: alk. paper) 1. Capitalists and financiers. 2. Businessmen. 3. Success in business. 4. Capitalists and financiers—Biography. 5. Businessmen—Biography. 6. Success in business—Case studies. I. Vuillermot, Catherine. II. Title. HG173.3.V5413 2009 338—dc22 2009019899 Cornell University Press strives to use environmentally respon sible suppliers and materials to the fullest extent possible in the publishing of its books. Such materials include vegetable-based, low-VOC inks and acid-free papers that are recycled, totally chlorine-free, or partly composed of nonwood fibers. For further information, visit our website at www.cornellpress.cornell.edu. Cloth printing 10 987654321 Paperback printing 10 987654321 To Pascale, Edith, and our friend Ross Koppel % MM o w • i >' 1 ..ft; *i ."*• 1 'HI Contents Foreword by John R. Kimberly ix Preface xiii Acknowledgments xv Introduction 1 Interlude: Jean-Paul Bucher (Flo group) 12 Part I. The Businessman, an Enigmatic Figure 1. The Businessman in the Scholarly Tradition 17 Interlude: Sam Walton (Wal-Mart) and the Fournier and Defforey Families (Carrefour) 30 2. Biographies and Numbers to Aid Understanding 40 Interlude: Frangois Pinault (Pinault-Printemps-Redoute) and Vincent Bollore (Bollore Technologie) 61 Part II. How (Good) Deals Are Done 3. Becoming a Businessman 71 Interlude: Ingvar Kamprad (IKEA) and Jim Clark (Silicon Graphics and Netscape) 92 4. The Good Deal: Key Moment in the Accumulation of Capital 101 Interlude: Marcel Dassault (Dassault Aviation) 121 iMWrn VIII CONTENTS Part III. What about Morality? 5. Charm, Promises, and Threats: The Good Deal as 131 a Political Practice 146 Interlude: Bernard Arnault (LVMH) 159 6. On the Virtue of Businessmen 175 Coda: Claude Bebear (AXA) 191 Conclusion Appendix: Principal Results of the Quantitative Investigation 197 219 Notes 233 Bibliography Foreword The English language translation of Michel Villette and Catherine Vuillermot's book from the original French comes at a remarkably ap propriate time in the history of business in the United States. It is a time when the need for effective leadership has never been greater, but when faith in underlying institutions has been deeply shaken. It is a time of pro found economic crisis the depth and breadth of which have yet to be fully known. It is a time when leadership in the world of business in general and finance in particular has been found seriously wanting, and when public questioning of the very roots of capitalism and the capitalist system has become both louder and more pointed. As we move from the scandals at Enron, Worldcom, Tyco, and Imclone to the more recent problems of Lehman, Merrill Lynch, Wachovia, Washington Mutual, and AIG we are led to wonder about the potentially volatile mix of opportunity, personal judgment, and individual and collective accountability that constitutes the raw material for both positive economic growth and ruthless, self-serving exploitation. From Predators to Icons takes us on a provocative and nuanced journey through the business practices of a number of individuals and the compa nies they built and shows how they navigated through this volatile mix to achieve extraordinary success in their undertakings. In an era in which we are obsessed with rankings of everything from colleges and universities to hospitals to tennis players, we tend to focus on the end result—who is number 1?—and much less on the means: how did they get there? In an era when we are fascinated by stories of leaders as heroes and by the lives X FOREWORD of the rich and famous, we tend to let the gloss of the material trappings of success blind us to questions of their origins. In the work they report here, Villette and Vuillermot use the lens of so cial science as a vehicle for unpacking the roots of extraordinary success in business, for analyzing how success was achieved. They have accumulated evidence from a variety of sources, including the myriad biographies— authorized and unauthorized—of business icons, to build their compara tive analysis of the practices of thirty-two businessmen from Europe and North America, of how their wealth was built, and of the common threads that characterize the roots of success across geographies, across industries, and across time. Their approach is highly original, and the data they as semble are wide-ranging. They are well aware of both the promise and the limitations of their data and are careful to discuss both. Ultimately, it is up to each of us to judge the credibility of both the empirical foundations on which their analysis is built and the conclusions they reach, the messages they send. But theirs is an impressive undertaking and needs to be taken seriously. Although the original French version was published in 2005, well before the current malaise, its messages are certainly relevant today and will con tinue to be relevant tomorrow and beyond. Those messages are sometimes surprising and always illurninating. First among these is that "predation" is the common denominator of business success. By predation they mean the ability of the successful businessman to identify opportunities created by market imperfections and the subsequent resolve to exploit them fully and, yes, ruthlessly. This is what Villette and Vuillermot call construct ing the "good deal," a sort of Darwinian scenario in which the success of some is built on the backs of those who are less agile or who simply do not see opportunity in the same way. In parallel, they note that the businessman achieves the status of hero when he, like the robber barons before him, begins to use a portion of the wealth he has built in the service of "just causes," when he engages in philanthropic activities and when judgments about the origins of that wealth are at least temporarily sus pended. Perhaps most surprising is their conclusion that the accumulation of capital appears to be a precursor to innovation rather than the reverse, as is commonly believed. Also surprising is their finding that fortunes of the businessmen whose practices they studied were built on an apprecia tion for the importance of minimizing risk rather than the more popular, FOREWORD XI stereotypical view that all-or-nothing, bet the company risks (that pay off) underpin success. Of course, not all predation leads ultimately to the emergence of heroes and to social legitimacy; far from it. The case of Bernie Madoff should make us stop and think. In some ways, Madoff was the ultimate predator, exploiting a deep understanding of human nature and its foibles to create a business enterprise that was successful by most conventional measures. He recognized the opportunity born of the tendency for individuals to suppress possible misgivings in the face of impressive financial returns and to rely on trust rather than rigorous due diligence when making in vestment decisions (if Spielberg is investing, it must be a good deal). He exploited these imperfections—imperfections at both the individual and the systemic level—vigorously. Along the way, he accumulated substan tial personal wealth, the material trappings of success, and an emerging reputation for generosity toward just causes. Yet as this far-reaching Ponzi scheme unraveled and the extent of damage to individual and organiza tional investors became clear, the ultimate predator fell from adulation to disgrace. Madoff moved from an outlier in Malcolm Glad well's sense to a social outlier, pilloried in the press, vilified by those whom he had cheated, and ostracized in the social world around him. As you will see in the pages ahead, this book is an engaging read. It mixes sociological theory with carefully written cases of business success. By suggesting that accumulation of capital typically precedes innovation, it gives us perhaps another way of looking at what Joseph Schumpeter famously saw as waves of destruction triggered by technological innova tion. And perhaps most of all, it raises important questions that do not have easy answers and that go to the heart of the role of business in civil society. How do we balance predation and social welfare, business initia tive that can result in economic growth and unbridled exploitation of ''op portunity" in service of personal gain, or the need for innovation with the need for stability? Villette and Vuillermot do not have answers, but they frame the questions, both explicitly and implicitly, in a most interesting and provocative way.

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