- By Rene A. Henry
Eli Broad is one of the most remarkable individuals I have known. Working closely with him as a client for 10 years was like receiving an MBA education.
Broad graduated from Michigan State University when he was 20 years old and became the youngest certified public accountant in Michigan history. He founded two Fortune 500 companies from scratch and was successful in four careers – accounting, homebuilding, retirement savings and philanthropy. An investment of $1,000 in 1961 when he took Kaufman & Broad public would be worth $3.4 million today.
Eli Broad and his wife Edythe have committed to give 75 percent of their wealth to philanthropy during or after their lifetimes. The $6 billion he earned in business is being used to reform public education, assemble two world-class art collections, fund biomedical research and revitalize downtown Los Angeles.
In his book, “The Art of Being Unreasonable” (John Wiley & Sons, Inc., 192 pages, $24.95) Broad — pronounced to rhyme with road — shares with his readers how being unreasonable has been his key to his success. He believes applying unreasonable thinking can help achieve goals that others may say are out of reach.
“Most successful businesses have to begin by bucking conventional wisdom,” Broad writes. “Invention and innovation don’t happen without it.” That’s exactly how his unconventional wisdom turned Kaufman and Broad (now KB Homes) from a homebuilder into a manufacturer and Sun Life Insurance Company of America (now SunAmerica) from a life insurer into a bank. He bucked conventional wisdom when he bought Sun Life in 1971 for $52 million which he then sold for $18 billion in 1998.
I first met Eli Broad in 1968 when I was vice president and director of the Los Angeles office of the public relations firm Daniel J. Edelman. He brought together a coalition of major homebuilders and community developers and retained our firm to represent what became the Council of Housing Producers. The association grew from five to 11 of the country’s largest multinational homebuilding firms. Several, like Kaufman & Broad, were publicly held; others were owned by publicly-held companies; and several were private companies.
While working closely with Broad to manage, promote and direct the activities of the Council I learned how to be successful by being unreasonable. With his leadership, I applied most of his management principles to the Council. The association hosted for the first time conferences with representatives from all aspects of the housing, mortgage and lending industries, government agencies, and Wall Street.
During this era securities analysts and those from the financial community would meet only with publicly held companies. We organized invitational events in Chicago, Dallas, Houston and Los Angeles that all had record attendance. Finally when the New York Society of Security Analysts waived its rules and the CEOs of the 11 member companies made a luncheon presentation it was a sellout — a standing room only record attendance event.
Other achievements by the Council established new accounting for profit principles for the homebuilding industry; created a homeowners warranty program for the 11 member companies; and resulted in legislation that allowed for pension fund investments in residential mortgage securities that created a viable secondary mortgage market and helped stabilize annual housing production.
Here are a few of Broad’s “unreasonable” keys to success:
> “The inability to delegate is one of the biggest problems I see with managers at all levels. The trick to delegating is to make sure your employees share your priorities. Bosses should make clear what qualifies as an emergency. If you’re afraid to delegate, or if you delegate incorrectly, it’s not your employees’ fault – it’s yours.”
> “The earlier you start taking risks, the more comfortable you will become with them.” Broad always asks two questions: “What do I have to lose? What’s the worst that can happen?”
> “The most effective way to motivate people is to accomplish big things together. When you set the same unreasonable goals for your employees that you do for yourself, your expectation becomes a gesture of respect. Fear is not a motivator.”
> “’Why not?’ is a powerful question and something you should ask every day.”
> “Prioritizing is something that should be done constantly. Be disciplined and be flexible since circumstances change during the day. Being unreasonable will help set priorities.”
He defines risk as “when you try something new or different, it may or may not work.”
He also has chapters on negotiation, leverage, motivation, and marketing, and — throughout the book — emphasizes the importance of research and doing homework.
As the author of two books on crisis management and communications, I was pleased to see that in one chapter he used a quote by Chicago Mayor Rahm Emanuel: “Never allow a crisis to go to waste. They are opportunities to do big things.”
When any of my former employees, colleagues and friends complain about my being unreasonable, I now can point the finger to Eli Broad.
This book is one of the very best business books I have read. It is a quick read, filled with excellent ideas, clear, concise and to the point. I recommend it for anyone in management in any field and young people who dream one day of being a manager.
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Reviewer Rene A. Henry, born in Charleston, WV, lives in Seattle and is the author of eight books and writes on a variety of subjects, many of which are posted on his website at www.renehenry.com. John Wiley & Sons published his book on land use and investment and its Wiley-Blackwell division published his book on marketing public relations.