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If These Famous World Leaders Were In Finance

April 16 2009| Filed Under » , , , , , , ,
The world of finance can sometimes resemble a war zone; it takes a special set of skills to successfully negotiate the chaos, pressure and personalities. So, when you think about it, the most renowned world leaders would probably fare well in this environment. Let's look at past world leaders, their strengths and weaknesses and how they would measure up if they were to work in finance today. Could success on the battlefield or in the White House translate into success in the boardroom? Read on to take a look at where these famous personalities might have found a niche in the corporate world.

Dwight D. Eisenhower - Director of Financial Planning and Analysis
Eisenhower came up through the Army ranks as a specialist in logistics and supply, authoring mobilization plans for the military prior to the outbreak of World War II. During the war, Eisenhower impressed military colleagues and U.S. and international political leaders with his leadership and diplomatic abilities while leading the military effort composed of different nations and often difficult personalities (such as General George S. Patton). A huge military campaign became a coherent one, increasing the likelihood of success.

Financial planning and analysis (FP&A) directors often spend many years in a financial-planning capacity, and in the course of carrying out these responsibilities, become highly acquainted with the various businesses of the company. They are often next in line for the job of chief financial officer (CFO). If they do assume this executive role, they will have to develop relationships with Wall Street - just as Eisenhower had to work with and coordinate America's wartime efforts with the political and military leaders of its allied nations. (Learn more about the roles of a company's management team in The Basics Of Corporate Structure.)

FP&A involves extensive amounts of historical analysis, but also forward-looking assessments of the organization and the industry in which that entity competes. Several high-level and smaller-scale drivers and variables are reviewed to help management with short-term and long-term financial and operational forecasts for the business. If the company is large enough, the FP&A director may be tasked to coordinate reporting functions with the various finance managers or controllers of the different divisions within the company - if he has the sufficient skill and respect. Otherwise, the chief financial officer may have to do it himself (and the director's time in that role may be limited as the CFO searches for an appropriate replacement). (Learn more about industry evaluation in the Industry Handbook feature.)

Alexander The Great - Director of Mergers & Acquisitions / Corporate Development
Alexander the Great led Macedonia into one of history's largest campaigns of conquest. Tutored and mentored by Aristotle, Alexander integrated many foreign armies into the Macedonian army as their drive for expansion continued. The Macedonian empire extended from southern Europe, through portions of the Middle East, all the way to western and northern India. While integration of conquered kingdoms was practiced, Alexander also displayed military viciousness in executing residents of local towns and forts that resisted his army. Some historians consider him more of a general than a statesman, although Alexander also made large attempts at cultural and social integration of East and West by encouraging intermarriage and the adoption of foreign customers.

Mergers and acquisitions (M&A) directors, along with senior members of management within a company, analyze several areas:
  • Capabilities, strengths and improvement areas for the organization
  • The strategic and competitive landscape
  • Key product and service providers within the industry
  • The capital markets
A company may offer core products beneficial to its customers, but may not manufacture accessories or replacement parts critical for the smooth operation of its clients. Or the company may have strong branding and quality products, but may have a weak sales and marketing team. If the company has sufficient cash and robust prospects - and debt is available in the capital markets - M&A directors can champion a merger with another positioned company and/or acquisitions of smaller companies to improve the organization. The company will have paid for, and secured, benefits that allow it to more aggressively compete against its competitors. (Read our Mergers and Acquisitions tutorial to learn more about the corporate-restructuring process.)

In military terms, if an army is comprised mostly of infantry and archers, and that same army conquers a competing military outfit (and its kingdom) that uses ballista (artillery-like weaponry), triremes (small naval fighting vessels) and cavalry (horses), the added capabilities will boost the overall strength of the victorious army as these new weaponries are integrated into the infantry and archer units. Alexander the Great combined two important traits for an M&A director: the ability to conquer and overtake other entities and the softer skill of promoting integration between the acquirer and the acquired.

Franklin Delano Roosevelt - Managing Director - Private Equity
An educated man from a privileged background, Franklin Roosevelt attended HarvardUniversity and became president of The Harvard Crimson daily newspaper. He secured work experience as a corporate lawyer on Wall Street, as New York state senator, as assistant secretary of the Navy and as New York governor. When Roosevelt became president in 1933, he championed the New Deal, a series of programs that aimed to tackle America's Great Depression (where nearly one-fifth of the labor force was unemployed) and social instability. (To learn more about the New Deal championed by Roosevelt, be sure to read What Caused The Great Depression?)

Among the massive initiatives included in the New Deal were the following:
  • Creation of the Civilian Conservation Corps - 250,000 unemployed men were hired to work on rural projects
  • New financing availability for farmers, railroads and the industrial base
  • Creation of the Securities and Exchange Commission to regulate Wall Street
  • Creation of the Tennessee Valley Authority to build dams, power stations and other infrastructure
  • Establishment of the Works Progress Administration, which employed more than 2 million workers
  • Establishment of Social Security, which aimed to provide economic security for the elderly, poor and sick (Read more about this federal initiative in Introduction To Social Security.)
Partners and managing directors at private equity firms raise pools of investment capital from high-net-worth and institutional investors, which is used to acquire and invest in companies. Private equity partners supervise the engineering effort to improve the companies (and increase their value) while their fund's capital is invested in them. Managing directors, in partnership with the portfolio companies' management teams, use a variety of strategies and approaches to increase the value of their organization. Similarly, Roosevelt demonstrated the skills necessary to implement wholesale changes to improve the financial lot of the country.

When a private equity firm acquires a company, several initiatives can follow suit:
  • Managers can institutionalize process improvements across the different divisions and within the corporate function.
  • The company can acquire related companies to enhance the parent organization's capabilities as well as product and service offerings.
  • Stronger managers and employees are put in place to run the business better.
When portfolio companies are sold, investors earn a return on their investment, and the private equity firm earns a hefty payday. For Roosevelt, his investments in the U.S. economy and infrastructure helped steer the country out of depression. (Read Private Equity A Trendsetter For Stocks to learn how this funding source is one of the forces that drives capital market valuations.)

Henry Kissinger - Investor Relations
Henry Kissinger served as national security advisor and secretary of state for President Richard Nixon and continued as secretary of state for President Gerald Ford. Kissinger played a dominant role in U.S. foreign policy, including handling delicate (and often highly tense) relations with China, the Soviet Union, Vietnam, India, Pakistan, the Middle East, Latin America and Africa. Kissinger led the policy of détente with the USSR, which aimed to relax tensions between the rivals. Kissinger also helped to form closer ties between China and the United States (to put pressure on the Soviets), and negotiated a settlement ending the war in Vietnam.

A director of investor relations is the key company representative that interacts with the organization's shareholders, Wall Street, the financial community and securities regulators. The responsibilities held in this role integrate finance, marketing, corporate communications and compliance, so this position is generally held as an integrated member of the management team. The management of public companies holds periodic earnings calls with the financial community each quarter to discuss the performance of the company. Investor relations serves as the key contact with the shareholder and financial community as well as securities regulators, and facilitates the informational exchanges between the company and outside parties. A master negotiator like Kissinger would surely be an asset in this position.

The director of investor relations allows the company to provide a unified and common message to external and investor constituents regarding various issues. If you have several messengers, sooner or later you will see conflicting answers and incoherent responses. Consolidating corporate communications within a single function is an effective and efficient way of providing important information when a lot is at stake. (Investor relations is often much more than just a website and taping of conference calls. Read The Flow Of Company Information to learn more about this important role.)

Conclusion
While it's anyone's guess how the world would be different if Alexander the Great had traded world domination for corporate takeovers, the financial landscape would certainly be interesting. Aspiring financial gurus could take their cue from these historical leaders and apply principles of political or military success to their chosen careers. (To learn more about career options in finance, be sure to read Financial Career Options For Professionals.)
by

Marv Dumon

Marv Dumon
Marv Dumon serves as Business and Finance Examiner and International Sports Examiner for Examiner.com. He previously served as a mergers and acquisitions advisor for a middle-market financial services firm. Dumon's background includes experience in consulting, finance and operations. He received BA, BBA, and MPA degrees from The University of Texas at Austin.
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