Conversation with author Harlan Steinbaum, former chair of Express Scripts
This article first appeared in the St. Louis Beacon, Aug. 3, 2011 - Former Express Scripts chairman Harlan Steinbaum believes he knows a smart and ethical CEO when he meets one, and he says he's talked to dozens of them -- including some of the biggest business names in St. Louis -- for his book "Tough Calls from the Corner Office: Top Business Leaders Reveal Their Career-Defining Moments" ($25.99, Harper Business).
Steinbaum includes interviews with 39 nationally known entrepreneurs and CEOs who share a range of personal career lessons and wisdom -- from ESPN founder Bill Rasmussen and Monty Hall of "Let's Make a Deal" fame to James Nixon of Whitman's Chocolates and Frederic Salerno of Verizon.
Prominent names from the Gateway City include former ambassador to Hungary George Herbert Walker III, architect Gyo Obata, banker Clarence Barksdale and John and Sanford McDonnell of McDonnell Douglas. Enterprise Rent-a-Car's Jack Taylor talks about partnerships and the importance of delegating. Maxine Clark, founder of Build-A-Bear Workshop, recalls turning her imagination to teddy bears when she found the timing wasn't right for her at Payless Shoes. Restaurateur Danny Meyer advises, "Say 'thank you,' 'I was wrong,' and 'I apologize' several times each day.''
Steinbaum said the interviews went well because, as a former CEO, he could relate to his subjects and they could relate to him.
"So many of our interviews went down wonderful roads and streets and winding places because we had a lot in common to talk about,'' he said. "Nothing they said surprised me, but I learned from every single one of them. It was just a fabulous experience for me, and I think the CEOs enjoyed the interviews."
Steinbaum, 79, can hold his own in any discussion about business success and the need to keep growing and evolving. His resume includes leading the old Medicare-Glaser drug store chain and serving as the first chairman of the board of Express Scripts, now a Fortune 500 pharmacy benefits management company.
He believes that most CEOS can pinpoint a defining moment that made the difference in their careers. He writes about his own turning point -- when he decided to buy back his drug store chain after it was acquired by Pet Inc. That decision eventually led to the founding of Express Scripts.
Steinbaum said he dedicated the book to his wife JoAnn Glaser Steinbaum who suggested that he write about his experiences. He began working on the book after her death in 2007.
"I felt we were partners in this whole process because she encouraged me to do it," he said.
Steinbaum did all of the interviews, either in person or by phone, part of a four-year process that started with learning how to write a book, finding an agent and publisher. He enlisted the aid of two co-writers: his son Michael Steinbaum and Dave Conti.
"I'm not a professional writer. I'm a businessman who decided to write a book,'' Steinbaum said. "I felt that I had a story to tell, and I felt that after talking to some of the CEOs I knew that they had stories the public should know.''
Steinbaum knew some of his subjects; others were recommended to him by friends and acquaintances who knew about his project. Several interviews didn't make his cut though he doesn't name names.
Steinbaum, who has seven grandchildren, said he particularly enjoys discussing his book on college campuses.
"I've found that young people get so stimulated by hearing about the successes of various CEOs and various industries and it's really inspirational to them,'' he said. "I really enjoy talking to young people because they're so enthusiastic and they want to learn."
Here are excerpts from a recent interview:
Your book stresses the positive traits of business leaders during what has been a rough time for the images of many corporations -- and their CEOs.
Steinbaum: Business sometimes gets a bum rap because everyone's couched in the same cloth. There are a lot of very honest businesspeople out there. Every single one of the people in my book I felt was ethical. They were strong planners. They knew themselves. They were able to manage risk. They never stopped learning and they took responsibility for their actions.
I was pleasantly surprised by the traits that all of these people have because that reinforces my feeling that most businesspeople are strong and good leaders.
A number of them had reverses, but they didn't try to blame it on anybody.
I've always told the people in my company that as long as you're standing you're never defeated. You've got to get up off the floor and stay standing.
Did your own background smooth the way with these CEOs?
Steinbaum: I could indentify with them, and I could relate to them. And they could relate to me. I'm not sure they would've opened up to someone they didn't relate to that maybe didn't know a lot about business. We could tell stories to each other about things that had happened: You know that happened to me, and here is what I did, and he or she said, 'Well, here's what I did.'
Ronald Shaich of Panera Bread was probably the most unusual CEO I interviewed because he looks at his business like it's a piece of sculpture and it's a live breathing thing to him. He said that if you just look at a piece of sculpture straight on you see one thing, when you get around to the side and back you see something else. You have to look at it from all directions before you can figure out what a business is all about.
He's a fascinating guy. His said his defining moment was not in making the decision to sell some divisions to focus on Panera. That was an intellectual decision. The defining moment emotionally was living through the noise and clutter of people complaining about him doing this -- and being able to withstand it. That was the emotional defining moment in his career.
The toughest calls in your book seem to involve major repositioning or the decision to change a company's culture.
Steinbaum: A lot of companies reinvent themselves. "Self-Renewal'' is a good book by John Gardner. Sandy McDonnell refers to it -- an individual is born, grows up and eventually passes away. But a corporation doesn't have to do that if they keep on top of things. And if they keep moving forward they can stay in business into perpetuity. But they do have to be visionaries.
Some say, 'I don't have time to think about the future. I don't have time to plan.' You better make time. The changes in technology, the changes in globalization, competitive change, legislative and legal change -- all these things impact a company and industry. You have to be ahead of the curve.
Some people are good visionaries and can do it and those that can't are going to fall by the wayside -- or their companies are.
How did you reach out to these CEOs?
Steinbaum: I called them. Some I called cold. Sometimes it worked and sometimes it didn't.
I called [billionaire investor and philanthropist] Warren Buffett's office and got through to his administrative assistant. She said he normally doesn't do this, but did you know Warren has a partner by the name of Charlie Munger? I said I knew that. She said, 'He's probably someone you'd want to talk to. I'm going to give you his personal number.' I said great.
I got through to his administrative assistant. Told her about my book and my background. She said, 'Let me talk to him, sounds interesting.' A couple of weeks went by and I called her. She said, 'Mr. Steinbaum, he's been traveling, but he's in the office today. Let me talk to him and I promise you he'll get back to you. Do you have a fax number?' I gave it to her. She said give me your email address again.
About 20 minutes later, my fax machine started to work, and I thought my goodness I'm hearing from Charlie Munger. And I could see his name and I took the sheet of paper out and it just had a big NO on it. He said no. That was my attempt to interview Charlie Munger.
You note that you enjoy speaking with college students. Would your advice be any different to them in light of today's tough business climate?
Steinbaum: We have to have the same basic characteristics, but you have to be a really strong visionary today. Try to read the future in terms of what are the industries where there is a need and how can I get involved in those industries to satisfy those needs. You've got to be honest and dedicated. And so if you're hard working and honest and dedicated and you're a visionary then I think there's still a heckuva lot of opportunity. And you have to be well-educated today.
How much of success is due to luck?
Steinbaum: There's luck. Two people can make the same decision. One can make it in one set of circumstances -- during times of growth and money's loose. Another can make it when, let's say, a recession is starting and he runs into a very tough marketing situation or the banks don't lighten up on their ability to loan. They're both qualified, but one has one result and the other has another result.
I've always said I think I was lucky in my career because a lot of things broke my way, but on the other hand you have to recognize them and take advantage of a situation or an opportunity that occurs. Some people will and some won't. Some will talk through the door and others won't. I think some perceptive CEOs in my book recognized an opportunity and seized on it and moved forward.
Your book was written during the height of the economic downturn when there has been much criticism of CEO compensation packages.
Steinbaum: Some of the salaries that are being paid are ridiculous. Some CEOs are paid more money than they should be based on the economics of the company. I just don't agree with a lot of the compensations that are being paid. I've always felt that it's fine to earn a fair wage, but you also want your people to earn a fair wage, too.
When you look at what's happened with this recent turmoil -- look at the bonuses and the earnings that some of these guys at these investment banking houses are making and some of these big banks. And here's a guy who's out of a job and he can't relate to that. And that other guy making that money isn't relating to this guy, either.
As the former chairman of Express Scripts, what do you think of the corporation's recent decision to acquire Medco Health Solutions?
Steinbaum: I think it's a great move for Express Scripts. I think they're going to have some antitrust issues to face. I don't know how this will all shake out, but they're going to command a really big share of the market. They'll probably have over 30 percent of it -- which gives them some tremendous negotiating power when it comes to the pharmaceutical companies and/or the drug store chains and independents. From what I've read, Walgreens and a number of the drug chains, as well as the pharmaceutical companies, are in opposition. It's going to be interesting to see how this all shakes out. Because the people at Express Scripts are very bright, I would think they would have thought all this out before announcing this acquisition because they're acquiring a company that's actually bigger than they are.
Did you ever envision this much growth potential for Express Scripts?
Steinbaum: I remember when we started Express Scripts. We had one employee and I remember interviewing him over at the Sheraton Hotel in Westport. And then I look at what's happened to that company.
No, I didn't envision this. I knew the concept was great. I knew there was a real opportunity to grow it. I felt the time was now for it to blossom, but no, I did not envision what's happened. They've got great leadership over there and you talk about visionaries -- they were able to conceptualize the future and do a lot of things that are now happening.