Reflections of a remarkable CEO

My friend Paul Anderson

Paul Anderson is a good writer, by which I mean his penmanship, as you can see here:

When Paul interrupted his retirement and returned to Duke Energy as its CEO and Chairman in 2003, after earlier spending twenty years at the company and its predecessors, he was faced with saving a Fortune 200 company that was in danger of financial collapse.

Over the course of a two-hour interview recently, Paul shared with me how he went about trying to revive the company. His priority was convincing the ratings services not to downgrade Duke, as any lowering of its rating would lead to a cascade of financial penalties that could push the company into bankruptcy. He described his task as needing to restore "faith" (his word) in Duke's new management, and he asked the ratings services for six months to stabilize the situation,

As part of that faith restoration Paul felt that he needed to show the Duke stakeholders that he was seriously and personally committed to turning the company around. He insisted on hand-writing the cover for Duke's 2003 Annual Report. As Paul put it, "he wasn't going to let the PR Department sanitize the situation."

Paul took that job with zero salary, but a stock package tied to the company's financial performance under his watch. There are two ways to read that: either, here's a wealthy businessman who hungers after one last financial killing; or here's someone who wants to help a company he spent decades working at, that's now in peril.

Paul also hand-wrote the cover to Duke's 2004 Annual Report, listing what the company had accomplished that year, as well as the problems that remained unsolved. Shareholder return was up 30%, versus 11% for the S&P, but Duke had made little improvement in its safety record, and only some progress in restoring credibility with key stakeholders.

When he left Duke three years later, the company was in quite good shape. The stock had more than doubled during Paul's tenure.

In his forty-year-career in business, starting after he graduated from Stanford Business School in 1969, Paul was also the CEO of BHP Billiton, the largest natural resources company in the world, based in Australia.

I was interested in Paul's reflections on how he managed these large enterprises. BHP Billiton today has 80,000 employees, and Duke about 27,000. BHP has a market cap of around $150 billion; Duke's is $75 billion.

In his first few days as CEO, Paul gave some fifty managers in the company a two-page questionnaire. Page One asked: What do you and your department do, and what do you want to do? Will you need cash in the next year to accomplish your goals, and if so, how much? Page Two had a single question: If you were CEO, what would you do? After they turned in their answers, Paul scheduled one-on-one interviews with each of them, for however long it took to get through their answers. Each meeting lasted at least an hour.

Paul went on to tell me that every important decision he made---every one, he emphasized----was based on what he learned from those meetings. "There are very few original ideas in the world, and I've had none of them," he said.

So, I asked, "Paul, if a CEO is just a grand collator of his managers' ideas, the facilitator-in-chief, why are they paid so extravagantly? Surely, in our future AI world, the CEO-as-facilitator can be replaced by a computer program."

“No,” Paul said, “because if you've got at least fifty ideas about what the company needs to do, not all of them will be valuable, and even if they all were good, the CEO needs to prioritize them.

At Duke in 2003 we had multiple problems: trading operations that were mis-managed and at risk of bankrupting the company; serious safety issues in plants and facilities; conflicts with government regulators; an irrational and massively expensive plan to build too many power plants, and a lack of trust by key stakeholders in the company's management. All these problems needed to be solved eventually, but no AI program would be of any real help in doing that.”

Paul told me a story from his first job out of Stanford Business School, working in product development at Ford Motor Company. His boss gave him a folder and told him to deliver it to another manager, quite a distance away in another building. The next day, Paul was given the same task, but to a different manager in a different location. This pissed Paul off----a Stanford B-School graduate being treated as an errand boy. So, he went into his manager's office and complained. The manager heard him out and asked: “So, Paul, did you read what was in those folders? Did you think about spending some time talking with the recipient, asking him what he did at Ford? Did you spend any time walking around that other building, to find out what they did there? So, he continued, you had a chance to learn about the key issues facing the company, meet the key players and tour the key facilities ---and you just thought you were delivering papers.”

Paul had two take-aways from that experience: Don't be quick to label a task as beneath you; and be open to learning at all times.

(I asked Paul if he thought his Ford manager deliberately sent him out as an errand boy to teach these higher lessons, or just because he needed the documents delivered. Paul wasn't sure).

Paul told me that some time ago he considered writing a book, which he called the Confessions of an Accomplished Poseur. He never actually did it, but he's convinced that the title is an accurate description of his business career.

No, I told him, there's nothing in your story indicating you've been a poseur, or just lucky to be in the right place at the right time. Those concepts are not an accurate or complete description of the history I've heard from you. Many of us have benefited from luck and being in the right place, but few have accomplished what you have, Paul.

You were a dedicated listener to the people who worked with you. You had quite good empathy skills, which is rare for a CEO of a very large business,

You spoke and wrote as a business leader with candor, and did an exemplary job, over forty years on the job, of keeping your ego in check.

You helped raise a family, and both your daughters either now live near you in Maine, or will soon be so. One of your mottos is "marry well or marry often". You've done it twice, but what matters here is that your children love you, after all. Very few parents of our generation could boast that their adult children want to live close to them.

Your rotator cuff is shot; you can't lift more than fifteen pounds, but your wits are still entirely with you. Your politics are sane, as you transitioned from being a Bush Republican to an ABT---anyone but Trump.

You've come a long way, Paul M. Anderson, from your childhood in Richland WA, the town adjacent to the Hanford Atomic Works, where your father worked a blue-collar job. And you've evidently learned much from that routine as an eleven-year-old, getting up at 4AM, to service a paper route, and then later selling greeting cards door-to-door.

In high school, you played guitar in a band that became the house band for a local TV station, and then toured the state, earning you your first real money. Real as that money was, you still needed to work as a janitor in your freshman year at the University of Washington, where you studied engineering. Boeing soon hired you as a part-time draftsman, so you could trade your broom for a slide-rule.

Your interest in the guitar and rock 'n'roll appears to be very much alive today, though now they don't pay you to tour. Just last month you told me you flew to Baltimore for the KISS End of the Road concert there.

You may not have been the only seventy-eight-year-old guy in the audience, but here's hats off to you, to all the energy and verve you still have.