In an Uncertain World (44 page)

I wasn't sure anyone would be amenable to creating the kind of role I was looking for. But almost every organization I talked seriously with did develop a solution, each in a slightly different way. Their answers were all unconventional, because the situation was unconventional. Most of the possibilities involved variations on being a nonexecutive chairman of the board or part of a chairman's office. One company proposed that I run a kind of internal think tank. Another suggested that I focus on guiding a generational transition among senior management. Each represented a potentially attractive opportunity, but they all raised some level of doubt about their workability.

I was close to deciding where to go when Judy threw a “Welcome Back to New York” party for me at the Metropolitan Museum of Art (this may have been her clever way of trying to ensure that I didn't take another job in Washington). Sandy Weill, the co-CEO of Citigroup, was there, and while we were chatting, he invited me to come by his office for a talk.

I said, “I'm happy to talk to you, if you'd like. But I can tell you I am fairly close to accepting something else and I just don't think working at Citigroup is what I want to do.” I didn't want to meet with Sandy under false pretenses. But Sandy still wanted to talk, so I went to see him at his office.

Sandy is known for being a good salesman. He made Citigroup sound like a fascinating place. He told me it operated in 102 countries and had a huge diversity of activities: investment banking, insurance, retail and commercial banking, credit cards, asset management, a private bank, and a whole range of emerging-market involvements. We ended up talking for a couple of hours. Citigroup had joint CEOs: Sandy and John Reed, who had been brought together as a result of the Citicorp-Travelers merger. This was an unconventional structure, and press accounts indicated that there were some issues between them. What I didn't understand until sometime after I got there was that, while Sandy and John's personal relationship was very good and both were extremely able, their working relationship was not commensurately effective.

After meeting with Sandy, I met with John. Then I met with Sandy again. It seemed as though he called me almost every day for a month. I started to develop a sense that despite his reputation as a large, dominating personality, Sandy was someone I could work with. And after about my fourth visit, I said to Judy, “You know, I'm not going to do it, but this place is really remarkably interesting.”

And she said to me, “You know, this is the first thing you really seem excited about. Shouldn't you do it?”

And I did. Shortly after the announcement, Al Hunt wrote a column in
The Wall Street Journal
criticizing my decision to take a high-paying job in the private sector. He was disappointed that I was going back into commerce and said I could do more good elsewhere. I have great respect for Al, but I didn't see why I shouldn't do what I wanted to do or why I had to become a monk just because I'd spent time in public service. Also, I did intend to stay involved in public policy and social endeavors—in fact, my contract with Citi specifically recognized that part of my time would be spent that way and that I would be expressing my own, independent views on issues. If Al's position became the standard, I thought to myself, people in the business world would be discouraged from going into government—to the detriment of both sides. You'd have something more like the European system, where civil servants and politicians rarely have any experience in the private sector and the private sector has relatively few people who understand how government works.

I also think Al missed an important point about my ability to be useful on the very issues he cared about. My contribution could be far greater if informed not only by my understanding of issues based on the experience I'd had in government but also by a current engagement with financial matters and markets around the world. In Bob Strauss's terms, I'd shrivel into raisinhood much more quickly if I didn't immerse myself in the business and financial world again.

   

FOR THE REASONS I've discussed, working in government was more preoccupying than anything else I'd ever done. It's always with you. You're in the public eye. Your role is never entirely clear. You can have the rug pulled out from you at any moment. You can have similar experiences in the private sector, especially when an issue blows up unexpectedly, but, except at extraordinary moments, the degree and constancy of the pressure are not the same. In my new capacity at Citigroup, I was hoping to have much more control over my own time—both to be freer to do whatever I felt like doing and also to have a greater feeling of freedom.

I remember talking about this with Sam Nunn, who had retired from the Senate a few years before I left Treasury. Sam told me to be careful, because I'd find myself overcommitted very quickly. He said that's what had happened to him since leaving the Senate. I said, “Sam, I understand you may have that problem, and that's a shame. But I actually understand myself pretty well, and I know I can handle this.” Though I tend to invest myself very deeply in whatever I do and find almost everything interesting, I thought I had the self-knowledge and discipline to develop a reasonably balanced life, to manage a little bit differently this time.

But I quickly found myself in precisely the situation Sam Nunn had described. Partly I misjudged myself, but I also underestimated the influx of opportunities outside Citigroup as well as the sheer size and range of Citigroup, the largest financial company in the world, which does everything from conducting the industry's biggest emerging-market trading operation to running the world's largest credit card business. From the outside, it's very difficult to have any sense of what this kind of scale and scope in businesses of this complexity mean. Goldman Sachs had 6,000 people when I left, and that had seemed immense to me. We had made one acquisition in all the years I was there, when we took over the commodity-trading firm J. Aron. Citigroup had 180,000 employees when I joined and typically made several acquisitions every year—one or more of them major.

I tried to get a handle on Citigroup's activities in my usual way: I took out my yellow pad and went around talking to various people about their businesses. Michael Froman, who had been my chief of staff at Treasury and was also moving to Citi, went around with me. What we found was nothing like what I had expected. For example, I assumed that the credit card business was an office filled with clerks who kept track of payments. In fact, it's an actuarial business that uses highly sophisticated statistical models developed and constantly experimented with by a large team of people with graduate degrees, including twenty-seven with Ph.D.s in areas related to “decision management.” They use computer simulations to test credit decisions and model how minor adjustments in credit card terms or marketing may affect consumer behavior and thus the business's rate of return.

I was soon learning about other areas of finance I'd never had much direct involvement in: commercial lending, consumer banking, asset management, private banking, subprime lending, and a range of emerging-market activities. I took the better part of a year just to gain a rudimentary understanding of Citigroup and its various businesses. In the course of that year, I began to feel much more personally invested in the company than I ever thought I would be.

Shortly after I arrived, I was drawn into issues related to Salomon Smith Barney, the investment bank that had come into being when Travelers had merged its subsidiary, Smith Barney, with Salomon in 1997. Before I arrived, a major New York financial figure told me that Salomon, which had always been a major force in fixed-income trading, was no longer a first-tier firm. I quickly realized that this comment wasn't correct. Despite having weathered a series of setbacks in the late 1980s and early 1990s, Salomon was still a force and seemed very focused on moving forward. Having both the capabilities of the old Salomon Brothers firm, especially its place as the world's premier fixed-income house, and credit extension abilities gave Citigroup multiple ways to meet a client's needs. But the firm did face a number of substantial strategic challenges, one of which was establishing itself more effectively in Europe. Toward that end, Citigroup had been negotiating to acquire an established British firm, Schroders PLC, as a platform for European expansion. The merger ran into trouble over the Schroders people's concerns that Salomon might still resemble the Salomon Brothers of the era of
Liar's Poker
, the book by Michael Lewis that famously described the Salomon of an earlier time as rather rough-and-tumble. The Schroders people asked me to fly to London for a Saturday night dinner to discuss the Salomon culture with them and to satisfy themselves that Salomon now functioned in a more civilized, client-focused manner—all of which I was comfortable doing.

Perhaps the most difficult issue at Citi was its management structure. I assumed that Sandy's desire to hire me was driven in part by the feeling that I might be able to help him and John reach decisions more readily. The complexities and potential of the co-CEO structure interested me, based on the very good experience Steve and I had had as co-COOs and co-CEOs at Goldman Sachs. I thought that I might be able to draw on that experience to help the two of them develop processes that would work more effectively.

Since I was now the third member of the office of chairman, though not a co-CEO, I suggested that we have a meeting once a week, called the “Office of the Chairman Meeting,” with the three of us as well as Chuck Prince, Citigroup's general counsel, acting as secretary. I would function as a facilitator to try to help John and Sandy work through decisions. John was fine with the process, but it was Sandy who really used these meetings, arriving with a prepared agenda. He would say, “I've got these five things I want to talk about today.” And we would go through them one by one.

These meetings helped John and Sandy somewhat, but making decisions and setting direction continued to be very difficult. One of the big issues in that initial period was something called e-Citi, an effort John had begun before the merger to take advantage of the Internet. John took the view that was common among Internet-savvy people at that time—and that may well have been right—that big, traditional companies weren't prepared to make the cultural changes necessary to employ the Internet effectively. Lest it be smothered, John thought the only way to get an Internet business started at Citi was to go outside traditional channels. Sandy, on the other hand, thought we were spending a great deal of money on the initiative relative to what we were getting. He thought Internet activities should be run within Citi's established structure and subjected to the familiar forms of budgetary discipline. My own view was that the problem of culture-shaking innovation at big companies was real and that John's way of getting the project off the ground was better initially. It did lead the company energetically into the Internet age. On the other hand, I felt that by the time of this discussion, awareness of the technology's significance had developed enough that transferring Internet activities into the various business units made sense.

That was just one of several unsettled issues outstanding in February 2000 when Citigroup's management committee, which consisted of the top twenty or so executives in the company, flew to Boulder, Colorado, for a three-day retreat. On the first day, we had a discussion about managing the company in relation to future growth. Deryck Maughan, former CEO of Salomon Brothers and a highly respected senior officer of the company, made a presentation that to me is still thought-provoking. At that point, we had around 180,000 people. Leaving aside Deryck's actual numbers, if, hypothetically, earnings grow at 10 to 12 percent a year, which with compounding means doubling in six or seven years, we would probably have around 400,000 people—allowing for increased productivity—within a decade. Deryck posed a major conceptual and practical question: What processes would we need to manage a staff that large and still growing? Coming up with an answer meant, among many other issues, finding the right balance between central control of fundamental strategic decisions, budgets, risk limits, and major legal affairs on the one hand and delegation of the more specific strategies and operations of the individual businesses on the other. And there are other challenges: treating customers as if it were a small company, giving employees the feeling that the strength of a great organization can help them best realize their own potential rather than being a bureaucratic anchor, making expeditious decisions where issues cross business, product, or geographic lines, and creating mutual cooperation across those lines to realize efficiencies in terms of revenues and expenses. I believe that these challenges are being met, but, like any successful organization, Citigroup is a work in progress, guided not only by its leaders but in its case also by an entrepreneurial, numbers-focused approach to business.

On the second day of the meeting, the discussion got around to how well we were functioning as an organization. People started talking about the co-CEO structure, and most said it wasn't working well, principally because of the difficulty in making major decisions and setting strategic direction. The discussion was remarkably candid. One longtime Citibank person made the point in a memorable phrase, saying, “We need one North Star.” I later got the impression that Sandy and John had both come away from the Boulder meeting thinking to themselves that the co-CEO structure couldn't continue. As a result, the two of them agreed to bring the issue to the corporation's board of directors at a special Sunday meeting a month later. Since so much has been written and reported about that meeting, I feel comfortable in speaking a little about my views.

When asked, I said that I thought Sandy and John were both extremely capable people, and my first choice was for both to stay and work together effectively. But if that couldn't happen, with most of the people in the company's top management coming from the old Travelers and Citigroup revolving mostly around Sandy, I didn't think the board really had a choice. I left the room, and their discussion went on for several hours. I was waiting in an office, watching a Knicks game on TV, while the board tried to resolve the issue. Sandy and John were sitting with each other in a different office, kidding around and trying to appear relaxed. Then the board came out and announced to the three of us that Sandy would be the sole CEO.