A Better Claremont

Ira A. Jackson, dean of the Peter F. Drucker and Masatoshi Ito Graduate School of Management at Claremont Graduate University, had an opinion piece in the Daily Bulletin yesterday.

In it, Jackson tried to answer how it was that Wall Street's leading figures found themselves in the unenviable position of having to explain, under oath, to the U.S. Congress why it was that the federal government should come to the aid of such financial institutions as Bank of America, Citigroup, Wells Fargo, Bank of New York, and others.

To Jackson, the congressional testimony by financial leaders seeking government bailout money seemed to result from an ethical failure in the boardrooms of these now-troubled institutions. Most importantly, the failure stemmed from a refusal to even allow contrarian views to be voiced in these boardrooms. Jackson said:

For the record, let me also note that in a prior professional phase, I was a banker. I know that safeguards work not just because I understand that now as a dean but because I practiced it when I was in banking.

That why's the Drucker School is so important, perhaps now more than ever. It teaches practitioners about ethics in business, not as an afterthought but as the basis of all management.

Peter F. Drucker, the namesake of our management school, liked to tell this story about Alfred P. Sloan Jr., the genius at GM who made it what it once was, the biggest and most successful corporation in the world.

Sloan is reported to have said at a meeting of GM top executives: "I take it we are all in complete agreement on the decision here."

When everyone around the table silently agreed, Sloan then threw in this example of true leadership: "Then I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what the decision is all about."

For Drucker, the point was that "unless one has considered alternatives, one has a closed mind."

Decision-making for Drucker works best when it's based on the friction of differing views and the resultant dialogue between different points of view, and the choice between different judgments.

The problem today is that few leaders tolerate dissent in their ranks. In fact, those who dissent or differ are often given a pink slip.

Indeed, that refusal to allow dissent is the mark of any failed institution. It allows organizations from banks to car companies to federal, state, and local government agencies to ignore important pieces of information that might otherwise help avert disaster. It is why the state of California faces a $42 billion deficit and the City of Claremont had a $3.5 million budget shortfall.

As we've written in the past, Claremont's official decision-making has often and predictably failed because of a groupthink mentality that only allowed for input from a small circle of people, that so-called Claremont 400, who are constantly talking to each other. The Judy Wrights, Diann Rings, Helaine Goldwaters, Barbara Musselmans, Paul Helds, Valerie Martinezes of town who are current and former councilmembers, city commissioners, and Claremont Community Foundation or League of Women Voter members decide among themselves what course to take on a matter, and then they get it placed on a city meeting agenda for the official City stamp of approval.

Former Claremont Mayor Diann Ring loves to talk about how many 5-0 votes councils of her time had. There was no disagreement at all in the votes, and those votes were guaranteed long before any public meetings were ever held because Ring's councils were all of one mind. Yet, if Jackson's thesis is correct, all those 5-0 rubberstamp votes actually underscored a potential for mismanagement at each decision point.

By so narrowly defining who has a say in how decisions are made and by excluding and dismissing wider public input, Claremont's leaders consistently discouraged the kind of constructive dissent that Ira Jackson wrote about. As a result, the same leaders are responsible for some truly monumental missteps: investing over $5 million in the Orange County Investment Pool in the 1990's, right before it went belly-up; refusing to spend a few tens of thousands of dollars on brush clearance in the Claremont Wilderness Park, which led to a $17.5 million settlement with homeowners whose houses burned down in 2003; spending $1.2 million on the riderless Claremont Trolley at a time when the nation's economy was failing; buying Johnson's Pasture with a deed that was worded in such a way as to cause the City to forfeit a $1 million state grant; and much, much more.

Jackson's opinion piece yesterday called for all Americans, not just the board chairs of financial institutions, to take to heart the new president's call for each of us to take personal responsibility for the world around us and to not avoid making hard sacrifices (though some might argue that some of these Wall Street bailout beneficiaries have not sacrificed nearly enough).

Jackson wrote, "It's time to propose an ethical bailout of all our leaders whether in finance, business, government, the nonprofit sector or the media. It's time for a change of heart and a change in course."

And that's just what we should do here in Claremont. Let's redefine the governing culture of Claremont and make it one that is open to all voices, not just a select few. Let's make sure that every decision the City makes is based on reason and the consideration of all available facts, not just the ones the Claremont 400 want you to hear. Let's make it our goal to create something here we can all be a part of and one that we can all be proud of.

If we cannot accomplish that one small thing, how can we presume to remake our country or the wider world?