Requiem for A Giant-- Scott Minerd

Author’s Note to Readers: This is the February issue of this newsletter. It is begin published early.

This newsletter focuses upon various aspects of the development of “Sustainably Successful Organizations.”? Although my original plan for this month’s Newsletter, was to continue the saga of the development of Starbucks. This issue is a Remembrance Tribute for Scott Minerd, who you might not have heard of but who deserves to be remembered with great respect.

Abstract

This newsletter issue focuses upon the development of “Sustainably Successful Organizations.”? This issue is a remembrance tribute to Scott Minerd, who passed away unexpectedly on December 22, 2022 of a heart attack at the age of 63. Minerd was Global Chief Investment Officer of Guggenheim Partners investment unit. He was one of true giants of the Bond investment world and an interesting, complex and wonderful person. His passing is a tragic loss both?personally and professionally to all those who know and respected him.

Introduction

Scott Minerd, one of the true giants of the bond investment world,?passed away unexpectedly of?on December 22, 2022 of a heart attack at the age of 63.?I consider Scott to be a friend and colleague. ?My perspective is based upon having known and worked as a consultant and advisor for more than a decade while he was at Guggenheim Partners. ?

Who Was Scott Minerd?

Scott Minerd was not a high-profile public figure except in the Investment ?industry, where his accomplishments and reputation were very significant. Obituaries were published in the Wall Street Journal, and online. ?

Scott was a person with many accomplishments. Briefly he was:

·???????Global Chief Investment Officer at Guggenheim Partners?and one of the firm’s managing partners,

·???????One of the top three Bond Gurus in the world, with an extraordinary performance track record.?

·???????A frequent market and investment commentator on television and social media.

·???????A leader and entrepreneur who helped build Guggenheim Investments.

Over his career, Scott made profound contributions as an investment professional and as a corporate leader. His recognition is appropriate both as a tribute and as a role model for others seeking insights about how to build sustainably successful organizations.

Scott Minded was A “George Bailey” type person who also had a Wonderful Life

Film buffs might recall “George Bailey” from the classic Frank Capra film, “It’s a Wonderful Life.” To jog your memory, the film is about the life of “George Bailey” who is having a moment of despair because his absent-minded uncle “Billy” has “lost” $8,000 that was supposed to be deposited in a bank[1].?Given the setting of the film in the early 1930’s, $8000 is a very large sum of money, and George understands that this could result in bankruptcy, disgrace, and even that?someone might be going to prison.

George is in despair. He questions whether it would be better if he were never?had never been born. His guardian Angel, a?good-hearted sad sack named Clarence, who died about 160 years ago, has not yet “earned his wings,” has the idea to show George what the world (at least his immediate world) would have looked like if he had never been born. George sees that if he had not been born:

·???????He would not have been there to save his younger brother’s life, and

·???????His younger brother, who was a Naval pilot in WII would not have been there to save an entire troop ship from an air attack

·???????He would not have been there to prevent a pharmacist to kill a boy by sending a?poison instead of medication,

·???????He would not have been there to prevent his town of Bedford Falls from becoming sleezy Potterville,

·???????He would not have been there to marry his wife, Mary.

·???????In brief, he would not have been there to make the difference he really made with his life.

As they journey through George’s past, Clarence finally exclaims: “See, George, you had a wonderful life!”

While still not yet convinced, George returns home to “face the music” and prepared to go to prison for a “crime” he did not commit. All’s well that ends well, as George’s wife Mary tells George’s many friends about his problem, and they come to his rescue by donating a great deal of money so George can repay the bank for something he did not do. As the movie ends,?George is smiling while holding his daughter and he clearly has concluded that it has been a wonderful life.

Scott Minerd’s Wonderful life

Like George Bailey, Scott Minerd also had a wonderful life:

·???????He became one of the most successful bond managers in the world.

·???????He traveled the world and was wined and dined by Princes.

·???????He befriended unnumerable people from Tommy Lasorda, the late former Coach of the Los Angeles Dodgers to investor Michael Milken.[2]

·???????His opinions were sought by regular TV and social media.

·???????He had?opportunities and experiences that few people have, such as attending the World Cup in Qatar just before his death.[3]

Understanding Scott Minerd

Minerd had a very distinguished career at Guggenheim, where worked for decades. However, the obituaries missed the essence of the man and his true greatness. I believe it is necessary to understand who Minerd was in more depth. and to document (at least in part)?more of his business legacy.

A Leader is Not a Leader is Not a Leader

Borrowing from Gertrude Stein, a leader is not a leader is not a leader.[4] This simply means that not all leaders are the same in personality or capabilities.

Although the classic stereotypical leader is someone like Steve Jobs, Elon Musk, and Reed Hastings and or who are, in fact, all true charismatic and visionary leaders, there are other types of leadership that is required and absolutely necessary for a firm to be built as a sustainably successful organization.?

A Typology of Leadership Types

Rather than a single great leader,?based on my research and experience there is actually a set of different leadership types that are required to build sustainably successful organizations.?The set includes leaders who can perform five different organizational tasks or functions, including:

1.?????Creating the vision,?

2.?????Defining and managing culture,?

3.?????Coordinating operations,?

4.?????Overseeing systems development, and?

5.?????Leading and managing innovation and change.

In my experience, there are virtually no organizational leaders who can perform all five key tasks or have all five skill sets required to perform them in any firm of “significant size.” Organizational size determines where this phenomenon kicks;?and it is?highly unlikely that a single leader can perform all five key tasks at any size in excess of $100 million in revenues, and it can easily be as little as $10 million in revenues.?Rather, beyond that inflection or “tipping point,” the need for what I have termed “a leadership molecule” is now required.

The Construct of the “Leadership Molecule[5]”

Stated briefly, a Leadership Molecule? is a core “team” (“group” or unit), including a two-person dyad) that cohesively performs a set of five key functional of strategic leadership as a unit rather than as a set of individuals.?The Leadership Molecule??is thus?a “core leadership team” (in the true sociological sense) with defined but overlapping and complementary roles. Typically, the roles of vision, culture, operations, and overseeing systems development, are performed by two or more individuals comprising the molecule, while the fifth task of strategic leadership (leading and managing innovation and change) is performed as a team.

A Zen Leader Performing the Leadership Functions Essential for Growth & Success

Scott Minerd was a unique type of leader, who perhaps did not even consider himself to be a leader.?He leadership was, in fact, as a role model for his younger colleagues as a professional investment manager.

His focus was on managing Guggenheim’s bond portfolio, which he did brilliantly. His performance record speaks for itself. As a result, Guggenheim Investments grew from a relatively small boutique type of firm to a giant with billions of dollars of assets under management.

However, while his role as an investment manager?was the basis of his acclaim, it was his less noticed but indispensable role as the virtual CEO of Guggenheim Investments that should be recognized here as well. Unlike people like Steve Jobs and Elon Musk, who view themselves as CEOs, Scott viewed himself as an investment manager and advisor. He virtually ignored his role as de facto CEO. It was not part of his title.?Yet just as there are nominal (stated) and effective interest rates, he was, if not the nominal CEO, the de facto or effective CEO. In this context the term “effective” is not a performance adjective; it is a reference it the fact that Minerd was the virtual CEO regardless of what he or anyone else thought about it. Minerd’s way of thinking about his role as CEO is probably the way Warren Buffet thinks about his role at Berkshire Hathaway. Specifically, Buffet probably views himself as an investor, even though he is the titular CEO of?Berkshire Hathaway. Buffet invests in companies which are largely self-managed. He does not really manage them per se.

Minerd was a somewhat reluctant manager of people. He trained them, and left them, to a very great extent,?to be self-managing. Technically, this is called “Positive laissez faire leadership or management” [6]. It can be a very powerful method of leadership or management if people have “the ‘right stuff’.” Unfortunately, sometimes people who reported to Minerd did not have “the ‘right stuff’.” When that happened, Scott did not suffer fools gladly. He could be volcanic. Nevertheless, he was not a “Napoleon,” or a brutal if brilliant leader what enjoyed the brutality per se[7].

I had first-hand opportunity as his business coach and advisor to see a few Nincompoops who worked for Scott and how they behaved. Specifically, they came to him with a problem but—intentionally--not a solution! Their thinking was essentially “if I don’t propose something then I can’t be wrong! So let him solve it himself”! In other words, they delegated upward to Scott!

Overtime, we worked to change that. Scott would ask me to do a 360 Review for someone, and I would identify the?issues and coach them to try and overcome those issues Scott was not “above” the 360 processes; he himself went through it several times.?He never got defensive at my findings, and over more than a decade working with him we never had cross words or even a nasty smile. He was always professional and personable. All he wanted was for people to do their work competently with the client’s best interest at the core.

That was the Scott Minerd that I knew and respected. He wanted people to grow, and he was willing to invest in that process. Sometimes it worked and sometimes not.?

The Final Chapter

The Final Chapter came for Scott Minerd much too abruptly and quickly. He died of a massive heart attack while working out.

I was in shock when I heard the news. Frankly, it depressed me for weeks.

Scott was a body builder. He was a massive human being with bulging muscles and massive brainpower. He was a virtual force of nature: An Arnold Schwarzenegger with brain of an Albert Einstein! It was impossible to comprehend his demise.

The Bottom Line: Remember Scott Minerd

Those of us who knew Scott Minerd, understand that this was a complex person, with great skills. No one and, of course, nothing is perfect. In that regard, I recall (roughly) the words of Charles Howard, owner of the great Seabiscuit, in talking about War Admiral, which was lauded as being the perfect horse, as a result of perfect breeding. Howard stated, essentially: “You show me something that is perfect; I’ll show you something that’s not.”

I write this with respect, affection and sadness for the loss of Scott Minerd. I hope this article contributes some additional insight to a Remembrance for Scott Minerd. He was a role model for a non-prototypical style of leadership that was effective and deserves to be remembered with great respect.

About the Author_________________________

Eric Flamholtz is Professor Emeritus, Anderson School of Management, UCLA. He is the founder and President of Management Systems Consulting Corporation, 10940 Wilshire Boulevard, Suite 600, Los Angeles California, 90024. He has taught accounting at Columbia University, The University of Michigan, and UCLA.

His latest book (co-authored with Yvonne Randle, is The Crisis Leadership Playbook, Vandeplas Publishing.?See Also: WWW.Mgtsystems.com. A revision and update of his book with Yvonne Randle, The Inner Game of Management, is currently in progress.

?

?

[1] Actually, ?uncle ?“Billy” has accidentally “given” the money wrapped in a newspaper to “old man Potter,” the meanest man in town! Potter sees the opportunity to embarrass and discredit George, his long-time nemesis, and does not return the money. ?

[2] Milken spoke at the Celebration of Life for Scott in January, 2023, which I attended.

[3] Scott left me a voice mail from Qatar during the world cup, sounding ?refreshed and ebullient, and letting me know he would be back soon and wanted to catch up. Unfortunately, it did not happen.

[4] Gertrude Stein was a poet who wrote: “A rose is a rose is a rose.”

[5] Eric Flamholtz, (2011) “The Leadership Molecule Hypothesis: Implications for Entrepreneurial Organizations,” International Review of Entrepreneurship. Volume 9,?Issue?no. 3, pp. 1-23,

[6]Eric G. Flamholtz and Yvonne Randle, Growing Pains: Building Sustainably Successful Organizations, Fifth Edition, Wiley, 2016

?

[7] For a discussion of Napoleon’s in business, see Eric G. Flamholtz and Yvonne Randle, The Inner Game of Management, AMACOM, (1987). Currently in revision for Vandeplas Publishing.