From Before the Spitzer Era, An Iconic Investment Banker

If ever there was a profession in desperate need of a hero, it’s investment banking. The rapid rate of turnover in the field means that most of those in the profession today never knew the business before it became synonymous with scandal, settlements, sentencing and Spitzer. And to date, no one has offered a solution to the fundamental structural conundrum that haunts the financial supermarkets now dominating the industry: How can investment bankers, whose financial success is tied to the ability to hawk product from their financial-supermarket inventory, also effectively serve as a trusted advisor to clients?

If anyone could fill this role—a living icon who embodies the best of a vocation in crisis—it would be John C. Whitehead, the 83-year-old chairman of the Lower Manhattan Development Corporation. Mr. Whitehead worked at Goldman Sachs from 1947 to 1984, the last eight years as co-chairman. Between his departure from Goldman Sachs and his current appointment by Governor George Pataki in 2001, Mr. Whitehead served as Deputy Secretary of State under George Shultz, as well as chairman of the New York Fed and leader of literally dozens of nonprofit boards, from the International Rescue Committee to the United Nations Association.

A Life in Leadership is Mr. Whitehead’s crisp, no-nonsense autobiography. Not a particularly introspective man, he lays out his life and career, identifies what he sees as the highs and the lows, and proposes a handful of overarching principles that might be of use to the general reader. But although discretion is an admirable quality in an investment banker, diplomat and leader, it doesn’t necessarily make for a particularly revealing autobiography. There are times when this reader yearned for Mr. Whitehead to break out of character and dish a little dirt. Though he gently chides his adversaries in business and public life (for a Republican, he has surprisingly little time for either Bush père or fils), one is left to speculate on the full scope of the conflicts that led to Mr. Whitehead’s occasional, somewhat cryptic aspersions.

It would be a mistake, however, to dismiss this autobiography as simply an unrevealing effort by an old man to provide an official record of his accomplishments. In particular, one cannot read the 60 pages of A Life in Leadership devoted to Mr. Whitehead’s career at Goldman Sachs without being overwhelmed both by the magnitude of his contribution to the investment-banking industry and the contrast to the values that prevail there today.

Early in Mr. Whitehead’s Goldman career, he became assistant to the legendary Sidney Weinberg, who led the institution from 1930 almost until his death in 1969. In addition to working with Weinberg on a wide array of projects, including the 1956 Ford I.P.O. that represented Goldman’s arrival as a major investment-banking player, Mr. Whitehead did something quite remarkable that changed Goldman—and investment banking—forever. Against some significant internal resistance, he institutionalized the greatness of Sidney Weinberg.

Mr. Whitehead realized that with Weinberg well into his 70’s, the firm was at risk, because all of its relationships were really Weinberg’s. Mr. Whitehead accordingly established a regionally organized “New Business Department” that would not only provide institutional continuity for Weinberg’s relationships, but also actively call on a targeted list of other corporations within assigned geographies. This latter role was revolutionary at the time; it was then viewed as unseemly to actually solicit business. But by establishing the function and imbuing it with the values of Sidney Weinberg—client loyalty, integrity, first-class service—Goldman created a sales infrastructure and a network of deep corporate relationships that not only survived Weinberg, but ultimately took Goldman to the global leadership position it still holds today. (When Mr. Whitehead established the department, Goldman was ranked only 15th among investment banks.)

Mr. Whitehead notes with some pride that an early memo he produced with nine basic principles for new business bankers to follow still adorns the wall of at least one Goldman banker. I can report that the memo circulates to this day, surreptitiously faxed and e-mailed: I’ve seen photocopies of it in the offices of wise bankers at every major institution on the street. A Life in Leadership reproduces the memo in full.

Mr. Whitehead doesn’t pause to reflect on the metamorphosis of the investment-banking industry in the two decades since his retirement from Goldman. Always circumspect, he claims that his early concerns that Goldman’s “transformation to a publicly owned company” might undermine its commitment to “the emphasis on always acting in the client’s interest … the importance of teams [and] holding to high ethical standards” were overblown. Rather weakly, he asserts that the firm has maintained these values “pretty well” and, in any case, “on the whole, better than the others”—hardly a ringing endorsement of either his alma mater or the industry.

Perhaps it’s unrealistic to expect Mr. Whitehead to second-guess his successors in an industry whose finer qualities he helped establish. The decency and humility on display in this book provide a striking counterpoint to the attitude of most big-shot investment bankers of the current era. And if leading by example is what John Whitehead means to do, maybe his character is the most powerful lesson of A Life in Leadership. The values of today’s conglomerate investment bankers—focused on the short term, obsessed with self-promotion, heedless of apparent conflicts—are not the only values. If we hope to recapture a different industry ethos, this book should be required reading for all new hires.

Jonathan A. Knee, a Goldman Sachs investment banker in the 1990’s, is now director of the media program at Columbia Business School and a senior managing director at Evercore Partners. From Before the Spitzer Era, An Iconic Investment Banker