Thursday, March 08, 2007



Greenspan's Long Shadow Needs to Shrink, Management Gurus Say

By James M. O'Neill

March 7 (Bloomberg) -- What does former Federal Reserve Chairman Alan Greenspan have in common with Jack Welch, George Washington and a movie character out of Hitchcock?

The answer, say management consultants and leadership gurus, is that -- just like General Electric Co.'s former chief executive officer, the nation's first president and the Hitchcock heroine -- Greenspan's reputation and persona can easily overshadow that of his successor.

Greenspan stole the limelight last week in comments that contributed to a global tumbling of stocks, causing his successor, Fed Chairman Ben S. Bernanke, to offer calming words.

Warren G. Bennis, a leadership expert, says all retired bosses must guard against what he calls the Rebecca Syndrome, named after the 1938 novel ``Rebecca,'' by Daphne du Maurier, and the Alfred Hitchcock movie that followed in 1940. It's a tale of a new bride who suffers from the romanticized image of her husband's dead first wife.

``The book is a good metaphor for when a predecessor's shadow looms over a successor's work -- it's dysfunctional and should be avoided,'' says Bennis, a professor of business at the University of Southern California's Marshall School of Business in Los Angeles.

Greenspan, who retired in January 2006, eclipsed Bernanke at least briefly last week. In an address to a Hong Kong audience, the former Fed chairman hinted at U.S. recession prospects just as Bernanke was about to testify before Congress. Greenspan's words played at least a minor role in the stock market drop that followed, the worst since January 2003.

`Voice Is Resonant'

``Greenspan's voice is still resonant and, like any former CEO, he has to be extremely careful,'' says Bennis.

Greenspan should keep quiet about sensitive short-term economic issues for another year, says Jeffrey Sonnenfeld, author of ``The Hero's Farewell: What Happens When CEOs Retire'' (Oxford University Press, 1991) and a management professor at Yale University in New Haven, Connecticut. ``He could talk about plenty of things -- trade patterns, currency strengths -- but not the most salient, short-term issues.''

Alan Blinder, a former Fed vice chairman and current economics professor at Princeton University in Princeton, New Jersey, calls it a ``bum rap'' to fault Greenspan.

``You can't expect him to stay mum forever,'' Blinder says. Prognosticating about Fed policy is ``the line he doesn't want to cross.''

Greenspan himself says he feels that because over a year has passed since he left office, he can be a little more candid in how he characterizes things.

`Back to Anonymity'

``I was aware of the problem that if I stayed public, I could make it difficult for Ben,'' Greenspan, who turned 81 yesterday, said in an interview. ``For the most part, it has worked. I was beginning to feel quite comfortable that I was fully back to the anonymity I was seeking. I was surprised at this recent episode.''

The furor over his earlier remarks hasn't stopped him from making more: In the March 5 interview, Greenspan said he believes there is a ``one-third probability'' of a U.S. recession this year.

Bernanke declined to comment on either of Greenspan's remarks, said Michelle Smith, a spokeswoman for the Fed.

For his part, the 53-year-old Bernanke has done in his first year as Fed chairman just what experts say he should be doing to step out from Greenspan's aura.

``You can't go head to head with your predecessor because people will invariably make comparisons,'' says Richard Boyatzis, a psychologist and leadership expert at Case Western Reserve University in Cleveland.

Transition to Volcker

``You have to find a way to differentiate yourself but to remain yourself,'' Boyatzis says. ``We want to know our leaders are walking their own talk -- that they're authentic.''

He says that Fed watchers should keep in mind that when Greenspan's own predecessor, Paul Volcker, stepped down in 1987, there was a lot of gnashing of teeth and concern over whether Greenspan could fill his shoes. ``At first people weren't living on his every word.''

Lyle Gramley, a former Fed governor and now economic adviser at Washington-based Stanford Washington Research Group, said Bernanke is ``well respected within the Fed and outside. He's doing a heck of a good job. I think the market realizes that.''

Several management specialists say that television and the Internet have changed the role of the former leader. World War II-era leaders gained their respect through the position they held rather than their personalities, says Allan Lind, a management professor at Duke University's Fuqua School of Business, in Durham, North Carolina.

Lingering Credibility

``In the TV era, people are more exposed to public figures' personalities, and they tend to judge more on personality,'' Lind says. ``People today follow the person rather than the position. The fact that Greenspan no longer holds the Fed title doesn't mean his credibility goes away.''

Jim Dean, associate dean of executive education at the University of North Carolina's Kenan-Flagler Business School in Chapel Hill, says Welch did a good job of stepping back after he retired as chairman and CEO of Fairfield, Connecticut-based General Electric in 2001 to let Jeffrey R. Immelt take charge

``Welch has remained in the news, but about other things,'' Dean says. ``He's done as good a job as any on this. It's a challenge to think about the future of the organization and not their own future. It's a central issue about leadership.''

GE Leadership

Welch himself had the benefit of that kind of leadership from his own predecessor at GE, Reginald H. Jones, says John Kotter, leadership professor at Harvard Business School in Boston.

Sonnenfeld adds that when Welch took over GE, the first thing he did was sell a company Jones had just purchased. Jones didn't criticize Welch, Sonnenfeld says, but instead graciously said that if Welch thought it was the right time to sell, it must be the right time to sell.

Walter Scott, a management professor at Northwestern University's Kellogg School of Management in Evanston, Illinois, says CEOs with large egos should think about their legacy in a new light.

``Egos do enter into these things,'' Scott says. ``But retiring CEOs should let the new guy run the show. One measure of your legacy is how well you're able to step aside and stay out of the picture to let the company continue on without you.''

Dean says probably one of the best examples of an oversized leader stepping down and staying out of sight for the health of the institution is George Washington -- who did it twice.

Gentleman Farmer

The first time was after leading the American forces in the Revolutionary War. On Dec. 3, 1783, Washington presented himself to the Congress at Annapolis, Maryland, and resigned his commission. The second time was when he stepped down after a second term as the first U.S. president, to pursue retirement as a gentleman farmer.

A biography on the Web site of Mount Vernon, Washington's Virginia estate, notes that ``Washington had the wisdom to give up power when he could have been crowned a king.''

To contact the reporter on this story: James O'Neill in New York at

Last Updated: March 7, 2007 00:07 EST

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