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The Challenges of Life at the Top

May 12, 2014

Whether you aspire to become a chief executive or simply want to be more effective in your current job, the skills taught at Booth—from developing an analytical framework to learning how to ask the right questions—will help you lead at any level, two Booth alumni who are CEOs, told students at the Charles M. Harper Road to CEO series, held April 24 at Harper Center.

“If you can set the right tone, build relationships, build capacity, and get results, you have a lot of what it takes to be a leader,” said John S. Watson, ’80, chairman and CEO of Chevron Corp., in San Ramon, California.

Moderator James E. Schrager, clinical professor of entrepreneurship and strategic management, invited Watson and David G. Booth, ’71, cofounder and co-CEO of the Austin, Texas investment firm Dimensional Fund Advisors, to describe the risks and rewards of their careers and give advice to a full house of 250 students.

While both CEOs detailed the challenges of life at the top, they also explained the critical roles played by their employees. “One of the keys is to figure out the people who can be the leaders and put them in spots where they can show their stuff,” said Booth, who donated a $300 million gift to the school in 2008.

The Road to CEO series, sponsored by Booth’s Alumni Relations and Development departments, along with the Corporate Management and Strategy Group, invites alumni in executive roles to share their professional journeys with students.

“No matter how hard professors try to talk about being a CEO, the special nature of the position can’t be intuited without seeing them in action,” Schrager explained.

For Booth, the path to CEO started at the University of Kansas, then brought him to the University of Chicago Graduate School of Business. He planned to earn a PhD and become a professor, but discovered that he preferred applying what he learned in the classroom, so he switched to the MBA program. After a decade of working in finance, he left the safety of corporate America to start his own mutual fund.

Booth focused his investment strategies on the efficient-market hypothesis he learned as a research assistant to Eugene Fama, Robert R. McCormick Distinguished Professor of Finance, winner of the 2013 Nobel Prize in Economic Science for his work on the theory.

At times, investors were unhappy that Booth stuck to his strategies—especially in the late 1990s, when the S&P 500 was greatly outperforming the small-cap stocks in Booth’s fund. He recalled once being brought before one of his largest clients, who was preparing to fire Booth’s company. “It’s much nicer when people wave at you using all their fingers,” Booth joked.

But by relying on the framework he learned as an MBA student, Booth’s company succeeded and now manages more than $350 billion in assets.

Watson took a more traditional path to the corner office. He studied agricultural economics at the University of California, Davis, then earned his MBA at the University of Chicago. He joined Chevron as a financial analyst and worked his way up, with roles including executive vice president for strategy and development and vice chairman.

Watson had been CEO at Chevron for only four months when a competitor experienced a major oil spill in the Gulf of Mexico putting all energy companies and how they conduct their operations in the spotlight. “The critical-thinking skills you learn here will carry you through a variety of circumstances, whether you’re analyzing an economic circumstance or a political event,” he told students.

Watson advised that to make good decisions, it’s crucial to think carefully about how to phrase questions, especially when taking on more senior positions. “If you’re not careful, people will interpret what you want by how you ask the question,” he said.

He also told students not to be afraid to say what they think. David Booth agreed, but added the caveat that the bluntness expected in a Booth classroom sometimes should be tempered to fit a company’s culture. “Say what’s on your mind, but think about how you deliver that message,” he said.

After the event, Schrager said the CEOs’ guidance can help students and alumni navigate the challenges of working within a team. “Even if you aren’t going to be a CEO,” Schrager said, “understanding the way these folks work is an indispensable tool in your toolkit.”