SBJ/Feb. 3-9, 2014/Opinion

The Unplugged David D’Alessandro

Where CEOs make mistakes, and why the IOC pissed him off

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David D’Alessandro walks into his Beacon Hill restaurant on Charles Street in Boston. It’s a cold, damp Tuesday in late fall, but one warms up immediately when entering the intimate Toscano, one of two Italian restaurants he owns in the city. It had been about 10 years since I spent time with the former CEO of John Hancock Financial Services, who was a big voice in sports sponsorship up to his retirement from the company in 2004.

Aggressive and provocative, he used major sports deals to enhance and extend the brand, and he was never afraid to offer his opinion. “I’m not used to being a tiny voice,” he says with a wink. We meet for an early lunch in his Northern Italian restaurant, where it’s obvious by the clientele’s relationship with staff that the 120-seat place does a strong neighborhood business.

Former John Hancock CEO David D’Alessandro at his Beacon Hill restaurant Toscano
Photos by: STUART GARFIELD
We sit at a window table overlooking the brick and cobblestone street. D’Alessandro looks relaxed and tells me, “I am having the time of my life.” He’s chairman of the board for SeaWorld and works for Blackstone Private Equity in New York, which owns a majority of SeaWorld. He sits on the board of Boston University and security company Vivint, which he proudly states “has just been named among the top the entrepreneurial companies of the year.”
 
But while many former CEOs fill time with board slots, that’s not for him. “I like board work inside the private equity world, but it’s getting difficult in the public company world,” he says with a laugh. “You spend a lot of time covering your ass.” In addition, don’t look for him on the consulting circuit. “I don’t do any consulting work; I turn that down,” he says, shaking his head. “Nothing is more boring than giving advice to people who don’t want it. They want you for your cover. They want to use your reputation so they can go to the board and say, ‘I talked to this guy.’ But I don’t find it very satisfying work. I still get a lot of people that call me for advice; I just don’t like to sell it. If I like the people, I’ll talk to them. It’s simple actually.”



D’Alessandro orders a double espresso, and I have an iced tea. I shift the conversation to his sports sponsorship while at John Hancock, which was rooted in major deals around big properties: a TOP deal with the International Olympic Committee, and a deal with Major League Baseball. It was, he says, a reflection of his sponsorship philosophy. “Go big or go home,” he says. “That’s my philosophy: Go big or go home. Companies like Coke are preserving market share; they can piss away what they want. Most companies are looking to increase market share. So how do you make yourself look three times bigger than you really are? By sponsoring something big and driving its revenue. Go big or go home.”

I suggest the difficulty of successfully executing a “big” sponsorship stems from not having complete buy-in. “Successful sponsorships don’t come from the brand people. It comes from the top, leadership at the company,” he stresses. “Most brand people, not all, are incompetent. And they have fallen into that job because they used to be a cat sitter for somebody or they were in advertising and became ‘brand experts.’ None of them have ever run a business unit before. You need to understand what it’s like to go sell door to door. Brand people spend half their time trying to justify their existence. Most brand people are, at a minimum, incompetent and shouldn’t be in the jobs. And the brand people don’t sit around the big table. They are all at the kids table.”

He emphasizes over and over the need to convince leadership of the value of a deal. “You can’t go big unless leadership wants to go big,” he says. “So you need to spend your time on the leadership first. You need access to the very top people.”

We haven’t ordered yet, but he’s already on a roll, and he refers to the early days of man to outline the problems of current corporate roles. “It hasn’t changed since the caveman era,” he said. “Look at the reward for people that actually hunt: If you can actually kill something, you bring it back to the cave, and the skinners, cooks and eaters are there. The problem with brand people is, they don’t kill anything. I came up on the PR side and came to the business side. The only thing that is respected in corporate life at the end of the day is gold. If you cannot bring in gold, and bring it in continually, then you are a skinner, or an eater, which is worse. You’re a staff person.”

I interrupt and suggest my worthlessness, as I’ve never “sold” in my life — or brought in gold. “That’s not true,” he says, as he shakes his head. “You sold me on this interview. You want to continue to demonstrate that you are bringing alms to the master. And if you cannot bring that gold to the feet of the master, you will die in corporate life.”



David orders the baked eggplant and the mista Toscano salad, with no onions — “in case I run into someone,” he says. I get the traditional spaghetti pomodoro. We shift back to sports sponsorship, and he expresses his admiration for the work of another company with Boston ties. “What Bank of America has done with baseball is very smart,” he says. “Major companies need to take on a big sport and really drive through it. When I say drive through it, it’s not just buy the sponsorship and the advertising. It’s get the brand on your sales reps’ cards; have it in your branch offices; have the stars of that sport go to your sales conferences; have incentive plans where if you are doing a great job in sales you get to take your family to events. You must immerse yourself in the sponsorship. Those are the sponsorships that end up really working. Bank of America has decided to be in almost every major league park. Their signage is there. Their local promotions are baseball-driven.”

That’s what he did at John Hancock. “We did MLB and the IOC because you get a lot of penetration right down to the sales floor,” he says.

Of course, it’s not easy to get any company fully behind a sponsorship deal, let alone one as big as an IOC TOP deal. “There wasn’t buy-in at first,” he acknowledges. “In any corporation, you have a lot of marketing programs. This division, that division, this product line, that sales force — and each of them has this little empire, and in that empire they have something they like doing: This guy is sponsoring a Little League team, this guy has a lead-generation program that is doing ‘X’, this guy has some advertising gig. And they all think they are the most important. A strong CEO says, ‘You know what? We are spending $80 million a year if you add it all up.’ Smart marketers say, ‘How do I get everybody under the same roof?’ You’ll never convince them. You’ll never get consensus. You have to dictate it. You have to say, ‘We are going to sponsor this. All you get in line. We are doing the Olympics, we are doing baseball, so get in line. Get rid of your contracts. I want everybody here.’ And then what happens is, ‘Oh my God, it starts to work.’”

I start to press him on the metrics he used, and he grabs my arm to emphasize his point. “Our sales were going up,” he says. “We had a common marketing program that everybody could get on board with. We weren’t spending any more money than we used to, but our name recognition was going way up and we were getting into deals we couldn’t get into. And we were attracting sales people that would sell for other companies and other brokers that wouldn’t sell for us before. We had record sales the years we were with the Olympics. Now, do I think it’s all because of the Olympics? No. Do I think it helped us? I certainly do.”

He says it also helped land major deals in China and Japan when the company entered those markets. “Being an Olympic sponsor,” he says, “is a big deal in many parts of the world.”



But in 1999, D’Alessandro’s enthusiasm and spirit around John Hancock’s Olympic sponsorship shifted. Reports emerged accusing members of the IOC of taking bribes from the Salt Lake Organizing Committee during the bid process for the 2002 Winter Games. The allegations dominated the headlines and sparked multiple investigations, and D’Alessandro was a lone voice in the sponsorship community calling for the IOC to take action. He repeatedly and publicly criticized the body for system failure, making him a very polarizing figure — so much so that NBC Sports’ Dick Ebersol publicly called him a “bully” and stated he should “shut up.”

Does he regret being so outspoken? “Why would I have regrets? They pissed me off. They lied,” he exclaims, looking at me pointedly. He stopped eating and leaned closer. “When the bribery issue first started, the IOC called me and told me, ‘In two weeks, this whole thing will be done.’ Then it became clear that they were covering this up and wanted to sweep it under the rug.”

He grows more and more agitated. “What bothered me about it, and it seemed pretty fundamental, is that I actually grew up believing in the Olympics. I still do,” he says. “I believed in the ideals of the Olympics. At Hancock, our product offering was very simple. Whether it was mutual funds or investment funds or insurance, you give us your money,
and when you come to get it, it will be in better shape. You’ll have more money. Trust us. TRUST us. I didn’t do the Olympic deal to be in bed with someone whose brand was, ‘Don’t trust us.’ And it was not trustworthy.” He pauses briefly, before continuing. “We were the only one of the big sponsors who was really tapping into the ‘trust’ factor. I’m paying you $40 [million] or $50 million and you look immoral. Our research and surveys were starting to show that our sales competition was saying, ‘You are going to buy from those guys?’”

He says he refused to just drop the sponsorship, even though it would have been the easy PR fix. Instead, he fought for changes. “Let’s say we simply dropped the sponsorship, which would be the corporate thing to do, which we could’ve done with our [morals] clause. But you’ve got six to eight years invested in it already. So that’s $300 [million] to $400 million invested in this thing, including advertising. So I’m going to drop it? Really? If a company drops a sponsorship, that guy who pushed it is dead; a dead man walking inside the company. They don’t stay. So I’ve got $300 [million] to $400 million invested in the Olympics. What am I supposed to do? Say ‘he’ made a mistake? ‘I’ made a mistake? You stick it out.”

He says he’s still surprised more people didn’t speak up. “Of the sponsors, I was the only CEO involved.” He picks at his salad and looks back at me. “It was by keeping their feet to the fire that they made a lot of changes. They weren’t ready to do that.” And it did lead to reform: There was the expulsion of several IOC members and adoption of new IOC rules. “I saw Jacques Rogge in 2002, and he said to me, ‘I didn’t like it at the time, but you did a great thing for us by keeping us alert.’ The IOC has no tolerance for scandal now. If there was a scandal in the IOC, it would be handled much more quickly."

We talk Olympic history, and he isn’t shy about calling out his worst Olympic experience. “Atlanta put on a terrible Olympic Games,” he says. “I was there for a week. It was like having a circus. They weren’t ready for prime time. It was over-commercialized. It was the worst of Americana, and it really turned off a European-centric IOC. The IOC learned something from that. They learned the Atlanta presentation was great, but you can’t pick these things on presentations. So they put much more solid teams in place to go around and look at the cities and facilities.”



I’ve cleaned my bowl of pasta, and he nudges aside his plate when I ask, knowing his connections and points of view, if he’d ever run for office. He rolls his eyes. “Why would I want to?,” he asks. “My tolerance for having to deal with stupid people is actually quite low. And you have to spend a lot of time being nice to people who you wouldn’t normally be nice to.” Was he a nice CEO? “You would have to ask the people who work for me. I don’t know. The people who made a lot of money would probably say it was great to work for me. The people who didn’t make a lot of money or the people I fired would have a different viewpoint.” Shift roles, I say. Would he have wanted to work for CEO David D’Alessandro? He smiles. “I don’t know,” he admits. “You have this self-image, right? Most CEOs have this self-image that, ‘Oh, I’m a consensus-builder. I hire people who are really smart and let them do the job.’ You know what? That’s bullshit. If you want to do that, join a fraternity. If that’s the case, we should pay you like an executive recruiter, pay you 15 percent. No. CEOs are getting paid by your stockholders to lead. That doesn’t mean you have to be rude or a dictator, but it also means you should hire people that are very different than you. My attitude is, a good CEO is basically a judge. It’s really about leadership.”
 
But was he a dictator? “Sometimes. But it’s more about being a judge,” he says. “So you have a top lawyer, a top marketing person, a top IT person, a top salesperson — you have 12 to 15 really smart people. They look at the same issue very differently, with some common ground, but they look at it from their own lens. Most lawyers say, ‘No.’ Most financial people say, ‘Let’s spend less.’ Most marketers say, ‘Let’s spend more.’ Most IT people say, ‘Let’s spend more and take five more years.’ What you are really doing is taking all these really smart people and judging what the answers will be. Sometimes it’s self-evident. That, I guess, would be considered consensus. But much of the time, which product to make, or in this case what sponsorships to do, is a judgment call. You get paid to be a judge, and you shouldn’t exercise that unless you have to. But you often have to. Either lead or don’t bother.”
 
He sees common problems in today’s top corporate leaders. “Where a lot of CEOs make the mistake is that think they are the smartest guys in the room. Why? Because they are led to believe that over time. If your ring is kissed enough, you actually come to believe it. I may have been the smartest marketing person in the room, but I was never the smartest lawyer, never the smartest IT person. But when you start second-guessing your IT person on how long it’s going to take to write the code, the real question becomes, in my view, Can you make the right judgments with the people you have, and do the people feel it’s OK to disagree with you?”

Leaning closer, he smiles at me, clearly relishing the talk on corporate politics. “I never had a problem with people disagreeing before the decision,” he says. “I’ve got a big problem with people disagreeing after the decision. Everyone has a say on the way in, and then a judgment is made, either by consensus or by me. But once we decide, we are all in. Now, two years from now, if it turns out you were right, you can say so. But on the way, you better be in.”

And if they weren’t all in? “Fire them. Disagree all you like before the decision is made, and if you’re right, you get a gold star at the end for being right. You don’t get any gold stars for trying to undermine it on the way,” he says.

He finishes his espresso and offers an inner view of corporate life. “You have three kinds of people in corporate life,” he says. “You have the yes man; they are just desperate and worthless. Then you have the people who play devil’s advocate. Whenever anyone says they are going to play devil’s advocate, it makes me insane, because they just want to be recognized and say ‘Whatever this leader’s view is, I’ll take the opposite view.’ And they do that all the time. That’s their style. They don’t really have a judgment. It’s bothersome; it’s not valuable. When they do it consistently, it’s a nuisance.

“The third person is actually dangerous. The first two aren’t dangerous. The third is a person who you think is on board, but they actually undermine you. That’s the dangerous one. You don’t know it at first. It takes time, a long time. The first two you don’t need to fire. The third person is hard to find, but you have to fire them. You can’t turn those people around. It’s a trust issue. There actually is a fourth person: one that actually challenges you — sometimes goes along and sometimes challenges. It’s a person of balance that you want. They are hard to find.”
 
D’Alessandro admits he doesn’t mind conflict in the workforce, and he smiles when getting up from the table. “Conflict’s a part of all good corporations. It’s exactly what you want — as long as it doesn’t get personal.” But sometimes it does. “That’s when it’s unhealthy, because then people get slighted and upset, and so many corporations are mirthless, with no humor.” And one thing D’Alessandro doesn’t lack is humor. “I like to have lots of fun,” he says. “Remember, it’s just a place to work.”

And with that, D’Alessandro smiles and walks out of Toscano, back into the cold rain, ready to have more fun in the time of his life.

Abraham D. Madkour can be reached at amadkour@sportsbusinessjournal.com. See “On The Ground” for more.

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