Wild Expectations

Expectations were not high for Harry Truman when he became president in 1945.

Truman was a failed retailer, a failed farmer, a failed zinc miner, a failed oil driller, a senator held on a leash by local Missouri bosses, a vice president who never asked for the job and whom Franklin Roosevelt had met just once before accepting him on the ticket as other candidates fought in the Democratic party. A former manager said he had “very little ability and will never amount to much.” His mother in law used the same phrase.

Biographer David McCullough writes about the day FDR died and Harry Truman became President:

To many it was not just that the greatest of men had fallen, but that the least of men— or at any rate the least likely of men— had assumed his place.

“Good God, Truman will be President,” it was being said everywhere. “If Harry Truman can be President, so could my next-door neighbor.”

[General George] Patton was bitter and more emphatic. “It seems very unfortunate that in order to secure political preference, people are made Vice President who are never intended, neither by Party nor by the Lord to be Presidents.”

The Washington Post summed it up that morning: “We should be less than candid at this grave moment … if we did not recognize the great disparity between Mr. Truman’s experience and the responsibilities that have been thrust upon him.”

Truman said to his new cabinet on his first day in office: “I pray God I can measure up to the task.”

By most accounts, he did.

Success is subjective, but Truman consistently ranks in historians’ top-10 rankings of the best presidents. A poll taken for six decades often puts Truman in a league with George Washington, Abraham Lincoln, and the man who in 1945 he measured so far below – Franklin Roosevelt.

Part of this, I’ve come to believe, is not despite, but because people expected so little of him.

The bar was set so low for Truman that any leadership ability seemed like a win. And big success, in the context of his low expectations, became viewed as a miracle. He never had the larger-than-life celebrity his predecessor enjoyed. That was a challenge. But the same deficit shined a light on his achievements in a way the rich and famous politicians couldn’t benefit from. That was an asset.

The question for today’s leaders – CEOs, managers, investors – is: which would you rather have? Vaunted celebrity, or low expectations?

“The era of celebrity CEOs is dumb and frankly dangerous,” Andy Kessler recently wrote.

Here’s my theory: High expectations and celebrity in business is often just outsiders seeing a glorified version of people, blinded to their faults. Worse, it masks the role luck plays in success. Both allow outsiders judging performance to ignore mistakes in a way that lets mistakes compound until they’re catastrophic. The impact celebrity has on the CEO or investor is equally bad. If people tell you you’re special, you are likely to believe them. Then you become less likely to second guess your decisions and seek the advice of others. It’s part of how competitive advantages die.

Could Sears have spent a decade bleeding money with abysmal operations without serious push for a different direction if its CEO Eddie Lampert wasn’t constantly referred to on magazine covers as The Next Warren Buffett?

Is “move fast and break things” the kind of slogan you only take literally after you’ve been named TIME magazine’s Person of the Year and floated to run for president?

Or take this recent account of Elon Musk:

“He went from nerd famous to Hollywood famous,” said a former longtime executive. “It changes you when you suddenly become a celebrity.” As Musk’s public profile grew, his life became more complicated. After he was divorced from his first wife, with whom he has five children, in 2008, he started dating celebrities (including actress Talulah Riley, whom he married and divorced twice). Some company executives say they began reading celebrity tabloids. If the magazines reported turmoil in Musk’s love life, they knew to wait to deliver bad news.

The hard part is separating a good reputation from celebrity. A good reputation is everything – it helps you raise money, attract talent, inspire workers, and strike partnerships. But reputation is only an asset if it matches ability. Celebrity in business is what happens when reputation exceeds ability, and can turn into a liability once reality catches up. It might take a year to catch up, or a decade. Those will be fun years. But reality always wins. And when it does, all the reputation that exceeded ability becomes a debt to be repaid.

The opposite is true. A reputation that matches or is even a bit below your ability is eventually rewarded with an extra dividend. Free from people telling you you’re amazing comes paranoia that you need to learn more and can screw up, which is what separates getting rich from staying rich. That makes accomplishments sustainable, and sustainable is when compounding works miracles. And if those judging your performance start with decent or low expectations, everything you achieve gets a boost from relative comparisons. That was true for Harry Truman. It’s also the foundation of how starting valuations determine final investment results.

Charlie Munger says “The best way to achieve felicity is to aim low.”

That’s counter to more typical advice of “Anything is possible! Reach for the stars!”

But you can be ambitious and talented – with a reputation for both – while ensuring that you and those watching you understand that you’re a flawed person who puts their pants on one leg at a time and needs other people’s help.

Truman, unburdened with maintaining an image, put it differently: “It’s amazing what you can accomplish if you don’t care who gets the credit.”