An officer and an executive - how the roles stack up
Former military men have not been viewed as particularly good business people, but perceptions might be changing, writes Peter Cai.
When General Peter Cosgrove hung up his slouch hat in 2005 and joined the board of Qantas as a non-executive director, he thought he would be pursuing a much gentler form of warfare, fought inside an oak-panelled boardroom rather than in a foxhole.
The general changed his mind after he found himself in the middle of one of the most audacious raids in Australian corporate history, when a Macquarie Bank-led consortium was trying to take the flying kangaroo private. He says watching board members and executives dealing with the corporate raid reminded him of a line from Banjo Paterson's immortal poem The Man from Snowy River: "The stock-horse snuffs the battle with delight."
"Corporate warriors doing their day-to-day stuff," the former chief of the Australian defence force says. "When there is something urgent and out of left field happens ... just to see them ramping up energy reminds me of an operational room of a unit in combat."
Business leaders love to use war-like language to describe their trade. Chief executives like to call themselves captains of industries and devise strategies for their troops. Executives are parachuted into hot spots to put out fires. Sun Tzu's The Art of War is mandatory bedside reading for managers.
Cosgrove is one of many former warriors in Australia who have traded their military fatigues for pinstripe suits. There are estimated to be 20,000 to 30,000 former officers active in the Australian corporate sector, says Thomas Triebsees, of Defence in Business, an organisation representing former officers. They can be found in all walks of corporate life, from ex-electronic warfare officers working as IT consultants to retired top military brass sitting on boards of listed companies. There is also a growing number of corporate chieftains who cut their teeth as fighter pilots, tank commanders and SAS commandos before they joined the business world.
Patrick Snowball, chief executive of Suncorp, the nation's fifth largest bank, was a British Army tank commander who served during the period of the Cold War. Pacific Brands CEO John Pollaers used to play with deadly naval weapons before he found his new passion in consumer goods.
But for all the Australian love affairs with Diggers, they are not seen as particularly good business people. There is a strong perception that military's command-and-control approach is out of sync with the free-wheeling management style in business.
Movie footage of drill sergeants shouting at fresh recruits for the slightest infraction has seared into our minds an image of an authoritarian organisation. People associate the military with uniforms, orders, protocols and "do it my way and no discussion approach".
Newcastle Port Corporation chief executive Rear-Admiral Chris Oxenbould says there is tremendous misunderstanding of the military. "When I started working in [business] there was this expectation that I would come in with a swagger stick under my arm and monocle in my eye," he says, "and expect people around me to fetch coffee for me and all that."
He says in reality the military leadership style, especially at senior levels, is far more consultative. As a former captain of a warship, he had to rely on the expertise of his weapon officers, communication experts and system engineers to run a guided missile destroyer on rough seas. "The captain's job is more of a team leader," the former admiral says.
The head of corporate strategy at Leighton and former army officer Patrick Brothers echoes Oxenbould's view. He says the perception is not only wrong, but the private sector is also lagging behind the military in terms of adopting the latest management practices.
"In the last 10 years, sadly from a world peace perspective, we've had so much conflict," Brothers says. "But the military has been in an environment where it has been testing and adopting these management theories in real time and in life and death situations."
Since the attacks of September 11, 2001, Australian troops have been fighting a global war from the streets of Baghdad to mountainous terrain in Afghanistan. Unlike early generations of ANZACs, soldiers are not fighting in large conventional battles. Instead, they are hunting down ghost-like enemies.
This has created enormous pressure on military doctrines and management techniques designed for a different era and different types of war. The defence force has responded to the new challenges by flattening hierarchy and empowering soldiers and officers on the ground to make judgment calls in evolving battlefield conditions.
The old mission and control approach has been replaced with new concepts such as "mission and command" - commanders set the objectives and parameters of the mission and allow the officers on the ground to execute as they see fit.
Brothers, who was deployed overseas, says the "military identified long before the private sector that if you just have people following orders, you may not be able to achieve your mission".
Stephen Langton, an adviser with Johnson Partners and a former British Army chopper pilot, says while the military has no choice but to respond to its enemies, companies are still wedded to their old strategies without going back to update them in a changing market environment.
Langton, who advises CEOs on corporate leadership, says the military is all about preparing people for the unexpected and operating in ambiguity. A simple principle taught at Sandhurst - the British military college, which counts Sir Winston Churchill as an alumnus, is "no plan ever survives first contact with your enemy".
"In business, how many corporates have collapsed from launching some five-year strategy and just stubbornly driving to complete it?" he asks. "How many of them got the courage to say after six months, 'The plan didn't survive our first contact with market and we have to change it'?"
When Lehman Brothers imploded in 2008, sending shockwaves across the business world, there were scenes of panic as traders broke down in tears and executives turned to Scotch whisky in search of solace. After years of unprecedented boom, many lost their nerve when the crisis hit.
Brothers, who was working as a private equity adviser at the time, recalls that a lot of his peers struggled with the uncertainty at the time. Executives with military experience argue keeping cool under fire is one of the hallmarks of good leadership and it is part of their DNA.
Brothers says, "Your team needs to have the confidence that you are not rattled or startled by events to the point that you can't make decisions."
This claim is supported by empirical evidence. Harvard economists Efraim Benmelech and Carola Frydman find that CEOs with military backgrounds perform better during industry downturns. But they say they are in short supply and companies may not be able to find these talents when they are needed.
Pollaers says you cannot afford to analyse things to death when you are under fire.
"When you are on ground, you have to assess things quickly and make decisions. A lot of intuition has go to into decision-making."
The military prides itself on the leadership qualities of its officers and it has been in the business of leadership development much longer than the business world has.
Rear-Admiral John Lord, chairman of Huawei Technologies Australia, the world's largest vendor of telecoms equipment, says the military trains people to be leaders from the beginning.
"Not too many people are born leaders. One thing the military does is through a graduated process to get you up to a stage where you can lead a group of people, command a battalion or a ship," Lord says.
From years of watching enemy movements and analysing their potential actions, officers have developed strong risk management skills and these can be easily translated into the commercial world, where there is a much heightened sense of risk.
Executives with military experience say their earlier exposure to leadership was crucial in the development of their careers. Young officers enjoy opportunities to manage teams and considerable budgets at an age when their peers are just starting their career.
A 21-year-old lieutenant fresh out of military college can lead up to 30 men and a platoon sergeant who is 15 to 20 years his senior, so they are forced to develop their management skills quickly.
Snowball told the ABC when he was first appointed CEO of Suncorp, "I think my style of leadership is based on 19 years of military training, and certainly the amount of time invested in training and leadership in the armed services is very, very significant."
American companies and executives love to boast about their military credentials. Amazon is reported to have the most military friendly hiring policy in the US, and Walmart also promises job offers to any veteran who wants to work for it within a year of honourable discharge.
US business schools such as Harvard and Wharton are incorporating military-style leadership lessons into their MBA courses. Students are touring historical battlefields and spending time at the school for marine officers, learning the art of military leadership first hand.
Nearly 10 per cent of American chief executives from S&P 500 companies served as military officers, a Korn/Ferry International report shows, though the numbers have declined in recent years.
On the other hand, Australian business leaders are shy to show off their military connections, and the military has yet to develop a reputation as an incubator of future corporate leaders. Some of the country's leading financiers are reticent to talk about their service in the armed forces.
It is not well known that St George Bank chief executive George Frazis was an air force engineering officer early in his career. Peter Allen, who looks after finance at Frank Lowy's sprawling Westfield empire, used to fly F111 fighter jets.
However, there are signs that corporate Australia is waking up to the fact that former military officers are a talent pool they can tap into. This has to do partly with the rising profile of the defence force as a result of their deployments abroad.
John Langton, of Johnson Partners, an executive recruitment firm, says the army is shedding its image of the 1990s and is enjoying new found status in the community.
Cosgrove also reflects on the time the military was a bit of a closed shop and a "monkish order", and how times have changed. "It is on front pages now, senior officers have became more profiled through media," he says. "I think corporate leaders say now, 'Oh, so and so seems to be experienced and measured'."
Lieutenant General Peter Leahy, the country's longest-serving chief of army, who sits on the boards of Codan and Electro Optic Systems, says employers are snatching up former officers.
But despite the rising status of the military and its leadership skills, many corporate employers still remain sceptical of the commercial nous of former officers.
One of the main criticisms is the perceived lack of financial literacy - a point that has been acknowledged by senior retired officers but is disputed by younger officers who left the service early on in their career.
The recently retired chairman of the Australian Submarine Corporation, Vice-Admiral Chris Ritchie, says he wished he had more commercial knowledge. He says serving officers should develop better links with industries.
"If I knew what I know now when I was back in defence, I would have done things differently," he says. "Not that my leadership would be any better, but I would have a better understanding of what is going on in the rest of the world."
Ritchie says the 2007 defence management review found that "people in defence didn't have bottom line responsibility in a profit or loss sense for what they did, and that breeds a different kind of management structure".
Cosgrove also doubts whether former officers can move straight into management positions.
He says if someone tells him he is leaving the military and going to join Qantas as the chief executive, he would rush to the chairman to warn him against doing it.
"Because we don't have that market experience or awareness, what I may call a portfolio or kitbag of corporate tactical skills," he says.
But Brothers, who has a maths degree and a MBA, says that perception does not reflect the high standard of academic training required of military officers nowadays. "It offends me when someone thinks that a weakness of mine is numbers when I can do calculations in back of head."
He also argues that the importance of technical skills has been exaggerated, saying many chief executives running companies are not necessarily finance guys and that is why you have good chief financial officers.
His argument is supported by Leahy: "As chief of army, I had a budget of $6 billion and I didn't do that all myself, I had a financing group to help me with that."
Companies in Australia and around the world are spending millions on building team spirit, and executives are using every opportunity to spruik their corporate mission statements. They have not always been successful. But in the military, it is the way of life. No corporate mission statement can match the power and simplicity of "Who Dares, Wins" - the motto of the Special Air Services regiment.
Cosgrove says he is bringing that military tribal loyalty to Qantas. "I have been on the board of Qantas for seven years and I identify wholly and totally with the airline.
"It is one of my great joys after
the military to belong to a national icon."
STRIPES TO PINSTRIPES
Chief executive, Pacific Brands
(Ex-Royal Australian Navy)
Chief executive, Suncorp (Ex-British Army)
George Frazis (pictured)
Chief executive, St George Bank
(Ex-Royal Australian Air Force)
Chief financial officer, Westfield Group
Head of strategy, Leighton
VAS Aero Services (US)
Former role: Chief of the Australian Defence Force
Now: Director, Qantas
Former role: Chief of the Australian Defence Force
Now: Chairman, Air Services Australia
Former role: Rear-Admiral, Royal Australian Navy
Now: Chairman, Huawei Australia; director, P&O Maritime
Former role: Deputy chief, Royal Australian Navy
Now: Chief executive, Port
Former role: Chief of Army
Now: Director, Codan Ltd
Former role: Vice-Admiral, Royal Australian Navy
Former chairman, Australian Submarine Corp