Dan Morrell: Every year, HBS selects a small handful of outstanding alums to receive its most important honor, the Alumni Achievement Award. This year's recipients work in finance, politics, biopharma, and the nonprofit sector and are all highly successful. But they also share something in common: failure.

Steve Schwarzman: You don't grow just by winning games. You have to lose a few to figure out how to make your team better.

DM: In this special edition of Skydeck, associate editor Julia Hanna asks this year's five Alumni Achievement Award recipients to share a failure they experienced and what they learned from it. Their stories show how the "F" word can be an integral part of success, shaping who we are and the organizations where we work.

Photos by Susan Young

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Julia Hanna: Ray McGuire (JD/MBA 1984) is the president of Lazard and former vice chairman of Citigroup. As the longest tenured head of an investment banking group in the history of Wall Street, he became one of its most prominent Black executives, advising on transactions valued at over $750 billion. McGuire started his career at First Boston before moving on to join the newly-formed firm of Wasserstein Perella & Co. He names Joe Perella as an early sponsor and mentor in his career, and describes two moments of failure— one professional, one personal, in which Perella played a role.

Ray McGuire: You know, it would be great if I could just choose one. There have been so many. I can remember one where Joe Perella was on the phone with the Chairman of International Paper Company. And I'd done the analysis and it started off with me not being available, the first call that Joe had with John Georges, who was the then chairman, and Joe was looking for me and I, nobody knew where I was, and in an environment that is less politically correct, everybody knew that Joe was looking for me because he stepped out of his office and started yelling about my whereabouts. So I get to his office and he's on the phone, and Polycom, which for those who don't know, it's a kind of speaker phone…and he had me on speaker phone with John Georges. And Joe was an accountant by training, so he had one of those little ad subtract, multiply, and divide, calculators. This was long before HP 12C. This was way back. Joe had looked at the numbers in the presentation and said, "Ray, looks to me like the numbers on page three are different to page seven, and different to page 17." And he said, so help us understand that. I said, well, I think that should be right.

He said, no, no, no. I've gone through and done… and it finally came down to me saying, "Oh no, it's the model." I said to Joe, "It's the model." He says, "What the h- - -  do you mean, it's the model? Didn't you do the GD model?" Oh it was so bad because I'd hardwired the model and that, I feel that today. And so when I walked out of the office and had to go redo the model, as I walked down the corridor, which was populated with glass offices, my workmates would kind of call me in and say, it's been not so good today, Perella just kind of reamed you a new one. So that was one. I was embarrassed by that.

The other is, I remember being in an elevator with Joe. I had gone to Times Square, I think when I got one of my first checks and I was gonna be really stylish, and really important. And I bought a gold Rolex watch. And so I'm in the elevator, going to a presentation and Perella looks over at me and says, "McGuire, that is like a really nice watch." And he said, "I wish I could afford a watch like that." And I'm thinking, here's a guy who is making tons and tons of money and he wishes he could afford a Rolex watch like the one I had on.

It was clear to me that he knew I couldn't afford that, and it was a fake Rolex watch. By the time we came down the elevator when the meeting was over, I promise you, I had ditched that watch. I have no idea where that watch is anymore. That just shows you you can't perpetrate, right? You gotta keep it real.

JH: Antonis Samaras (MBA 1976) served as Prime Minister of Greece from 2012 to 2015, a particularly difficult moment in his country's history. Greece was three years into a debt crisis, with the Samaras government implementing unpopular tax increases and spending cuts and leading intense negotiations with the IMF, the European Central Bank, and Eurozone finance ministers to ultimately keep Greece on the euro. An anti-austerity party won the next election, but Samaras, who continues to represent the district of Messinia in Parliament, doesn't regret his stance during the crisis…nor does he regret launching Political Spring, a party he started in 1993 after breaking away from the New Democracy Party over his stance on the naming rights of Macedonia. Political Spring gained 10 seats in Parliament in its first year, but that number shrank to two seats in the next election, with the party ultimately disbanding in 1999. A failure? On some level yes, but not when you consider the big picture, Samaras says.

Antonis Samaras: That was part of the cost I had to take for believing very deeply in one national issue that had to do with the Macedonian issue, if you heard. The idea is that yes, we lost, but when you lose because of your own conscience, it's fine. It is a failure, but you do not tell yourself, you should have done this, you idiot. No. It might be a failure, but you did, according to your conscience, the right thing. That's what allows you to keep yourself up. I mean, you know, you come home and your friends and your people tell you you did the right thing. If you had just failed or done something totally wrong or whatever, you wouldn't feel well. Not that I felt well, because I lost.

JH: Yeah.

AS: But you have to be able to correctly justify what you did. In Greece, you're not supposed to fail. In the States it's the opposite. If you don't fail in business, you know, you don't learn. So you need the failure experience. In Greece, you're not supposed to fail.

So in my life, I look politically like the cosine curve, up and down, up and down, up and down. So I had to learn and I had to live politically through thick and thin, you know, the hard way. And I think that this helped me very, very much when I became Prime Minister because I knew how it is to go through difficult times and to think that if, you know, I fail, it's not the end. So many, many times because the situation, believe me, was abnormally difficult—we had lost 25 percent of our GDP within a year, the unemployment was going up all the time, our debt was increasing continuously as a percentage of our GDP. And we had to face all that by going into solutions that required the people to feel very bad because we were increasing taxes and everything. And so it was a very difficult period to me. So you knew that everything can not always be positive. No rose gardens. So this experience of mine helped me very much.

JH: Depelsha Thomas McGruder (MBA 1998) is treasurer and COO at the Ford Foundation, enabling the organization's grantmaking program as it leverages a $16 billion endowment to drive positive social change. She's also the founder of Moms of Black Boys United, a nonprofit with over 170,000 members nationwide that had an unexpected start in 2016 as a private Facebook group. When she wrote the first post that started that group, McGruder was grappling with the consecutive police killings of Alton Sterling and Philando Castile and the emotions she felt as the mother of two sons who were four and seven years old. At the same time, McGruder was working at Viacom, where she was named senior vice president of programming at BET Networks in 2015. Here she tells a story from earlier in her career, when she was working to lead the launch of the network MTV Tres in 2006.

Depelsha Thomas McGruder: I thought really hard about this question, the failure question, because it's not my frame for life. Like, I don't consider anything a failure. Even if something didn't go well, I assume it was meant to be, it's a lesson learned, it gives me something to take on the journey. So I can't say that there's anything that I would consider like a colossal professional failure. When I think about business failures, when I was at Viacom, I had the opportunity to help create a business plan for and launch a network that was targeted at US-born Latino youth, like second and third-generation. So their parents had come to this country and now they're navigating two worlds. We wanted to target that population at MTV, but to do so was a complicated business model. One, many of these households didn't have cable television. We were a cable television company. So the first thing is we had to create a unique distribution model. Many of them still watched broadcast TV, so first we had to convince Viacom to allow us to acquire broadcast stations in local markets that had high populations of Latino people. And that was the first struggle, because we had to convince our parent company. We also had to convince our traditional distributors, who make money off of people paying for cable, when broadcast is free.

And the way we did that is by saying, yeah, but if we buy these local stations, we're going to promote that they should sign up for cable and we're going to help you convert people. So, unique distribution model. We also had…you know, we're trying to bring together all these cultures, whether it's Mexican, Cuban, Dominican, Puerto Rican, those are all very distinct cultures, with their own traditions.

But we wanted to bring them all under this pan-Hispanic umbrella. So that was also a challenge. And the third part that was a challenge was we wanted to make the language authentic. They spoke Spanish and English, so Spanglish. And so our programming was both, and it was in context, and it was great, but the model was that advertising agencies were either Spanish advertising agencies or English. So in trying to do this, we launched and got off to a great start, but ultimately we had to pivot and Viacom didn't want to continue to invest and wait. I think we were ahead of our time, if anything, but they ended up retreating and making it, sending it to the international division and making it a Spanish dominant channel again. But it was the time of my life. So I definitely don't consider it a failure because it's one of the things I'm most proud of for trying to do. And I think it was an early indicator of what was to come. Now I think there's a lot more diverse programming, a lot more comfort with navigating different cultures. And some of those walls were broken down. So I think it was a necessary and worthwhile failure.

JH: No one likes being yelled at, including Blackstone Chairman, CEO, and Cofounder Steve Schwarzman (MBA 1972). In 1989, a few years after Blackstone's start, Schwarzman made the unfortunate decision to purchase steel company Edgcomb and was called on the carpet by one of the fund's major investors. The experience was formative for Schwarzman personally and forced a major reexamination of how investment decisions are made at Blackstone, resulting in changes with a significant positive impact on the firm's success. Today, Blackstone is the world's largest alternative asset manager with $991 billion in assets under management and 27 offices around the globe.

Steve Schwarzman: That was a disaster. And you know that was probably the most impactful investment we made in at least our first 10, 15 years in business because, you know, we basically wiped out our equity in our third investment. And I got to analyze my role in that. And, you know, I was an unknowledgeable, unsophisticated person with no analytics of a certain set type that you need to make decisions provided. We had no investment committee. People just lined up in front of my desk as if I was King Solomon. I thought that was amusing. I thought that's what "business" was like, only to realize I had made a complete and utter mess by picking the views of one partner over another. I just picked the wrong partner, and I realized why I did. But I didn't see the logic all the way through of what the downside was.

We put some more money in, we almost lost that. I had to sell the company for 32 times cash flow to a company in France just to get our second tranche of money back. (I want to make sure the bank's always got a hundred percent.) But this was traumatic and you know I had limited partners, one guy in particular screaming at me and calling me a dummy, or worse, actually. And that was completely fair. In other words, I didn't resent the conclusion. I resented being in the chair, being screamed at. The reason why that's important is I remember leaving…the company was located up the Hudson River, you know, probably 45 minutes outside of New York, and it was fall, and there were beautiful leaves coming down. I was looking out at the water and, you know, the sun was glancing off of the water, and I said, I can never do this again in my life. I can never have another meeting like this. What do I have to do to never have a meeting like this?

And we set up just a wonderful investment committee process where the key was depersonalizing decision making. You know, everybody had a speak. There was inquiry, and questions and answers. There was a second meeting because the first one basically just ended up bringing up a bunch of stuff that didn't have answers. If you needed a third meeting…and by the time you finished the third meeting, these questions were answered in writing, nobody trying to pass one over on you…by the time you set up a system like that, you could get a really good answer, and we're still using that same system 35 years later. And it works.

So the fact that somebody was screaming at me had enormous impact. That was a catastrophic failure, but we made a lot out of it, and every time something doesn't go well here at Blackstone, we talk about it. Because people don't want to be blamed, they don't want this. But that's how you grow. You don't grow just by winning games. You have to lose a few to figure out how to make your team better.

JH: Reshma Kewalramani (GMP 18, 2015) emigrated from India to the United States at the age of 11 and discovered a love of math and science, later graduating from Boston University's joint BA/MD program in seven years. Kewalramani quickly fulfilled her goal of being a "triple threat," working as a researcher, practicing physician, and instructor, but soon realized her true passion lay in making medicines to help patients. She joined Amgen in 2004, rising to vice president of the firm's US Medical Organization before being recruited to Boston-based Vertex Pharmaceuticals in 2017, where she was named CEO and president in 2020. Confessing her own discomfort with failure, Kewalramani reflects on an experience earlier in her career that has stuck with her over the years.

Reshma Kewalramani: I am really hard on myself. I'm not very good with failure, and I've learned to be far more comfortable with it, far more reflective about it, and the ability to take lessons away. But I have to say that was a journey for me. You know, when you're a practicing doctor, failure has a very specific connotation around it, and it's very personal because it's about a patient, and when you feel like a patient has had a bad outcome, it's very difficult to get comfortable with that.

When I think about failures that were real lessons for me, I remember a time when we were building an entirely new department almost from scratch. And at that time it was really important to hire quite a number of people because there was a lot of work we needed to do in a short amount of time. And of course by the time we started, we were already behind. So I made a decision to just hire—even though I may not have thought that each individual that I was hiring was the very best. I just decided that that's what I was going to do. And it was a big mistake. And what I really learned from that experience is there is no substitute for great talent. You can't convince yourself that you will make people great. There is no substitute for bringing in great people, to have patience for that, and to recognize that that's what sets up the next group of people coming in, that's what sets up the culture. That's what sets up the ceiling. You can't bring in people to set the floor. You have to bring in people to set the ceiling for what you can accomplish together.

This episode of Skydeck was edited by Jocelyn Gonzalez from PRX Productions with assistance from Craig McDonald at HBS. It is available wherever you get your favorite podcasts. For more information or to find archived episodes, visit alumni.hbs.edu/skydeck.

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