B4| Saturday/Sunday, September 7 - 8, 2019 *** THE WALL STREET JOURNAL.
EXCHANGE
Deuteronomy and
The Tribal Approach
To Management
While T-Mobile’s rivals may loathe its CEO, John Legere’s employees
treat him like a rock star. Is his Old Testament style sustainable?THE CAPTAIN CLASS| SAM WALKER
false idols, it says, “Thou shalt
surely smite the inhabitants of that
city with the edge of the sword, de-
stroying it utterly.”
Examples of “Deuteronomy man-
agement” are rare in modern busi-
ness, but they do exist. Facebook’s
Mark Zuckerberg isn’t as publicly
vitriolic, but like Mr. Legere, he’s re-
ceived consistently positive reviews
from his own employees while earn-
ing a reputation as a formidable
and ruthless competitor.
This mindset is more prevalent
in team sports—where one of the
most prominent examples is Bill
Russell, the former captain of the
Boston Celtics who won a record 11
NBA titles in 13 seasons. Mr. Russell
could be thoroughly nasty and arro-
gant toward opponents but was also
selfless, caring and wholeheartedly
loved inside the team. “One thing
we’ve always had on the Celtics is
mutual respect,” he once said.
The military has a strong tradi-
tion of Deuteronomy managers, in-
cluding James Mattis, a longtimeU.S. Marine Corps general and for-
mer defense secretary. Gen. Mattis
was renowned for showing both
toughness in battle and extraordi-
nary kindness to his charges. In
March 2003, on the eve of the Iraq
War, he urged his troops to show the
world “there is no better friend, no
worse enemy than a U.S. Marine.”
Mr. Legere’s initial plan to turn
T-Mobile around had nothing to do
with Deuteronomy.
Early on, he hoped to distinguish
T-Mobile from its larger rivals by
rebranding it as the “un-carrier.”
Ditching his former buttoned-down
look was a calculated move to bol-
ster that renegade image. He also
figured that any good narrative
needs a villain, and that throwing
lots of jabs at AT&T and Verizon
might energize his employees.
“They just needed an advocate and
something to rally around,” he says.
It’s impossible to measure the
precise value of a CEO’s leadership,
but so far, Mr. Legere’s tenure at T-
Mobile has been a ripping success.The company turned profitable dur-
ing his first full year and has been
in the black ever since. Revenue has
soared and its share price has risen
nearly fivefold since 2013. T-Mobile
leapfrogged Sprint to become the
nation’s No. 3 carrier.
Despite all of this, Mr. Legere
hasn’t inspired a wave of copycats.
In fact, many major companies havegone the other direction—hiring
low-key CEOs who make very little
public noise.
Mr. Legere’s sharp-elbowed style
sometimes invites comparisons to
another polarizing leader, President
Donald Trump. Mr. Legere knows
this, and doesn’t seem to mind. In a
2017 interview, he said he admires‘I’m outspoken and loud
—and yes, sometimes I
call out the other guys.’T-Mobile CEO John Legere, who savages business rivals, high-fives fans before an episode of his cooking show.London, “you’re often getting the an-
swer to another question entirely,
which is ‘How do you happen to feel
about risk this morning?’ ”
So, he says, they yield “very unsta-
ble answers that move about based
on what the market is doing or how
the client feels.”
To be fair, many financial advisers
don’t take these quizzes seriously.
Over the years, dozens have told me
that they downplay, override or ig-
nore the results.
That isn’t necessarily wrong.
Some clients may be all too eager to
risk money they can’t afford to lose.
Others fear taking any risk, but lack
the income or assets to reach their
goals unless they do.
If, however, advisers are treating
risk tolerance arbitrarily and incon-
sistently, then that’s a problem. Put-
ting one investor into a risky portfo-
lio and another into a much safer one
isn’t easy to justify if they both
scored the same on a risk quiz.
That’s a pattern Amy Hubble of
Radix Financial LLC, an investment
advisory firm in Oklahoma City, and
John Grable, a professor of financial
planning at the University of Georgia,
find in a study to be published in the
Journal of Investing this fall.
The researchers presented dozens
of experienced advisers with descrip-
tions of five clients: age, career, in-
come, net worth, housing situation
and long-term goals, as well as theirscores from a risk-tolerance quiz.
For one client, the various advisers
recommended portfolios ranging
from a risky 85% in stocks to a timid
100% in bonds. They also suggested
wildly divergent holdings for two cli-
ents with identical circumstances but
slightly different risk scores.
“Even very competent advisers,
when presented with the same in-
formation, don’t seem to be using
any standard procedure other than
following their own judgment,” says
Ms. Hubble.
That isn’t unusual. Professionals
in many fields are vulnerable to
what the Nobel prize-winning psy-
chologist Daniel Kahneman calls
“noise,” or variation in judgment
driven by such irrelevant factors as
emotion, time of day or the weather.
To do better, think about howyour past experiences might shape
your future expectations.
Joachim Klement, an indepen-
dent analyst in London, suggests
superimposing a timeline of your
key financial experiences onto a
chart of stock returns and interest
rates. Did you buy your first stock
at the beginning of a bull market?
That could skew you toward taking
more risk. Did you start a business
during a recession? That could
make you more gung-ho if it thrived
or gun-shy if it failed.
The best guide to whether you
will dump stocks in the next finan-
cial crisis is whether you did in the
last one. If you weren’t investing in
2008-09, look back at the fourth
quarter of 2018, when stocks lost
nearly 20%. Be sure to ask what
your financial adviser did in pastmarket plunges, too.
Your perceptions of risk are only
part of the puzzle. At least as impor-
tant is your risk capacity. Think of
your spending habits, your non-fi-
nancial assets and how easily you
could sell them in a pinch.
Also vital are your goals. You can’t
know how much risk to take until you
estimate when and how much you’ll
need to spend in the future. Any good
adviser should devote more time to
your risk capacity and your goals
than to your risk tolerance.
Ask advisers to take the same
quizzes and make the same revela-
tions as you—and explain how their
views will shape your portfolio.
“Clients have biases, but we advis-
ers need to be cognizant of our own
biases,” says Ms. Hubble, “because
we are also human.”Don’t Let Your
Adviser Get Too Testy
Those quizzes on risk tolerance aren’t very useful
THE INTELLIGENT INVESTOR| JASON ZWEIG
IfIaskyouina
questionnaire whether
you are afraid of
snakes, you might say
no. If I throw a live
snake in your lap and
then ask if you’re
afraid of snakes, you’ll probably say
yes—if you ever talk to me again.
Investing is like that: On a bland,
hypothetical quiz, it’s easy to say
you’d buy more stocks if the market
fell 10%, 20% or more. In a real
market crash, it’s a lot harder to
step up and buy when every stock
price is turning blood-red, pundits
are shrieking about Armageddon
and your family is begging you not
to throw more money into the
flames. Then risk is no longer a no-
tion; it’s an emotion.
That is why you, and your finan-
cial adviser, should be wary of risk-
tolerance questionnaires meant to
figure out how much money you
will need when, and how willing
and able you are to withstand
losses along the way.
Unfortunately, imagining your fu-
ture behavior isn’t as easy as it
seems. And new research shows fi-
nancial advisers create drastically
different portfolios even when cli-
ents appear to have the same toler-
ance for taking risk.
With these quizzes, says Greg Da-
vies, head of behavioral science at Ox-
ford Risk Research & Analysis Ltd. in
ALEX NABAUMOfficially speaking,
John Legere is the
chief executive of T-
Mobile, the $68 bil-
lion wireless carrier.
Unofficially, the 61-
year-old telecom vet-
eran has another title.
He is, hands down, the world’s
most relentless corporate pugilist.
Since he arrived at T-Mobile in
2012, Mr. Legere has used every
public forum at his disposal to
bash and belittle his company’s
chief rivals, AT&T and Verizon; or
as he likes to call them, “Dumb
and Dumber.”
He once bankrolled a Super Bowl
ad to mock Verizon’s taxes and fees.
On another occasion, he posted a doc-
tored version of Verizon’s logo with a
few alternative slogans, such as:
“screws over customers.” He not
only does impressions of AT&T’s
Randall Stephenson, he once
compared his rival CEO to Bat-
man’s evil nemesis, the Riddler.
Operationally, Mr. Legere’s
favorite bludgeon is speed: T-
Mobile has tried to run the
competition ragged by crank-
ing out new service plans and
promotions at a dizzying pace.
In 2015, Mr. Legere spent
several months loudly lobby-
ing federal officials to slap
stricter limits on how much
low-frequency spectrum AT&T
and Verizon could purchase in
an upcoming auction.
It might be tempting to
dismiss Mr. Legere’s aggres-
sive leadership style and oc-
casionally profane language
(he describes his attacks as
“jabs” and “good-natured rib-
bing”) as the product of one
man’s singular personality.
After all, most CEOs don’t
sport shoulder-length hair, or
wear motorcycle jackets to
work, or have 6.4 million
Twitter followers.
“I’m obviously different
from your ‘normal’ CEO,” Mr.
Legere says.
Before rendering judgment, how-
ever, there’s one interesting tidbit
about Mr. Legere that’s worth con-
sidering. His opponents may loathe
him—but a large majority of his
employees seem to genuinely like
the guy.
At T-Mobile events, the marathon-
running bachelor often enjoys recep-
tions befitting a rock star, complete
with the occasional marriage pro-
posal. While Glassdoor’s annual em-
ployee surveys aren’t scientific, the
2019 edition gave Mr. Legere a 99%
internal approval rating—No. 4 over-
all among his CEO peers.
Mr. Legere’s intensely tribal ap-
proach to management may seem
new—but in a sense, it harkens all the
way back to the Old Testament.
The four most famous words in
the Book of Deuteronomy are “thou
shalt not kill.” It’s a commandment
of mercy meant to regulate the way
all people, leaders included, treat
one another.
At the same time, Deuteronomy
also includes one notable exception
to that rule. If some neighboring
community chooses to worship
the president’s determination to
communicate frankly and directly
with voters. “He is ignoring norms
that I ignored as a CEO,” Mr. Legere
said. “I don’t know where it goes,
but he’s got game.”
Scientists who’ve studied “social-
dominance theory,” or the shared be-
lief inside a group that it’s only natu-
ral for one tribe to prevail over
others, haven’t painted a rosy pic-
ture. People who forcefully advocate
for their own kind are more likely to
disregard the rights and wellbeing of
others. Historically, they say, groups
that adopt an “us-against-them”
mindset are more likely to tolerate
oppression and discrimination.
Running a wireless carrier is
nothing like leading a nation, of
course. Besides, as the CEO of an
upstart company battling for retail
customers against large, in-
cumbent players, it’s not his
job to be a unifier.
The larger question is
whether his bellicose style is
sustainable.
Mr. Legere’s legacy may ulti-
mately hinge on the outcome of
his biggest, most controversial
initiative: T-Mobile’s proposed
$26 billion-plus merger with
Sprint. Although regulators ap-
proved the merger in July, a co-
alition of state attorneys general
filed a lawsuit to block it on
grounds that it will harm con-
sumers.
On Thursday, New York City
dialed up the pressure with
another lawsuit. It alleges that
one of T-Mobile’s brands sold
used phones as new devices
and overcharged customers. T-
Mobile said it’s still investigat-
ing, but the suit’s allegations
are “completely at odds” with
its team’s integrity and com-
mitment to customers.
If nothing else, the rise of
social media has sharpened
the public’s radar for what’s
authentic and what’s phony.
People have grown suspicious
of leaders who seem overly
polished and scripted. We wonder
what they might be hiding.
Mr. Legere uses social media to
fire rockets, of course, but also to
communicate with customers and
invite them into his personal world.
On Sundays, he uses his kitchen as
the set for a goofy, low-budget on-
line cooking show.
If Mr. Legere is playing a role, it’s
clearly one that suits him. To some
extent, he simply decided to unmask
himself at T-Mobile. It was a bet, re-
ally, that his customers, employees
and shareholders would rather fol-
low a three-dimensional human be-
ing than some cardboard stranger.
“I’m outspoken and loud—and
yes, sometimes I call out the other
guys,” Mr. Legere says. “Everything I
do is about one thing: inspiring peo-
ple to be better and constantly push-
ing for innovation. It’s been that way
from day one, and I won’t change.”Mr. Walker, a former reporter and
editor at The Wall Street Journal,
is the author of “The Captain
Class: A New Theory of
Leadership” (Random House). JASON DECROW/ASSOCIATED PRESS