Ron O'Hanley was on track for a successful career at consulting firm McKinsey when Mellon Bank offered him the chance to leave and run a business. He turned it down. Then he began to wonder if he'd made the wrong decision.
I had buyer's remorse. I said, 'Was this the right decision?'
Three months later, O'Hanley called Mellon back and asked if the job was still available. It was, and the experience taught him a lesson about opportunity and timing.
There's a lot of ways you can engineer your opportunities. You can seldom engineer the timing.
For O'Hanley, the right opportunity doesn't always arrive at the right time. And turning it down because of the timing can mean missing it altogether.
If you're turning down something because it's not the right time, second guess that. And I did second guess it and it turned out the best thing I ever did.
Years later, another unexpected opportunity would take him to State Street, a financial institution founded more than 230 years ago that he initially questioned joining, but where he would eventually become CEO. For O'Hanley, the lesson is knowing when to reconsider the path you thought you were on. These are Ron O'Hanley's executive decisions.
Very few young people say I'm going to be a successful finance year when they're thinking about what they want to do in their formative years. Tell me a little bit about your upbringing and what you thought you were going to do for a career.
So I grew up in what you would describe today as a very middle class family, right? My father worked for an industrial company. We lived in a part of the US that was entering its post-industrial phase and so at the time I had this curiosity about how things worked. So I thought I wanted to be an engineer. And then as I got closer to my mother and what she was doing, she also taught nursing. I thought, gee, there's a nice intersection here. I could be an orthopedic surgeon, right? Because it's about how the bones worked and all that. So early on, that's what I thought I was going to do. Either be an engineer or go be a surgeon.
Were they your early role models and early mentors?
They were, as was my grandfather, my mother's father, who was not an engineer, but certainly could have been. He started out in the Navy and then was a civilian contractor to the Navy, ran a machine shop for the Navy and really could fix truly fix anything. He always had a boat in his backyard or a boat in his basement that he had found or somebody had given him that he was reworking on. So he would have been the third role model for me too. And this idea of kind of fixing things and being curious about things.
What values did they give you?
Education would have been the one. Again, both of them, but particularly my mother. I mean, she really went through life continuing to educate herself. She got her master's degree, I think, at the age of 55, right? She was constantly kind of bettering herself. But the other thing that influences, again I mentioned I grew up in a town that was entering that post-industrial phase and seeing my father lose his job during that period because it's just really, you know, you think everything's fine and then it isn't. And of course like many parents of that generation they were trying to make it look everything's okay. But then the moment came where it was time to select university and they said remember you're the oldest of five so what it cost is actually going to matter here.
Yeah. And the cost must have been weighed quite heavy on you as well because I mean had you not gone to university and gone straight out to work, you could have been helping be a bread winner for the family as well. So that would have weighed quite heavily on you.
Yeah. And it did influence where I went to. I mean I'm very happy where I went to school. And one thing I've learned about at least in the US where you go matters a lot less than what you do about it while you're there. So but I went to the place where I got the best deal. I got the largest scholarship and that was 1980.
You got your BA in political science at Syracuse as well. Why did you choose political science when hang on a second a couple of years earlier you wanted to be an orthopedic surgeon?
I faced organic chemistry and I met my match and said okay we're not going there. So and I was always very curious about the world in which we live in and there's an outstanding program there. Today it's still the number one ranked school of public citizenship and public affairs in the US. So there were extraordinary professors there and I just got drawn into that vortex.
It's really interesting that actually you see as a strength that you didn't know what you wanted to do earlier on and actually you were able to try lots of different things.
Yeah. And I think it's a combination of I am a curious person. There's I have a lot of interest and I'm also interested in learning and talking to others about what they do. I like hearing how their companies operate. So it was that combination of curiosity, not knowing what I wanted to do that really led to my first major career decision, which was going into consulting.
If there was one quality that people said to me, what is what's the top quality of being a CEO? It's curiosity. Every single time it comes up, if people are listening to this and watching and they want to be Ron O'Hanley, they want to be a top Wall Street CEO. Is curiosity the number one skill, quality, value, trait?
I think it's the combination of curiosity and knowing that you there's always something new to learn. Which to me is the opposite side of the curiosity coin, right? Why are you curious? Because you're going to learn something. And if you ever believe in these roles that you've got command of it, you ought to step down right then because you don't. You really don't have command of it. You really don't know what's going to happen the next day. We are a cog in a very very large system, right? And what might happen three, five, 10 institutions removed from us could have an impact on us. So you think you know it. You think it's like just a big factory and I know all elements of it. You actually don't.
So in 1986 you got your MBA at Harvard Business School and then you spent a long time over a decade at McKinsey. Tell me a little bit about the decision to join McKinsey.
Well, again, a little bit of it was wasn't sure what I wanted to do and got exposed to McKinsey, liked what they did. And to me, I thought this is going to advance my learning. I'll learn a lot more and I can decide what I want to do long term. At the time, I think like a lot of people think when they enter these roles, you know, I'll go there for two years. I'll figure out something else and do it. I loved my time there. Lots was going on in terms of you had these at that time relatively newer entrants like the Fidelities of the world that were transforming the way money was being managed and so McKinsey was one of these places where it also gave you the ability to be quite entrepreneurial.
Yeah, I wanted to start a practice. So did I've got a whole list of mentors from Mellon Bank, AXA, Syracuse, but actually Peter Walker comes up as a senior partner at McKinsey. Why was he such an important mentor? What did he give to you?
So a couple things. I remember talking to him after I'd arrived. And he made a point of welcoming me and you know the way that interview process and we'd probably spoken 9 months before. So one I was surprised you remembered me. But what drew me to him was he's talking his it was his passion around insurance which to me I thought other than watching paint dry is the most boring thing on earth and talked about here's why you ought to come work on this project with me. What was interesting about it, he was implying I had a choice, which I didn't really have a choice, but I was going to do it. But it was again his curiosity, a really successful senior partner at the firm that was constantly thinking about what is the next thing and curious about what was next.
Tell me about an instance when you made a mistake where things hadn't gone well and then afterwards what your attitude was to that failure.
Yeah, I can think of several instances right where you you done all the work and you think that the answer is about getting it analytically correct. I think one of the shortcomings of the consulting firms at least then and was my biggest learning when I left consulting was it's not about the answer it's about the implementability of the answer and I think we as consultants really never understood the challenges that your client had as a senior executive and that that immediately by the way struck me when I moved from consulting into quote the real world. You realize the time commitments that are put on an executive are very very different than what you have as a consultant. I didn't realize how good I had it as a consultant.
Your words, not mine. Left McKinsey to join the real world. PMY Mellon 1997 to 2010. I mean just just give us a little bit about that period of your life, how important it was for you and that evolution of your career.
So back then it was Mellon. I'd had several opportunities to leave. I was actually enjoying myself at McKinsey. I was a year or two away from becoming elected a senior partner at that point. In fact was getting prepared to go run one of the offices in Europe. Now in reality as confident as I was I hadn't run much up to this point.
So did you have self-doubt?
I didn't have self-doubt. I initially turned it down because I wanted to go do what McKinsey was enabling me to do which is go run an office. And then thankfully I had if you will call it seller's remorse, buyer's remorse. I said was this the right decision? And it was it turned out and it's something that I always tell people later on. Opportunities will come along. There's a lot of ways you can engineer your opportunities. You can seldom engineer the timing. And so if you're turning down something because it's not the right time, second guess that. And I did second guess and it turned out the best thing I ever did. So I called him up literally 3 months later and said, 'If it's still available, I'd like to come.'
Is your attitude to risk taking different? Has it evolved throughout your career as well? Because I've had a lot of CEOs who have said to me in the early part of your career, 'Take risk. Take risk. Try different things as well. You will regret it if you don't.'
I think probably my attitude towards risk has changed because at the time I didn't think this was a big risk. Right. You think, okay, I'm coming from McKinsey. I know everything. What I didn't realize at the time was you know nothing about being an executive. Right? You've advised executives. You haven't been an executive. And I go back to what I said earlier. You don't understand the time commitments that are being imposed on you. You don't understand that having an elegant answer is maybe this part of actually getting to success. It's how you implement it, how quickly you implement it, what you need to do to move and marshal an organization. And I learned that very quickly. I mean in when I think about it here was this person that you know maybe I'd at this point in my career I was running three or four five 10 person teams. That's not a lot. And they're turning over this business that was it was not an insignificant business with great growth aspirations and said go forth, acquire, do what you need to do. They gave me a lot of opportunity. Honestly, I don't know that I would give somebody like me that opportunity right now. So, I think what has happened and this is over the course of my career. I think executives have become and institutions have become much more risk averse. I think the financial crisis had a lot to do with this and we are much more concerned about who are we going to entrust this to? Is there enough scaffolding around this person? You know, this is pre-financial crisis and I think there was I mean I don't know exactly what Frank and Kip their decision-making was at the time but they probably thought how much harm can he cause right? He's a pretty smart guy we know him. He's never done this before but if it fails the institution isn't going to fail.
That's fascinating Ron. You talk about institutions becoming more risk averse and perhaps a little bit more cautious and yet in your career I mean I remember Barings when that all imploded the amount of money that Barings lost compared then with the financial crisis and then compared later on with the kind of numbers we're talking about in an AI world now it's insignificant so it is what I find fascinating is what you just said is that companies have become more risk averse but the costs and the scale of the finances involved now are an order of magnitude.
Yeah but I also think the regulatory structure has caused firms to become more risk averse. If you think about how regulators now have changed the way they look at these institutions, you think about the rise and by the way I'm not critical of this. I think it was required but you think about the rise of the risk function within financial institutions. Pre-financial crisis if you had a risk function which most didn't. It was not of the sophistication that we have now. That sophistication is great, but it also has caused institutions and therefore people to be much more cautious about the chances that they're taking.
The amount of horror stories that between us we must have heard about risk managers flagging warnings about positions, flagging warnings about traders, about exposures. Tell me about your experience of the great financial crisis as well. The early part of it you were at Mellon. What was your experience? What did you learn from the great financial crisis?
At the time I was running the combined asset management business and I remember the you know we were in a constant crisis mode as a management team and remember the credit pressures that all these firms were under and that was translating into this the regulators said there's only so much that you can do and then you realize that we're getting to the point where we've got to basically suspend trading in these funds because that's the only way that we're going to enable the fund shareholders to come out whole. If you believe that in 45 days this is all going to pay off at par. The right thing to do, suspend trading in the funds, tell clients you're not going to get redeemed. You will get redeemed as everything matures. That is basically you're signing the death warrant for the business. And what was remarkable to me at the time is through the course of about 5 to seven days, the team we have to be very quiet about this, but the money market team knowing that they were going to put themselves out of a job were doing everything they could to prepare for that orderly dissolution of the business. I've never seen any I had never seen anything like before. And it just reminded me that firms are dependent on people and what people can find in themselves to do recognizing that has nothing to do for themselves but the clients they serve.
Did you learn lots about yourself at that time?
You do. And what you realize is that everybody is looking at you. Absolutely everybody is looking at you and what they're looking for is is this going to be okay? And you don't want to be dishonest to people. But you also want them to know that we've got to get through this. It may cost us something. It's probably going to cost us something, but we've got to do the right thing. And you realize that if you want people to do something, then you've got to behave in the way that you want them to behave. You don't want them to panic because there were all kinds of behaviors. There were other people who just froze. There were other people who were seasoned, been around. They on the surface were very very good at their job but they just froze and they couldn't act under that kind of pressure as well.
We saw a lot about human qualities during that period, didn't we?
We did. We did. And again, I go back to when people are doing something that they know is going to ultimately hurt them and hurt their pocketbook, but they recognize that it's going to be the right thing for the client. It's something that you never forget, and I will never forget that experience.
